Group Coaching Call: January 11, 2017

Okay, we'll get started in just a little bit here. Let me know if you can hear me alright. Hopefully we won't have any technical difficulties this time. Alright, Fred can hear me. Anybody else, can you hear me? Gaorii can hear me, awesome. We'll give people some time to hop into the room. Seems like we just have a few people on there right now. George hears me, awesome.

And while we're waiting for everybody to jump in, thanks for your patience with last week's call. Hopefully people weren't sitting in the room for too long. But some things are out of our control. I was traveling and there was a delay and there was right in the middle of when I was flying to Mumbai. And so I would rather been on the call, I got in about 1 am and couldn't get to sleep until much later and it was a pretty short night of sleep after a long travel day. So that's it. That's what's end up happening. So, I know not to schedule flights during schedule coaching calls into the future, because you can't really rely on some of these airlines.

You probably noticed that I'm not on camera today. My camera might force me to be on there every so often. But actually I think for this one, I'm just going to be presenting you with the facts and the data on the screen. And so hopefully you don't mind. If you really want to see me, you're more than welcome to. But I don't think it really matters in this case.

Alright, it looks like some people are trickling in. Just give people a few more minutes to get started. Any news from any of you? Anything interesting that has happened recently? Anything you've applied from the course to your agency to your life? Fred wants to see the box. I decided not put the box up this time either, actually.

I'm going to queue up the survey results and I'm just going to start talking about those right now. And then we will see if people can jump in. I know with the schedule change people might have some troubles getting in. But sounds like those who are in can hear me and everybody is working alright. So let's take a look at these survey results. Okay people are jumping in now.

So, how many employees does your agency have? It looks like a lot of you are just one person shops right. So majority of you are just yourselves and then couple of you are two persons. Some say other, I am not sure what other encompasses. I guess I can look at the free form answer in there. And then we have a three person agency and then an 11 - 20 person agency.

So as you can see a lot of the agencies are small, just you. And then some of you are growing and obviously this course is geared for all levels of people all types of people who are here. All different types of agencies. I think the 11-20 is probably Fred's agency. They are a little bit further along. But if you are answering these questions and you're taking the lessons, you'll soon be raising from one person to multiple.

George said that he has already booked his first client based on the course material. Already a positive return on investment, that's pretty awesome to hear. George, is it the same type of service you've been providing? What from the course material helped with the closing of the deal, if you care to share? Just type it in the chat box. Like to hear some more details on that.

Okay, so moving on to these answers. Looks like people are jumping in. Over half of the registered people are in there now.

How many independent contractors does your agency use? Some of you are using two, the majority of the answers are two contractors. Some don't use any, some just have one, two, ten plus. I'll be curious to see with ten plus, if that's Fred's agency or a different one.

How many years has your agency been in business? So, many of you are less than one year. Fred is not the one with ten plus. Interesting.

So a lot of your agencies have been in business for less than one year. And I'm assuming that many of you are just getting started in this. Some of you, I know are just starting your agency based on the skills you learned even in my other courses, the analytics and PPC courses, and that prompted you to start this area. Some of you are actually still in school and looking to learn skills that you can use when you get out of school and start an agency. So a lot of you are just getting started.

But then there is obviously on the other side there are some that have been around five plus years. Be curious for those of you who've been around for five plus years that have one employee. There has to be some overlap there. Do you plan on keeping it as just you in the future? Do you plan on keeping it for a long time? How do you plan to proceed moving forward? For those of you who've been in the place for a long time, has anything in this course changed your opinion? Has it solidified what you already thought? Has it done anything to change your perception?

George says that the client he gained was from SEO set up. And it helped him structure the contract and ask for a fair price. That's great. Thinking back to when I was first getting started myself, the biggest question I had, the biggest uncertainty I had was, how much can I charge for something and then how do I not get screwed over? How do I make sure that I'm protected? But how much do I charge, that was the hardest thing for me. I remember having no idea, honestly I had no idea how much should be charged and I didn't really have even the frameworks that we are talking about here. I just guessed.

And I know my dad told me some advice too. He was like, basically ask them how much they are willing to pay and then charge them that much. That's how you should sniff out what their budget is. And then charge them what their budget is. That's how you can understand market pricing. I actually don't do that as much anymore. I'll sniff out budget when I can but I really just try to set my own market price and then if people are saying they don't have budget for it or they don't want it then I have to make a decision if I would do an exception or not. If I'm going to stick with that or not.

Okay, so we move on to see some more insights. Are you in-charge of hiring employees? Most of you are in-charge of hiring employees. One of you says that they are not. Again, I'll be curious if that's Fred's agency or if it's a different one.

Do you have a formal hiring process? Majority of you saying no, some of you saying yes. Five or you, 38% says yes. Now I'm curious on this one about, if you have one employee including yourself then you don't need a hiring process. That's the reality, right. You probably don't need to have a great hiring process. You need to understand who you hire, but process assumes that you've gone through this many times. So it's really hard to have a process if you haven't even gone through it yet at all. So, interesting.

Okay, Stephen is the one who doesn't have an involvement in the hiring process. Makes sense. On the hiring process piece of having a formal hiring process, it's one of those things where, even if you're one you've been doing it for a while one person in your agency, when the hiring does come it's a chaos. You recognize you need somebody to help you with something and then you are trying to find the right fit, the right person.

So I guess having an idea as to what the process should be, even if it's just the graphic we put together for the course, is a good starting point. But then you just making sure you don't forget anything, you don't do any damage to the businesses is really that I would say is important.

What I mean by that is, hiring your second person, it's a huge consideration especially if they are not a partner. Because it's the first time you're paying somebody. You're putting their employment on the line, their salary, their livelihood on the line. So it's an important consideration.

The other thing is, in our agency we didn't have a process in place for as we were growing and we would get a lot of applications for jobs and we wouldn't even know how to respond to them. So there is probably hundreds of people who applied for jobs at our company, never even got a response from us. I think that's unfortunate.

And so it's not just about whether you have a process for how do you hire somebody, it's how do you handle the interest, the influx and then not cause damage or not annoy people who are interested in your company. That's really cool to have that problem, when there is a lot of people interested in your company. Really, it's great to have that problem.

How do you decide if you can bring on new employees? Your cash on hand. That's a pretty common answer. Staff overworked, you want to hit your percentage of profit. You want to hit the revenue per headcount. Right, it looks like a lot of these answers are pretty common between you. And I'm assuming the ones who haven't answered this or if you haven't answered it because you haven't made a hire yet. Which makes sense.

Seeing the answers here, you can tell that a lot of you are probably so early in the process that the majority don't even have more than themselves in the group. This is probably more research for you right, it's an inevitability that you are going to bring people on or you are going to extend the team for many of you. Not everybody, some of you are going to stay solo for a long time. But it's also, when you do this, now you have the research in place to do this the right way.

Because like I said, for those of you who've been following the lessons from this week, actually it was last week, I'm having the weeks mixed up, but lesson 26. I shared my story about how I was a contractor for two plus years. And I was a freelancer, whatever you want to call it, I was just on my own. I wasn't even sure how to bring on employees, I wasn't really sure how do I cash flow it, how do I afford to pay somebody, do I pay them first, do I pay myself, do I need a line of credit?

Those are all the questions racing through my head really, as I was looking to expand. And I wasn't even prepared to deal with it. I wasn't prepared at all to deal with that. That's one of the among many reasons why I ended up merging my practice with others.

So, I hope this lesson gives you at least a logical perspective as to when you should hire and the ups and downs. So at least it gives you some things to think about, some things to marinate on. That's all I wanted to say about that piece is that it is really important that when you get to this point you understand the consideration.

So, that's why I am spending more time talking about this part, because a lot of you haven't made a hire yet. And so I want to make sure that you at least have time to think about it or have your questions answered about that. Maybe that's what comes out of this live call. As if somebody is on the verge of hiring or if they have questions, we can answer them here.

Do your employees help with business development? A few say yes, again those of you who say no probably don't have employees. From that lesson about employee business development, we know that's an important area that many agencies haven't really tapped into.

Do you pay commission? This is some good data for those of you out there. 1% - 5% it happens, some get no commission. 11% are higher 6% - 10%. So I think we talked about this among the lessons. I would say a commission is a nice incentive for an employee to do this. I've been around a lot of people who--if they didn't have some kind of reason to bring in business they wouldn't. If they didn't have a commission or some kind of incentive, they wouldn't bring in business.

I think a lot of times with employees the reason why they don't do it without incentive is because they don't want to create more work for themselves. The reward for bringing in new business for your company if you don't get a commission is just to work more. And so I think that's actually a double edged sword. The other thing is it's still cheaper to have an employee bring in business than it is to have a sales team to have to develop a bunch of collateral.

And so I'd say this set up we had at our agency was, key employees would get up to 5% commission on the first $100,000 and then if they may have brought over a $100,000 they'll be eligible for a larger bonus. That's a good way to structure I think, is to tier it. Because actually the more revenue that is brought in the more margin potential there is. Paying a commission out on a $50,000 deal, that can eat into your profits a lot more. So it's a recommendation that you put in some kind of kicker, accelerator in there.

Stephen says, they have employees who don't take an active role the small group contributed blog there is an active business development. So I think that's an opportunity Stephen obviously. And then Ryan is saying he has contractors, it's hard as it is to do his development only.

Paul wants to know how does everybody find contractors? Do you hire somebody local? Or you have any luck with freelance sites? Robert is saying, word of mouth work well for him. Stephen agrees with that.

So contractors usually--it depends on what you want. If you want cheap labor, then there is one way to find people. If you want somebody who is good, then that's another way to do it. So generally if you want somebody who is good, who is trusted, you are going to call upon somebody you've worked with before. Or that your employees have worked with before, or your business partners, whoever it is, that's how you are going to-- basically references right? You are going to find somebody who is in that area.

And that's especially important if you want to do knowledge, super intensive specialist type work, if you want somebody who's good. So for example we use a consulting firm to handle web development before our agency got into web development. And there was one guy who we worked with, he was just awesome. And we knew that if we sent anything to him we could profit off of it, generally speaking and it would just get done. And that's what I think when I think somebody who is good, I think of that type of person. A solid contractor where you know it gets done on time, on budget and that person is a professional. So that is the high end type consultant you want.

I am not sure which lesson it was on, because last week throwing me off on not being on the call. Where we talk about adding a margin on top of your contractor's. That type of work that you can do in that area. So that's one type of contractor, Paul. If you want somebody good, then it's a reference. It can be local. I think local really depends on what geography you're in and how important it is to have somebody local. If you're going to meet face to face or physically with this person, then local is good. If that's not a requirement, then local doesn't necessarily matter as much.

Freelance sites, the quality of worker you're going to get is going to be--unless it's a vetted market price, but if you go to Odesk or if you go to Fiverr or, actually Odesk is called Upwork now. Those type of sites where a bunch of people bidding on $5 projects or whatever. The quality is going to vary. You can use those, like I use Fiverr all the time. For example to transcribe these coaching calls, we use Fiverr for that. Probably the person who is transcribing this that hear this going to say “hey they are talking about me”. So we use Fiverr for that and it works out because we have a defined project that we need to have done.

If we were to say, what's the strategy on creating an entire transcript strategy with these survey results and everything, then that would be a different type of resource we would go for. We would have to go to somebody else. I'm not sure that person exists on Fiverr. Maybe somebody does. So it really depends on what you're looking to get done.

Now the reason why I'm going so in depth is because a lot of what we talked about with process and project management and all these areas of knowing what the pieces are that you need to get the work done. Operating procedures, that type of stuff. It makes a lot of sense that you have those things in place then all you really need to do is plug in pieces.

Fred mentions the Designcrowd. Yes, if you have done all your research on what you want, you have your brand idea in place, then you can bring in somebody from a freelance designer website and have them create design for you. So if you did the leg work yourself then you can plug in the pieces because your process is in place.

If you want somebody to handle the strategy in the top down, you need to hire a pro, whether it's local or not but somebody who's a really seasoned professional. You hand them something and they just get it done. That's they two types of contractors I've worked with. People who that are successful but ones where you have a process and they're fulfilling the labor need you have, in that process. That's one and then two is where you don't have a process but you have a need then you expect that person to develop a process. The prices go up significantly for the second type of contractor.

This next one is, do you have bonus program? This is biased against, not everybody has an employee so why would you have a bonus program. For those of you who say yes, it's based on company profits, revenue, percentage of salary, there is quarterly retention, sales retention, so there’s all kinds of different bonus structures out there. I do think that profits are important.

Over the years, we had a company revenue bonus and then a profit bonus. I don't think it's the right thing to incentivize somebody to work on because they don't have a lot of control on revenue, if they are not a revenue producer. And so, it's difficult to put the whole company's bonus on revenue when profits are really what we should be going for, right? Revenue is good, but profits are better. So you should incentivize based on what you want to have as the result. So it's good to see some company profits.

I think revenue is okay to bonus offer especially if you are trying to hit certain rounded numbers that look good or that really are the rallying cry for people. But again, we did that and I think it creates the wrong incentive. Because you are basically telling people to bring in any revenue you can to hit their bonus and you're not having them focus on what's really important, which is profits.

Of course it's acceptable to target based on revenue if your entire staffing plan is contingent on you making a million dollars, whatever your billings are, and you're are only at $800,000, then maybe you want to push that up there. That's important because you'll end up paying out money or you'll lose money if you don't hit that number. So that's the time where revenue makes sense, where I would focus on that. But otherwise I would go based on profitability, at least is the target.

And then the third one, percentage of salary. That is often what the bonus ends up becoming. You can make it an annual bonus that's for 10% of your salary or whatever the number ends up being. Usually it is based on what they make, some kind of percentage of that.

Jason wants to know, how do you structure a profit bonus, roughly what percentage? So, here is exactly how it worked with our agency. Every year it's a little bit different because we learned that when you do one thing it could be the right move for that year but the next year it won't be or you have different challenges. That's one thing that every year there is a new challenge that your business needs to face and it could be growing revenue, it could be growing profits, it could be retaining employee, it could be retaining clients. So there is not hard and fast rule, that's first and foremost. Is that we've adjusted ours several times because our business needs change and those challenges that we face and focus on. And you're going to have the same thing.

The one that I think worked best for us is that if our company had a profit number, say our profit was 20%. 20% net profit off of our revenue. That was what we wanted to hit. And we had a revenue number. Let's say that our revenue number was $5 million. I am just using a round number because it's easy to do the math. That means that you have a million dollars in profit. You have 20% net profit on $5 million dollars in revenue, $1 million in profit. And assuming that we're sticking with the percentages we've talked about in this course, your labor cost on $1 million in profits is going to be somewhere around $2.5 million. That's 50%. So $2.5 million to employees, $1 million in profit. Let's just say you gave a 10% bonus on $2.5 million. 10% bonus to all employees. That would be $250,000 you're paying out in a bonus on your net profit. Now essentially your profit goes down to $750,000 if you do that, and so you make the decision, if you payout 10% bonus, your profit number drops down by $250,000. You do a 20% bonus, that's $500,000, your profit number drops down to $500,000.

Can you live with that or not? Does that make sense? Does that give the employees enough to stay interested in it? Those types of questions you can answer based on adjusting your profit numbers. So that's how I think it ends up working out in this case. Is that if you have a bonus based on the profits, ultimately that bonus comes out of your profit. So if you hit your number then you pay out the bonus, your number goes down. Can you live with that number once it's all said and done? What advantages does that give you, what does it afford you? Do you need that money for your own lifestyle? Do your partners need it? How does that end up working?

So, that's ultimately your bonus is going to come out of something. And usually it's based on the percentage. I would say somewhere between 10% and 20% of employee salaries is a reasonable amount of money for bonus. If it's more than that, if it's 50%, think about it. If it's 50% and your employees are your biggest expense then there is just going to be no profit left. So you can't go too high. Now certain key positions can go high on bonus or again you want to do a threshold. Like if we have a $1 million in profit then you get a bigger bonus, if that's how it might work.

Again there is so many ways to structure bonus. Bonus changes too. A bonus is a reward for a job well done. So there need to be a reason why you are paying it out, it shouldn't just be staying. Because people want it or they are used to it. They need to help get to that point. So employees are pivotal in you making a million dollar in profit, then you should pay them an incentive to keep on making a million dollars in profit. That's essentially how it works.

Fred says, if you're giving bonus on profits are you revealing the company profits. I've run open book company and I'm kind of soured on that. That's a good question. If you say we're hitting a profit percentage, do employees know how much money you made. Essentially that's how I'm reading between the lines here. Are they happy that you're making a profit? Are they unhappy? What is it?

I am in the same boat as you, Fred. I've done it. Obviously if they can do the math. If you say our company is Inc magazine, so people knew how much revenue we were making. Just because it was published on the internet exactly how much money we made for our agency. It was audited by the Inc magazine. So yes people knew how much money we made. You guys can just Google Inc 5000 for my agency and you'll know how much money we made from a revenue perspective. Yup, that's available. If you're going to get an award, if you’re going to grow, then that's out there.

Now profit percentage. If they know your percentage is 20% and they know that you made X dollars in profit. Are they going to treat you differently, are they going to think good or bad. I don't know, I think that some employees are going to get jealous. Because they think that the owners get paid too much. I've been around people who think that the owners get paid too much.

But I've also seen a lot of people who respect the owners more for the transparency and they are more open to things, ideas. And more accepting of the owner. Because they know how hard they worked and they think that it's a job well done. So they are really excited about working for a company that shares that with them. Because a lot of companies don't.

And ultimately, I think if you open up your profit numbers to an employee or to people in your company and they get jealous by it or they think that you don't deserve it or something, then that's not the right employee. That's not somebody I'd want in my organization. If they take your generosity and the ability to offer them a bonus and these things and you share that with them and they take it the wrong way, then they are just not at the right company.

I agree with you, you can get soured on it. I'm not sure that I would do it again, the way that we shared our numbers but I also respect the company more for doing it. And so it's something you've got to work up to. We didn't do it for eight years actually and then we started doing it and then there is still good people in the company, still a lot of good things happening and didn't all go bad once you gave it away.

And then people who left the company they really don't talk about the profit percentages or anything, I haven't heard anything about that. So I don't think it was as big of a deal that might seem like to give all that information away. Especially if you're going after awards like we did a lot, you're giving that away anyway. People can find things out. They can just say what percentage of profit should an agency get and then they can figure it out.

Jason, do people come to expect bonuses automatically part of their salary? Do they get upset, if they don't get it? And bonus is on top of their annual raise as well. Yes. Great question. So, do people start to expect these bonuses and do they get upset? Yes. They absolutely get upset, if they don't get their bonuses and they start to count on it. That does happen. This is something I learned from one of the founders of my agency, who is a CPA. That was his background before he started getting into marketing.

And his thing with salary was always, the salary plus the bonus equals what the person is targeting. So if that somebody says that I only want $50,000. He would say, I'm going to give you $40,000 and a 25% bonus opportunity and that will get you to your $50,000. That was always his tactic. That was his negotiation. And the reason why he did that--we paid out bonuses while I was there, every single quarter. Yes we paid every single quarter. So, 24 quarters in a row, we paid out bonuses. So it was expected by people by that point. And I think one time we didn't pay it, because we lost a big client and yet people were complaining because they started to count on that money.

So, I think it's a good idea to structure the total compensation package at their target, because then it gives you down side protection. Because if you do lose a big client, now you have the ability to get 25% back in theory to go against your bottom line. To still remain either profitable or not to lose money when you lose a big client.

It's hard right? Because you're basically saying, I'm going to give you your compensation but some of it is variable as a bonus. Then you pay out bonus all the time. How do you deal with things if it doesn't come in as the employee expects it to? I don't know if I have an answer for that. Other then, it's difficult and it takes management, it takes fortitude to say this is how we're doing it.

Personally I think a bonus structure should be beneficial to employees and the company. But it should be up and down side to the company as well. So, if you choose this model you basically just need to make sure that people need to understand that going to your company, they're going to get their target compensation when things go well. Or they can just negotiate a way of bonus, right. They can just their target compensation, no bonus.

The reality is that if somebody tells you they want to make $50,000, and you pay him $50,000 you're giving them what they wanted. Doesn't necessarily mean that you're on the hook for how that's done. And so I think, it's up to the company to offer somebody a compensation package and you can do whatever you want to with that compensation package and then it's up to the employee to accept that or not. So, you have the right to do it. And if they accept it then they can't really be legally mad at you. They can be upset if they don't get what they want but then that's why you need to have a fair bonus structure in place in the first place.

Now the second part is the bonus is on top of their annual raise. Yeah, if you give somebody--let's go back to our $50,000 total compensation. 25% bonus on $40,000 in salary, if they want a raise and you give them a promotion and you pay them $10,000 more. So they're now getting $50,000 base. If they are still at a 25% bonus structure, then that means that they'll get a $12,500 bonus. So they'll get $10,000 in raise plus another $12,500 in opportunity. So that is pretty healthy right? So $10,000 raise is actually more like a $12,500 raise when you add it all together. So they get $62,500 after that raise because of the way the things work.

And hopefully that helps, gives some idea around bonuses. Like I said, I love the fact that our company paid out bonuses 24 quarters in a row. I am proud of it. It's probably one of the reasons why employees were happy. It gives you down side protection, which is really important for a business owner. But it's not without challenges.

And also as Fred said, telling people how much profit you made, it's not without challenges. It depends on what type of organization you want to be and how you want to work, and how you can sell your ideas into people, right. If you're the leader of this organization, are the people going to respect you or are they going to resent you, based on how you present these things.

Really, I think that, I would want an employee who is proud of the organization hitting its goals and the organization having this much thought to share information with employees that most companies do not share with their employees. And to be transparent and to be caring about what people are doing. And so that's really how I look at it when it comes to bonuses.

I'm going to move on to the next one. I don't see any more questions in there. What percentage of employees are billable? Three people say 50% or less of their employees are billable of employees time. 61% - 70%, 76% - 80% and then a few in-between. We'll expand those.

I'll be curious for those of you who are saying that 50% or less of their employees times are billable. Are they a one person company and they are talking about themselves? I think it's acceptable, if it's just you. But you've got to get it higher than that. There is no beating around the bush there. If you're in this area and you want to see yourself being successful, if you're a freelancer you have to be more than 50%. And also your employees have to be more than that as well.

My wife comes from the CPA firm background and she explained this to me in a way that I thought was really interesting. And that is, your junior people should be at 90% - 95% billable. They call them their staff accountants or something like that. And then as you get to be more like a manager, which is you get staff 1, staff 2 and then manager 1, manager 2, senior manager whatever it's called. They go down to 80% billable, and then partners, higher level people, they end up being even less billable. And so the more senior somebody is the more responsibility they have. Even if they are ownership, the less of their time is billable the more they have to deal with administrative items or admin is what they call it.

But I think that if you were at a CPA firm and you had a 50% or less billable time, they wouldn't let you do that very long. You'll have a stern talking to. Because at that level of billable it means that you are not carrying your weight in the eyes of that firm. Now I'm not saying that this is bad in general. I'm just sharing an anecdote, because I think that it helps to see how other industries do this.

Because marketing or digital analytics whatever you want to call, what we're doing here is relatively new. These other companies have been around for a long time. And they have really thought about these problems a lot. And so learning from established industries, established companies that have been around for hundreds of years, it's really beneficial. Just wanted to share that little insight there.

I see Stephen is anxiously waiting his Christmas--I'm not going to click on that gif but I'm guessing it's Clark Griswold from Christmas Vacation.

Do you have an employee skill development budget? Few people do. I would recommend this. I think it's really important to improve employee skills and to give them education. Especially since a lot of us think that we should be teaching everybody everything. Like we should be teaching our employees, our team members everything individually. And the reality is that, that's not very cost effective.

If you're billing out your time at $250 an hour. Should you be teaching all of your employees, all of your skills or should you be billing it $250 an hour then buying an online course for $300 and then giving them 40 hours of learning. Which one do you think is the better investment? Definitely giving them some kind of budget for education, not to say that you shouldn't give them one on one training, but it has to be the combination of two. Because doing all of your time to training somebody is not the best use of anybody's time.

How often are employees given raises? Most of you are saying on your anniversary date. Some give only cost of living, other compensations some say never give raises, some say whenever they ask. Anniversary date is definitely the way that I would recommend people going into raises. Or if you are just a one person shop, maybe you do it on your calendar. Like when the new calendar hits.

And then a few of you said that you will be willing to join so if we get to that point we can have some of you share. So that's the standard answers. I'm going to go over to the free form answers, and I'll be monitoring your responses as well.

Okay, so this one is saying, what roles are you looking to hire for your agency? Looks like some writers, developers, word press, web design, graphic design, admin assistant. It's interesting to see when a company hires administrative assistants. At what point do you do that? You could make an argument that should be the first person you hire to free yourself up for a time. Or you can make the argument that it's not valuable to do that right away. Or that it's obsolete in modern work place.

The answer as always is if an administrative assistant can consistently make you more billable, so instead of being less than 50%, you can be at 90% and that administrative assistant salary plus benefits plus they cost to you is less than the amount of extra money you are going to make, this sounds so obvious but people don't do this calculation ever, then that administrative assistant is worthwhile for you.

I think a lot of agency owners and a lot of you since you're just one employee or just you, what they end up doing is, they think they need administrative assistant and that it's money well spent, yet they can't account that money in extra productivity. Happens all the time. People say that they need an admin or a VA or virtual assistant or they need an offshore resource. Somebody to make themselves more efficient so they can go do more stuff, and yet once they get that admin, they do zero extra work as a result of it.

Or they are 0% more productive. I've seen this happen so many times to so many people, who act like they are big shot because they have this administrative assistant. And then what ends up happening is they pay that person, even if it's not that much. Even if it's small hourly rate, it adds up and then they don't do any extra work and actually they do less work because they are so busy trying to train this person to over-engineering a problem. They are trying to train somebody to fix all their problems or doing things and it ends up meaning that they are actually not as productive and they are paying somebody to be less productive.

And that's not a great investment for any company. But it's a really bad investment if you're a small business, just one person. It can impact everything you do right, it ends up the difference between profits or paying yourself and not. Now I don't even know whose answer this is so I'm not saying that to anybody who wrote this down is doing the wrong thing. I'm just sharing a perspective that I think isn't what I read in blogs or on entrepreneurship advice.

Entrepreneurship circles that I play in or listen to, people are like, oh you need a VA. If you don't have a VA then you can't get anything done. It's like the four hour work week mentality. You can't work four hours a week unless you have a VA to do something. I don't know, you need to crunch the numbers and it needs to make you multiple times more productive to have that. Otherwise, it is not going to work out.

So everything is a number's decision. Everything is a numbers game. Nothing is really like, you have to do this. Just look at it and say does this make sense. Does this make sense for me.

This one says do they want to go with a contractor moving forward or do they want to hire a junior SEO or PPC person. My question to you is, if you hire a junior person, what would they do for you that a contractor wouldn't. Do you have work to support them? Are you looking to invest in this area? Do you have a position in this place? Do you want to train them yourself? Do you think there are other ways to train them? Those are two different things, right, doing a contractor versus hiring a junior person.

Totally different set of considerations. So what's the outcome you are going to get for this junior person? Are you looking for really an inexpensive labor? And it's just a cost consideration. Do you need the expertise that a contractor can do? Do you just not like doing it yourself? So, those are some questions I have there.

Summer intern, content writer, SEO/PPC coordinator, project manager. That's quite a few positions in this one. This seems like these are positions that this agency needs. So I assume those are needs based hires.

Next one PPC optimizer. Sounds like this person is probably doing primarily PPC all day every day. And they just want some extra work, some extra help. If anybody wrote these answers and they want to clarify what I'm saying. Please do put it in the chat box so we can talk about it.

None, not planning on hiring since he is new. Since they are new seeing 2018.

Project manager, digital marketer, part time animator. Must be Robert that answered that one.

Project manager, account manager, sales people. I'll be curious about number 10. How much production you have right now in place? Because, if you are a one person company, I don't know if those will be the hires that I'd make right away. If you're a bigger company, these are definitely the hires, you'll make. So, I'd be curious about the size of this agency. Unfortunately, I don't have that side by side right now.

Project manager, designer, developer, copy/content writer, additional editors, producers and directors. And that one is Robert.

AdWords specialist, account managers, okay. This looks like those are all hires, I don't have any other comments on those ones.

Describe your hiring process. Phone interviews, review results. Phone interviews bring in person, meet with the team, assess technical skills, post mortem, bringing the person again if there is a serious disagreement on the person, or it's still open questions, make an offer or decide to pass. That seems very similar to what we've talked about. The thing that's nice here is the post mortem on the interview. I don't know if we explicitly called that out in the notes of our lesson. But yeah, looking through the interview and making sure the person makes sense, is good.

Bringing the person again if there is a disagreement. That's something that our agency would do that a lot. And that was really annoying to me that we would do it. We would bring in people multiple times for interviews. To ask questions or to get a different person as people were out of town. I think you want to minimize that as much as you can. There is a lot of stress to go in to an interview and to go into companies and everything. So that's tough.

Job description, list job, qualify resumes, pre-qualification, phone interview, paid test.

This one has a panel interview on that one. We never did panel interview. So I assume that a panel interview means that--I guess we did a few panel interviews. It's multiple people at a time. So like three people talking to somebody and saying hey, tell me about yourself or basically a team interviews somebody. I found that was really off-putting to candidates, so I stopped recommending that. I guess candidates felt like they were in a hot seat. I don't know, yes you want to see if somebody can perform under pressure. A lot of us that we were doing wasn't that high pressure work.

Cultural fit is important, mind set over skill set. I like that. Definitely you want to find if somebody is willing to put in the hard work. Especially if you're looking for somebody junior. If you were looking for somebody who is more focused, somebody who you want to grow their skills.

Rosemary, okay so you see, yeah you need an animator. I think that’s obviously these are specific areas where help is needed. And so I don't have any more comments on the roles themselves.

Do you have any tips that might be useful for other agency owners? Ask others recommendations on good people. Yeah definitely. Top grading is mentioned up here. And I see top grading mentioned down here as well. How to find A players for your team? Interesting. I'll take a look at that and if we can put that in our lesson notes as well.

This one on technical interview. We ask interviewee to map out the project on a white board, they've worked on. Ask them to describe it as if they were taking it over. What were the decision points, what would you have--so this is more of a behavioral interview. Sort of like what Google does. What are the phases. I mean, I think this is a good way to look at somebody in an interview, how would they solve a problem. It's sort of what Google does, what web developers are asked to do in a lot of interviews.

Curiosity. This is a good one. People who are curious generally are super successful. People who are looking to learn and really have that curiosity. That comes across every single time I do my podcast interviews of successful people. Curiosity is one of the number one quality that people have that are successful. Somebody is saying that they can do, but then they can’t -- I hear you.

The biggest thing that I found is that people can interview well, they can tailor their resume, there is an entire website that's dedicated to making your resume match a job description. There is a service that I share in my digital marketing class. I can't remember from the top of my head. But basically it takes your Linkedin and it compares it to a job description and gives you a grade. People can just make their resume look exactly like a job description.

How do you trust? How do you people on there? One is I don't over emphasize oral interview skills at all. Just in person like what word people say. I give it almost no precedent because it's easy to fake that. It's easy to sound alright. So I don't put a lot of value on that. Especially even if like appearance and stuff like that. That's why I like to really understand what they did. What's the project that you worked on that was successful and why. I do like to look at the resume' and line items. How do they describe what they did.

There are all different kind of things you can do to understand if they are the real deal or not. It's easy for them to say it but it's hard to demonstrate it. It's hard to continue to demonstrate it and fake it, when you start to asking questions about what they actually did. So that's easy to say, oh I really like this stuff, I'm really interested in these things, but how do they demonstrate what they are saying. I like actions more than words. So I ask questions around actions.

I've mentioned in one of the lessons that I gave a test. A test was awesome. I got so much value out of giving a test. Because if you're a faker, you're faking it. You really have to learn how these things are done in order to pass the test or get a good response or if you are just looking for an easy answer, you're not going to give in-depth answers and I can tell that this person does not care about the job. So that was a really good one for me.

But like I said, generally people who say things and who use buzz words, who seem like they're really too polished, I don't really trust them, until I can see the results they gave. And that's why I have my guard up. But you know what, it doesn't always work out. There are still times where you come across people and they say they are eager to do things or they want to learn and then they don't. So it doesn't work out. So you get to be one of the adages in management is what? Hire fast and fire faster. Maybe that's a start up mantra or something. I don't know if I agree with that. But you have to be ready to make that decision. You need to know if these people are working out or not.

This one says passion goes a long way. He has interviewed the cocky ones, the connections, the referrals. “I have got a great resume”, highly educated but generally speaking passion. It doesn't come out in the interview. Chances are they are not going to move forward. There is so much more criteria that plays into the role. Show me some passion. I like that. Hire slow and fire fast, Ryan there you go, that's the mantra.

Back to this one about passion. I don't know if you guys do this but in my head I am picturing a person who I hired, who made it seem like they are passionate, and they just didn't give me anything. They were a bad hire. Somebody that I regret, that I didn't do a better job of vetting this person. It's actually the reason he is the person why I have the test. Because he seemed passionate, he was just like, I'm so eager to learn I want to do all these and then he just didn't know how to learn. He didn't know how to do any of the work and he was very lazy. And it’s almost like in school. Did you ever have somebody who had you do their homework for them? Or maybe I was just a nerd. But they would have you complete the assignment for them and they just get by. They’d always find somebody who is going to help out.

This is the type of person that I end up hiring. And I don't know why I didn't catch it. But he was just so passionate that it was like, oh yeah, he just needs the opportunity to learn and he wasn't getting as last job. Now this person has gone, he changes jobs every three to six months because he is basically either getting fired or let go, or he is just trying to stay ahead of the fact he is not going to be able to make to the next one. And so that was my one example of passion alone.

But then there are so many examples of people who are passionate who excel. I'm not trying to plug my podcast anymore than I already have, but people who are passionate are successful. Curious and passion are awesome. So for those of you who are looking to go from employee no. 1 to employee no. 5. Those are the types of people you want. Entrepreneurial, passionate, curious, people who want to take this thing to the next level.

And honestly if there is a ton of potential and they are just looking for a break, then it can work out financially too to have somebody who you're creating an opportunity for them and they are creating an opportunity for you.

Successful companies have a cult following. Hire based on culture is the last one here. I agree with that. I think it does work out but I don't know about you but I don't want to create my company to become a cult. So I know it's not necessarily what's being implied here. But I know for example has a high performance culture and you have to work all these hours. But also all their employees cry at their desk from what I hear. So it's like do you really want to be that? I have friends who worked at Apple and they just try to burn you out.

Yes, successful companies have a culture that's cult like. But it's also like full time burning you out. And so for me it's hard for me to agree that this is good for an agency. I think it's good for tech companies that want to change the world and high growth areas. But I think it's not how I would do an agency. But then again that's just one person's opinion.

Where do you go to find people? Friends, associates and third party websites. Agree with that. But Odesk and Fiverr as an example.

Referrals from employees, job postings from the site, job boards, online job boards, local networks.

Don't need talent yet but finds the university job boards are good.

Word of mouth, staffing firms, LinkedIn, associations.

LinkedIn, personal network, always keep an eye out for good talent.

Relationships, but will start doing more networking, need to like the person if I'm going to work with them.

Listen carefully to peers, employees, business associates, competitors especially in advertising because everybody talks.

Student organizations and universities filter the most active ones. So this one is basically saying, people who are fresh out of college don't have bad habits. I do agree with that to a certain extent.

It's hard for me to say there is one right or wrong way to do it. It's also hard to give a definitive answer because it's depending on the size of your company. If you are looking to go from a 100 employees to 110, you're going to employ different things than from one employee to second employee. That's the hard part, I mean since people who fills this out, the majority of you say that you're just one person, I'm just going to go with that realm and say from one to five are hard hires. Because they are pivotal and it really depends on what type of business you want to grow.

Do you have a partner, who is a partner in crime, who can help you and be complimentary to what you're doing. Or do you have just you. If it's just you, then are you looking for a partner? Like we just talked about in our lessons that started this week or if you're looking for just a junior person that you can sort of have be your under-study or that learns everything you know. Or are you that junior person. That's sort of the under-study right now.

You have different considerations for each one. But I would say that if you're a one employee company looking to make it to two. My biggest advice to you is to find somebody who you can mold into what you want them to be. And so find somebody who's super passionate and super curious who has potential but isn't quite there yet. Who you can teach how to do things, who can benefit from your knowledge and then help elevate them through the organization. So I guess the organization is just two people at that point so it's more elevating their career.

There were several people who did that for me when I was younger and passionate and it really helped me out a lot and it helped them out a lot too. So I think that there is a symbiotic relationship with finding a young talented person and helping them grow. So some of you might be the young talented person and some of you might be the one who is looking for somebody to grow. But that's basically creating an environment where they can get paid in experience and you can get a lot of benefits in their work and amount of effort they put forth.

What's not working? Craigslist doesn't work. I haven't used Craigslist in a long time so it doesn't seem like it will work well. So good to know that it's not working. Not sure, short term subs are challenging.

Used to get more referrals but that’s dropped off, like to explore it a bit further.

Only one method that has worked.

Unfortunately no experience.

They haven't found stellar examples and I'm assuming that's saying working with colleges, universities, associations.

Recruitment agencies, they don't get top grading when they send rubbish over to you.

Job ads.

Yeah so, I think it gives you a bunch of quantity without quality. Those don't usually work very well. The reason why is because it's so cheap to submit a resume. It's free for people to send them and so you really want to focus on quality. So good to see that these aren't working, and have some explanation as to why they are not working.

And that's it for the free form answers.

I know a lot of you don't have employees yet. And are looking to make the leap and maybe you're not looking to make the leap, but I'm going to assume that many of you are looking to make the leap. So I'm just going to leave the time open now to answer your questions that you have about that. And let me know what you think, what questions do you have about employees and hiring and all that fun stuff. Let's hear it.

Rosemary, all those since you're up on the screen right now, great insight on passion. Chooses a filter but adding it to the test would help weed out the politicians. Yeah I liked the thought of politicians. It seems like you might be coming across a lot of people who are not--when you use the word politicians it seems like might be--I am not sure what type of position you're hiring for, but yes somebody who seems like there charisma or like hey, everything sounds good. It seems like people that you're talking to for some reason are focused more on potential versus what they've done or it might be a sales role or a role that's very personality driven. And so that's a challenge because it's a personality driven in the interview and the role requires personality. It's easy to get tricked by that if they are really good at it.

And may be references would be a good example there. Like what references do they have? I don't know if somebody is that good then they should have good references. So maybe you decide that you're not going to hire based on how nice they are, or how cool they seem to you or how charismatic they are but based on who has talked them in the past. That seems like a good example where vetting will really take you a long way. If they sound really nice in person or on the phone or whatever, have a good personality, what about the results? How do you get the results? How do you understand them?

Nicole is asking would you get special treatment for super producers? So let's just define a super producer and then define special treatment first. Super producer I'm assuming is somebody who, what we might call a 10x or 2x employee. They do more work than two times or two employees could do, or 10 times or 10 employees could do, whatever it ends up being.

Do you give them special treatment? Yes and no. It's a really fine line you have to cross. So I consider myself to have been a super producer for my agency. And also I was a partner in the agency, am a partner in the agency. And it's tough to have super producers--you want to give into their demands, because they can produce. But it's also, you don't want to give them too much power, otherwise they become divas. That's just the reality of it. They become full of themselves. I don't really like what people become when you give them special treatment.

And so I would say that a good policy for the company is not to give somebody special treatment. At least not officially, at least not in a way that others can see. So if you give them special treatment and it's at the expense of others or it reduces morale. It's going to make your company worse off in the end. If that person leaves or that person is going to hold in over your head. And so I would not recommend that.

But I think that's different, special treatment in that sense of giving them different rules, different set of operating rules then you would give anybody else. That is a bad idea because it puts you in a vulnerable position. But if you give special treatment as in bonuses and super producers means they are producing revenue for you, then yeah why wouldn't you. If they are making you money, then they can make money. But there is a challenge there too. If you give somebody more money, then are they going to ask for more? Are they going to quit, what's going to happen then?

So, then follow up is faster promotion, would that be good special? When you promote somebody, it depends on your org chart. Like how does your org chart structured? Do you have room on the org chart? Are you top heavy? Are you bottom heavy? That's part of it. You also have to know if you're going to give people raises or not and how much budget you have for raises. So can you even afford to do it in the numbers? And then also, are they asking for it? And so from an employer perspective, you know a few of those things. You know whether your org chart can handle it or it makes sense in that area. You know if they are asking for it.

Generally speaking people get promoted faster if they are more vocal. If they perform well, that's not the same thing as getting promoted. If I have a great performer and they don't ask for promotion, yes eventually they'll get promoted but not nearly as fast as if they ask you or if they are persistent about it.

But you have to decide what are the impacts, giving them a promotion, giving them a responsibility. Is that going to impact the organization in a positive way or a negative way. Well, if you give them more responsibility and they are doing more for you and they are highly functioning person, then it seems like that's a great thing to do, right. That's a good idea to do that because you're basically getting more of a good thing.

It can be the opposite effect too. Again, if somebody is immature or if they're manipulative, they can put all that strong effort they have towards working, they could put all that concentrated effort into negative then, right? If they are high functioning person and you get them thinking in a different way or negatively then it's going to become negative. So you just have to be careful about what type of treatment you want to give somebody.

Fred is saying, for what’s worth we always do team interviews after an initial phone screening. Can be stressful for the interviewee but we all get to see the person in action and make our own decision. I had almost A/B split test team interviews to see if it's better or worse. Again, I have done them both ways. I have not applied them consistently. So I can't really say which one led the better candidate or not and also candidate interviews are uncomfortable either way. So it's not like, you shouldn’t do them, just in the interest of the candidate.

But I think it's had to do team interviews consistently because it's hard to assemble the team consistently. And if you are having four or five people, how do you ensure the same four or five people are there. If somebody goes on vacation, can you do an objective interview with that person still? Because it's not the same. What’s your timeline of hiring?

All these things that we talked about hiring, it just leads to taking a longer time to hire somebody. It can take eight months from when you realize you need something or when you sell a project to get a new employee in place. It could take forever. My average is half a year. And that's why, because of little stuff like you add more layers to try to get the best candidate and then you end up creating more complexity and it just gets clustered trying to figure it all out.

Rosemary says people say the right thing. Honestly I don't put a lot of value on what people say. Just words alone in an interview, I have my guard up, because I've been burned too many times. So try not to be easy like that in an interview itself.

Challenge them. I was going to say make them sell you on it, but I think it sounds like they are already selling. Looking at it from the other perspective and that is to figure out more about them. Get some more background and everything. But if it's a role that requires a personality, then it's alright to have personality.

Did you ever see somebody's resume' and it looks like they spent 40 hours working on their resume. Does that make you feel better about the person or worse? Personally I feel much worse about that person. Because I am like, why would they put so much time into a resume first of all. And then are they just going to use that to get a new job all the time? Like why would somebody put that much effort into a resume'? Usually I think they are trying to hide something. Like I said, I have my guard up.

So I think that's a biggest thing you need Rosemary is to put your guard up. And just to really make sure that you've learned all the reasons why it didn't work out in the past. Or you have an idea of why it didn't work out in the past and then keep on adjusting your process in order to make sure it doesn't happen again. Just keep on making it better. And also incorporating the things we're learning here as much as you can and asking other classmates and everything.

Stephen jumped off, Alvaro dropped off. So that's where we are at now with the questions. Does anybody have more questions that I can answer?

Okay, going once, going twice and we will see you next week with our coaching call number 6. Same time, same channel. And I'll talk to you then.