Search Interviews:

Justin Krane  10:41 

I think for business owners when they’re approaching seven figures, it’s dealing with people. The compensation, they haven’t quite figured out what to pay people. The cash flow off of payroll, meaning you’re paying people, is there an ROI on it? Is it freeing up your time? What should their comp structure be? And a lot of times, people work for business owners and entrepreneurs thinking they’re going to make gobs of money right away. And they don’t even have a clear growth pattern on what they want. So what I think is best is when you’re hiring people, not only to look at the money aspect of it, but to get clear on the growth path that an employee wants to take. Notice I say employee, because actually a lot of mistakes I see. I’m just going to call it this way. I guarantee you that 42 gazillion people are going to disagree with me. But everyone’s hiring VAs, and everyone’s doing VAs who live in Guam, Philippines, Peru, and South Indonesia. But there’s nothing wrong with hiring employees. Literally, they work for you all the time. And they’re part of the team. And they can even be remote. But I think employees are important because they’re dedicated people that work for you, and that are part of your deal. So when you’re hiring an employee, of course, there’s an employment package with benefits and 401k and comp and bonus and all that. But what about the growth Avenue and the growth path for that person, if they don’t feel like they’re going to achieve growth, they’re gonna bail at some point in time. And then the mistake that you make is you invested time and energy and money in this person. And then they’re Gonzo, and now it’s you wearing 75 hats instead of 74 hats. I wear about 17 hats. I’m down from 20.

Jeremy Weisz  12:31 

Can you talk about that growth plan? Maybe an example of because it’s great advice. And I know, a lot of people think about this will be an example of someone who in how they structured a growth plan.

Justin Krane  12:50 

When I look at the Dan Sullivan question, the R factor question, if you look at one year, what has to have happened in your life personally and professionally, to make you feel like you achieve progress? And some of those answers could be money, but then from there, you can go way more into life. And you can just tell me more expand blah, blah, blah, and then you’re gonna get the real answers. And then if you can incorporate some of the, I don’t know, the goals or the objectives that that person can do into their life working for you, it just aligns them.

Jeremy Weisz  13:31 

So their objectives in their life will be an example like they want to go on a trip, or what are we talking?

Justin Krane  13:39 

Okay, so I just hired someone. And one of the examples was, she said was that she didn’t feel like she was part of the team. And then she didn’t get to interact with the clients, customers and patients that she was working with. So now on the calls that I have, she’s on literally the beginning. Like I’m not even putting her in the shallow end she did like a cannonball into the deep end of the pool. She’s on every call talking with the clients. And I’m working with her and watching over her but she’s immediately feels like she’s connected to the other clients, and that she’s part of the team and that she’s communicating with them.

Jeremy Weisz  14:19 

Yeah, so the old the past position, finding out what the person wanted they didn’t have in this case, it was interaction with clients and working to fulfill some of those objectives which has nothing to do with financial.

Justin Krane  14:35 

Nothing. And then at the end of like, three weeks, I asked her like, I gave her this worksheet to fill out about her progress. And I gave it to her and like you talk about a deer in the headlights look, she had no idea what this was about. And asked her fill it out. She came back with like one box out of 30 filled out. I’m like no, you got to really fill it out. I have a side question for the peanut gallery here. Everyone listening there’s a Rise25 Rise Up together like full upstanding poster of Rise25. And if you’re not working with them, you really need to talk to them because they’re amazing. I am convinced that John Corcoran is hiding behind the Rise25 poster. Is he there? Yeah, he’s right there. Oh, there he is. He’s probably what his 17 kids on some backpacking trip in southern Utah.

Jeremy Weisz  15:27 

For probably does feel like 17

Justin Krane  15:29 

Yes, yes, yes. But I’m curious, like what you see, like when you work with your employees or VAs, what do you do to try to get them to feel like they’re growing?

Jeremy Weisz  15:41 

Yeah. Well, that’s, I’m asking you, because I want to learn. But, I mean, one of our core values is always learning, right. And so we do have things that we do with the team. Like, I have a book club, where we are all going over and up-leveling skills. And you mentioned, and just feeling like a team, because all of us are remote, doing daily stand-ups so that we aren’t feeling like we’re working in isolation. And so feeling like you’re part of the team, I know your staff is in your office. So it’s a little bit different. But I know a lot of people running virtual teams, so we do daily stand-ups with different departments, so that they can help each other. Right. And just as if they’re in the office together, having a meeting or walking down the hall, but you feel like you have more of a cohesive team that you’re working together because you have these daily stand-ups. And so, I mean, those are a few, but it’s a constant, it’s a work in progress, right? We don’t have it all figured out. It’s constantly figuring out how we can help, how we can serve the people that we work with, to up-level, their skills to be challenged to feel like they’re contributing to a bigger mission than just that piece of work. And so some of us just showing, here’s the whole thing that we’re creating, I know like your yourselves with this piece, but showing everything so they people can see the big picture and the vision of what we’re doing, right. Because for us, it’s not about just podcasting. It’s creating amazing relationships, right, and seeing that, that this piece that you do helps create an amazing relationship. So that’s some of the stuff but it’s always a work in progress. I mean, I asked you that question, I asked questions that I’m curious about that I want to know, because we need to get better at those things. So that’s why I asked you. And the other thing is, I liked what you said about looking at what people did previously, and maybe what didn’t fulfill them and what they were looking for it was a void, because that is helpful and it can run the gamut of things that they wanted, right? Sure. Maybe you should have your own podcast because you ask good questions. And you do. But I looked at it the other day, you need to, maybe this episode will go on that podcast, actually, you got this.

Justin Krane  18:34 

I got to get going on it more. And at least I have one a lot of people need one. So I actually have five in the hopper, but we got to get them up. And they should be up by Friday. So but Good Friday, somewhere.

Jeremy Weisz  18:46 

Exactly. You rattle off a bunch of things, I want to unpack it because it’s, you think about this thing, these financial pieces on a different level, at least than me. And you say cash flow thing of cash flow off of payroll? Right. Can you unpack that for a second? What you’re looking at because this, I was talking to someone the other day, and they’re like, well, I know I need to hire but can I afford to hire to all that talk in their brain? Right? So someone’s like, listen, we need to hire but can I afford this person or what type of person can I afford?

Justin Krane  19:27 

Yeah, yeah. Okay, so this is like, I’m gonna go paint by numbers. Like literally, because I like I know when I don’t know something. I asked someone like, okay, tell me like, what’s step one? And like, what’s step two? Like, I’m so concrete about this. So step one is you need someone to tell you how much cash your business creates each month. So that’s the statement of cash flows. That’s the nerdy way of saying it but like every month, how much cash does your business generate? So what is that mean? Like? How do you calculate that, so I’m gonna go very, very simple. You just take the beginning balance of your business bank account for the month, and then you do the ending balance. And then that difference is the cash that your business generated. So there’s a lot of things that can affect that. Profits, you can take money out of your business, you can take loans and money can go into the business, you can pay back a loan and money leaves, the others, all of that, but somehow you need a baseline of like how much cash each month your business generates. And then from there, you can determine whether you can afford to hire someone. Step two is how much does that person cost? Like, let’s say your business generates 10 grand, like, that’s the net change, January 1, you’ve got 40, January 31, you’ve got 50. So your business generates an extra 10,000 bucks right? Now, if you’re gonna hire someone that costs 10,000, you can afford it is this is hypothetical, you can afford it. As long as there’s nothing else in there, that isn’t going to affect the next month. So it’s how much cash does your business generate? And everyone’s about profits? What’s your p&l and all that, but that’s all great, but that’s like accounting mumbo jumbo stuff. Like I’m talking cash. I think you have a couple of bills lying behind that big poster in the corner that you’ve got lots of cash stacked up?

Jeremy Weisz  21:29 

I don’t think so. So let’s say you have 10,000, right? Yep. And like, Justin, I need to hire this account manager. Okay. Yeah, I’m very conservative. Yep. How would you think about the dispite of what like the market rate is or whatever it is? Yeah. What would you think about the offer? And how much of that cash should you keep?

Justin Krane  22:05 

Yeah, so this gets into like an emergency account? Like, do you have an emergency account for your business? Let’s say? I mean, I like to have three months. That’s ideal. You know, one or two, if your business is very, very steady. Is the account manager responsible for sales at all handling anything about the growth of the business? Or are they just like an admin that’s just like dealing with like, paperwork and scheduling and forms and all that stuff?

Jeremy Weisz  22:33 

Yeah. So let’s say yeah, it’s half and half.

Justin Krane  22:36 

Yeah, so then maybe go with. Okay, so this is I’m literally just pulling this out of my telcos because it just depends. But I would say 50 to 70% would be fixed and 50 to 30, or 30 to 50, would be on the come tied to sales, not profits. But let’s say you could, if you got the 10 Grand, then you could pay them five to seven, and then give them two to five in a bonus tied to sales. And here’s another thing, I worked with lots of these, most of them are seven-figure business owners, they like even if you’re a six-figure business owner, they like you still think about this, and I see them getting these people getting in the weeds, I’m like, I’m like a detailed numbers person. And I hear my clients bring this up. And I’m like, this is way too overweight, it’s way too complex. It’s one of these, our average sales are $100,000. But if we bring in 120, I’m going to give them 40%. But if we bring them 160, I’m going to give them 70%. And then next thing they know, for every month, they’re tracking sales on some percentage. And they’re spending like two hours on this sales structure that is just Freakazoid. I’m just with one number, like if they do over 100, give him 30%, or whatever the number is, and I know it’s even parameter. Yeah, some director of finance from Harvard, Wharton, MBA, blah, blah, blah, is gonna give you all these nuances of increasing percentages, and CFO strategy and all this, I’m like, we got to keep it simple. We got to go with one number, and we’ll reassess in six months, you can do it, you can put, hey, we’re going to try this out for three or six months. Go from there.

Jeremy Weisz  24:15 

Do you get a lot of people asking you from a sales perspective, how to create bonus structures.

Justin Krane  24:25 

Sometimes, and we just kind of worked through one. But a lot of times people forget that being that I’m a financial adviser, people forget that. If they’re hiring employees, you’ve got workers comp insurance that goes up. If they’re on some sort of health plan, you got to pay for that. But the biggie is if you have like a defined benefit plan or a 401k, you’ve got to put in money for those employees. And if you’re doing a profit sharing, they might be getting a lot more money than or they might be entitled to it than you think so if you’re like, all in, you’re like, Okay, I’m going to bring in this person, all in, I want to, I want it to cost 80 grand, and you’re thinking, Alright, I’m going to pay them 65 And a salary, the payroll taxes could be 10 to 15, then all of a sudden, you get hit with the profit sharing number of like, 25. And you’re like, oh, my God, I just gave them a bonus of 20. That was the money that I was going to give them as the bonus. And now I give him another 20 on some profit sharing, like, what’s that? What’s up with that? What’s up with that?

Jeremy Weisz  25:30 

Sometimes you come in and you have done, I don’t know if you currently do fractional CFO work, right? Yes. And you have to come in and diagnose what’s going on. And there was one I don’t know, probably more than one. But one in particular, I’m thinking of which was a marketing agency. So I love to hear the hands you this chest. And they’re like, Justin, what, what’s going on here? What do we do? What did you do in that situation? What do you what did you find? What do you look at?

Justin Krane  26:04 

Yeah, let me just give you and everyone a little context on this fractional CFO thing. I’m a CFP. Like, I didn’t go to business school. I’m not some CFO of some like Uber, tech startup, blah, blah, blah. Like none of that. I’m a CFP. And I started asking my clients, what is your business need to do in sales and profits so that you can save $50,000 for retirement? Or, like, how much do you have to do in sales if you want to pay down your mortgage in eight years? Like personal finance stuff? And they’re like, I don’t know. So I’m like, Well, okay, well, let’s look at the business money, like, what’s the deal? Like what are your sales? What are your cash-generating, and all of that. So that’s how I got into the CFO thing. I read a bunch of books. I taught it to myself, and I still learn from people that are way better and smarter than me, but I know enough to create some damage and some drama. And that’s the preface to this question. So this question is an agency question where this person does marketing, and they have staff, and the staff has to fulfill these projects that the owner does, the owner gets a job, he has to deliver it. And he hire staff to do it. Designers, editors, you know, marketing people and all of that. So there’s always this correlation or connection between labor and your sales. And for that kind of business owners mind when you’re running an agency or a consulting practice, or whatever, it’s always like, well, what are my sales? And do what do I have too many people for the job? Do I have too little people for the job? So you have to get some metric on that. So there’s metrics for that. And those are called labor efficiency ratios, now, by the way, for everyone listening, did I create that? No. I literally Googled it. It’s just your labor, against your gross profit. And I know, that’s a little technical for some people, but I literally Googled it. And I taught it to myself, when I was in fourth grade. I mean, it’s just like that. So the big question for this one client is you sound smart when you say that, yeah, I’m currently in seventh grade. And I just had my Bar Mitzvah, this morning

Jeremy Weisz  27:29 

Labor efficiency ratios.

Justin Krane  28:27 

The bottom line is, is like, if you’re an entrepreneur, and you’ve got this job, what’s the right amount of staff? And are you overstaffed or understaffed? And then you of course, when you have staff to fix costs, it’s not variable, it’s you got to pay it every month? So that’s a big question that I think a lot of business owners need to think through is should they work lean? Do they got to hire more for the next job? How do they conserve cash? By the way, I don’t have an answer for that. Like, it’s not like black and white. But it is very important to compare, in this example, the staff and the cost of that labor, against the projects against the cash that you have. Here’s one more if you’re a marketing agency, and you only get two jobs a year, and you’re working with, let’s say, only Google or Microsoft, you got to be really dialed in, because that’s two clients. But if you’re an agency and you deal with 4000 clients, you can pivot and kind of move around. But if it’s only two like you got to be real dialed in.

Jeremy Weisz  29:31 

So when you say dialed in, what should people be looking at?

Justin Krane  29:35 

You cannot get overextended. You got to look at what your average labor is. And you got to look back like a year two and three years be like, All right, my business did 1 million in sales and I spent 200 grand on labor. So 20% I’m making it up. And now you think all right, if you bring in Google and Microsoft and you do 2 million, well then does your labor need to be 20% of that 400 I was and then literally, you just pull out an org chart. And you’re like, I got three people here, I got two people there, you write their names and their salary. And then you’ll know if you can pull it off. And then if you don’t bring in your number two and your business and be like, hey, this is kind of what I’m thinking, you think we can pull this off with these 20 people? And go from there? It’s more iterating, then like, no one has the answer. You got to just iterate. It’s okay to guess. But just be conservative with your guesses. And then you can add on over time.

Jeremy Weisz  30:32 

So what else are you looking at when you are digging under the hood with financials? Like in this case, you were mentioning a few scenarios with labor efficiency ratios? And what else are you looking at, to see where maybe there’s glaring issues on the horizon?

Justin Krane  30:53 

Personal finance major. So in this situation, I’m going very, very high level, this guy owned a house, and he wanted to move. And we were trying to figure out whether he can afford to keep his house and buy another house, keep his house and buy another house. So if he kept his house, he would rent it out. And he would play have a rent or pay the mortgage and pay it down. And that would be part of his retirement plan, right? And then if he buys another house, he’s got to come up with the cash for the down payment. So now the question is, can he afford to take the money out of the business for the down payment for that second house? And then it’s a question of, for the next six months, how aggressive was he going to be with respect to hiring, and really putting his foot on the accelerator and trying to like, be huge, or, in this case, playing a little bit more safe, which I advised him so that he could pull some of this money out and buy the house? It was a stretch. But in hindsight, he locked in great mortgage rates on both properties.

Jeremy Weisz  32:06 

So in that situation, he kind of had to make a decision. Do I put the accelerator on the business and put the money in the business? Or is this personal piece, important enough for me to be conservative in the business for this amount of time? Invest in something that I have a goal with?

Justin Krane  32:28 

Yeah, yeah. And the other thing is, like, I’m kind of like, I mean, you talk to 20 people on the street, you probably get 10 people one way 10 people the other way, I believe that the business has to serve the person’s life, it should not be that the entrepreneur starts the business, his wife, I believe the business has to fund the personal goals of people. So I was more interested on what’s his personal end game than the business end game? Because, like, what if he can’t sell his business? What if it goes down whatever, it’s like, I believe that the business got a service personal. So if that’s the case, I was like, okay, if you can pull this off, I think it’s a smart move, keep the house buy another one, blah, blah, blah, blah, it was hard, but it wasn’t a straight line. And there’s always risks with that, again, everyone listening, I’m not saying you should do this. This is general advice. It’s hypothetical in nature. For you, and you need to consult your own advisor, but these are the things you need to think about like, okay, my business is going to fund my personal life. How am I going to set it up that way?

Jeremy Weisz  33:35 

When you’re talking to business owners, again, you’re explaining a lot of stuff. What do you wish that people knew more about? Because you’re explaining a lot of this stuff.

Justin Krane  33:49 

I think their relationship to money. I think, like, what did you learn from your mom about money? What did you learn from your dad about money? How is your spouse or significant other thinking about money? You guys get in fights about money? What are your own opinions about money? I think there’s a lot of woo-woo people that talk about money mindset, and all of that. And I think it’s really important. And there’s a lot of CFPs and financial advisors that don’t even want to touch the psychology of money. And because they are not trained, and they’re just not in that. I’m in the middle. Like, I definitely talk about it. But I think that I’m not the expert. Sometimes we’ll bring someone in. But I do think that people need to be more aware of their money. It’s called money script, right? It’s like the stories that we have about money, stuff like that.

Jeremy Weisz  34:45 

And then, on that topic of dealing with spouse and money, yeah, how do you help people or not maybe you but how do people navigate that?

Justin Krane  34:55 

Yeah, I think both spouses want to be understood by one another and need to have the perspective as to why their spouse is doing things the way that they are, and why they’re making decisions that way. And I think I’m going to talk to myself here, I’m literally I’m talking to myself. Humility is so big in this, like, I can’t put myself above my wife. Not that I do. But I’m in the money game the whole day, like, all I do is talk to people about money and advise on money. It’s all I do. So when I do my own money stuff, it’s like, I need to be very chill, and very humble. And just, like, ask myself, what am I trying to accomplish? And the same thing with clients, they need to feel like it’s safe, to get a little bit more vulnerable and be okay with where they come from, with respect to money. What we mean example, that the vulnerability, yeah, so okay, so for entrepreneurs, let’s say one spouse is running the business is very, very in touch with the money and kind of knows and is in charge of that. The other spouse doesn’t know anything about the other spouses business. They don’t know the bank account numbers, they don’t know how much the business makes. They don’t even know how much money the business has. There’s just money that goes into the joint account and the spouse, it could be husband or wife. And they’re just they know, like, okay, well, he or she does that, and there’s just money that comes in. And then they feel a little bit in the dark. And then when they ask questions about what’s going on with the business, that spouse that’s running the business, sometimes it’s like, no, this is my baby, I really don’t want to go through it with you. And then that other spouse feels shut out. And then when I come in, I’m just looking for like two or three things to tell that spouse, the non-knowing spouse about what’s going on, it could be literally, the business does $70,000 a month in sales, and it generates about $10,000 a month of cash that you guys can do whatever you want with and every three months you got to set aside 20 grand for taxes, and we’re doing that with that $10,000 A month of extra cash. What do you think we should do with it? I’m getting curious. I’m asking I’m including them making them feel like they have a voice and it’s not like I think I know what they should do with it. It’s more like okay, so how can we collectively make a decision and then that just this little trigger. It’s like that first sip of wine that you have it’s just that little first sip of coffee and it just brings the edge down a little bit. And now we’re in the game of communication. Men are from Mars women are from Venus.

Jeremy Weisz  35:06 

Justin I know you have to run but I think you mister calling is a therapist. But I want to be the first one to thank you. I want to point people they can check out more learn more at or And thanks for doing this.

Justin Krane  38:23 

Thank you so much. Great to be here.