Michael King: Hey everybody, welcome back to In the Trenches with Michael King where we talk with business owners, leaders, and executives about the lessons they've learned while fighting In the Trenches of the business battlefield. I am Michael King.
[00:00:24] Have you ever sat back and thought to yourself, I wonder how much money my business is going to make in revenue next month? And, you came to the realization that you could either be making maybe tens of thousands of dollars next month or $10 million next month, and it's because your business model is primarily either hours-based where you're charging for your time or project based, where you go out and bid on a project.
[00:00:51] You give them a quote and they say, yep, you can go do that. I think the reason that hourly and project work can be so doom or gloom is because once that job is over, you've got to go out and find another one. And so it can be really hard to predict what revenue's going to be like from month to month, because you never really know exactly what you're going to find next month.
[00:01:14] That can create a lot of stress as a business owner, because you have no idea what to expect. That uncertainty can slow you down from hiring more employees and doing the other things that you need to do to grow your team. So what a lot of people have done is, myself included, is made this journey to recurring revenues so that things are more predictable and more sustainable.
[00:01:36] They don't require you to go out and get new business month in and month out. Today I'm going to talk with my friend Eric Olson. Eric is the CEO of Array Digital, and just like me and probably a lot of you, he went through that learning process as well. There's a maturity that goes from charging clients for hourly work, then project and then perhaps ultimately recurring revenue.
[00:02:00] And he says how he made that transition from being scared of having $0 million next month to being able to forecast within a few thousand dollars. How much money he's going to have because he moved to a recurring revenue model, and now Eric is doing multiple seven figures a year. We also get into an interesting conversation that's very timely for me around some of the struggles that can come along with hiring employee number one, and kind of transitioning your mindset from a solo-preneur or a small business owner where you're doing a lot of the things yourself to the point that you're able to delegate
[00:02:38] tasks so that you can focus on the activities that you know are the most important to your business and will ultimately help your business, thrive and scale and do great things. So, Eric has done this before. He's an expert at it now, and so he's going to share some of his stories about how he hired employee number one.
[00:02:58] And then finally we spend a bit of time talking about how Eric has found success in being just remarkably transparent about the health of his business, including the financials and the impact that that's had on his culture. So without further ado, here is my conversation with my friend Eric Olsen. Eric, thanks for joining us today.
[00:03:18] Erik Olson: I appreciate you having me.
[00:03:21] Michael King: Eric, we were talking just a few moments ago about some of the lessons that you've learned In the Trenches, and you had a couple that hit pretty close to home for me. So I'm excited to drill in as we were talking about how as businesses evolve, they typically start off with that solo-preneur charging an hourly rate to their clients, then they move eventually to project work.
[00:03:43] And then kind of that golden place to be is recurring revenue and that can be a tricky transformation to get through. We were also talking about how much of an adjustment it can be when we hire our first employee and thinking through the responsibility of paying for somebody else's salary and kind of crossing our fingers and hoping that we have money
[00:04:04] leftover to pay ourselves. Those are both huge topics that I think are really relevant to a lot of small businesses. So, I'm excited to drill into both of those, but before we get into the details of recurring revenue and hiring employees, take us back in time just a little bit and tell us how you got started and how you got to the point that you were ready for employee number one.
[00:04:24] Erik Olson: Sure. So we are in Chesapeake, Virginia, and we have 11 employees and 100% of focus on digital marketing. But in the very beginning, I wasn't focused on digital marketing at all. Matter of fact, I started off as a DOD Navy contractor. I did that in my own very small company for about four years, just me and one other guy, and we were billing by the hour and we did that just because that's the way the Navy worked, and we were making really good money.
[00:04:53] And so billing by the hour and billing up to 40 hours a week every single week. It turned into really good money. So it wasn't an issue at all. When I was doing DOD work to bill by the hours, matter of fact, it was fantastic cause I was making a ton of money at the time. Well, as work projects come and go and if you're not partnered up with the right person, then it can just kind of disappear, which is exactly what happened.
[00:05:19] About four years into running my own very small sub-contracting company, I decided to go find commercial work. I went out on the internet and I went to the site called Ilana, which has since been merged into another company, and it formed Upwork.
[00:05:37] Michael King: We know of Upwork over here.
[00:05:40] Erik Olson: yeah, yeah.
[00:05:40] I still hire some people here and there from Upwork. It's a really good platform and they've done really good things. There's certainly a lot of work to be gotten from there. I went there and very quickly I got two gigs. Actually much quicker than I anticipated.
[00:05:58] And so, this was towards the end of the Navy days. And so I was working nights and weekends and still working by the hour, and I was making really, really good money now. Well, once the Navy work went away and it was just me and a laptop and billing by the hour, yeah, things were still good.
[00:06:16] But I realized very quickly that if I didn't work eight and 10 hours a day. Then I wasn't going to make the kind of money that I wanted to make. So I was billing by the hour. And so I knew that I needed to get into a different kind of pricing model, but it's honestly a couple of years before I got to the point where I feel comfortable bidding on a project.
[00:06:38] So we started to work on projects and when I realized that it took a whole lot of work in order to figure out what the scope of work is, because you're bidding on this project price. So the price is fixed, which means that if you don't fix the skill, then you're going to be in big trouble.
[00:06:57] And I got into trouble a couple of times. Not big trouble. I don't think I ever actually lost a ton of money, but I probably didn't make the money that I was hoping to make on a couple of projects. And so for me, some of the big lessons learned were things like making sure that the scope was correct and if you work on projects, fixed price projects,
[00:07:17] then making sure that when there's a change, even if you're not intending to charge the client, you still need to document the change, and certainly if you're going to charge the client for the change, you have two documents, what you're doing and get approval beforehand. Now, all of a sudden that means that you have a layer of bureaucracy in your company.
[00:07:40] You have paperwork to do. And a lot of people like myself just don't want to do paperwork. When you start working on projects, unless you intend on just giving away this work for free, you have to do the paperwork and you have to submit change orders and you have to confirm when they get approved.
[00:08:00] Otherwise you're at risk. And I don't like working at risk. So we did that for several years, but I knew when I shifted from hourly to project work, I knew that wasn't the end goal. The end goal was this mysterious thing that entrepreneurs talked about called recurring revenue. And I knew that I wanted to get to the point where I had monthly recurring revenue, but I frankly had no idea how I was going to get there.
[00:08:23] So at the time, I was doing software development work, and when software development is project-based work, they hire you to build a website or a mobile app, you build it, you deliver it, and you're pretty much done. I did bolt-on a little bit of recurring work or things like hosting or certain number of them hours per month that I would be available to make whatever changes they wanted.
[00:08:48] It was really just kind of a repackaging of hourly rates into a monthly recurring fee, but I still was capping them out as far as number of hours and stuff like that. So it wasn't a real good solution, but it got me into the recurring revenue game. And once I started to get recurring revenue, I realized that was just the way that I wanted it to go.
[00:09:11] Michael King: Why is recurring revenue such an important change in your business model?
[00:09:17] Erik Olson: We had a meeting with our CPA at the time and we were going over the results of one of our quarters and he asked us, Hey, how does next quarter look for you guys? And my response was, I have no idea. We could double our revenue, or we can be out of business.
[00:09:33] It just depends on how many people contact us and how many projects we get done. And it was feast or famine. So you've probably heard of the expression, you eat what you kill, and I was having to go hunting all the time and I was having to chase after the dollars and I was having to get a project worth the project, get another project working and another project again.
[00:09:53] It was exhausting. What I really wanted was to get a client and keep that client forever because the first sale is the hardest, all right? Getting that client to buy that first time is a lot harder than getting them to buy the second and third and fourth time. So I just wanted to sell a client once instead of having to sell them.
[00:10:12] Every single little project.
[00:10:15] Michael King: I think that when people are in that hourly, and to some extent the project mode as well, you think, okay, I don't want to work more than 40, 50, 60 hours a week, and then you multiply that by your hourly rate, but then you've got to back off of that too and say. In order to have my sales funnel full,
[00:10:33] I can't work 60 hours a week, times a hundred dollars an hour. I have to leave time for me to go and do business development. I've got to leave that time to leave the cave, go out and kill it and bring it home. In addition to the hourly work and I think from my experience Eric, you reach a cap where you can only grow a business so big doing that and
[00:10:56] It's just not going to get any bigger because it does take time to go get those clients in. The more you charge per hour, the longer the sales cycle typically lasts because it's not just a transaction anymore. There's some relationship building that's involved. If you're charging somebody a hundred plus dollars an hour, they kind of want to know who the heck they're working with.
[00:11:15] And so there's probably a number of meetings or calls. So yeah, when you transition from that hourly model to recurring, just like you said, you go out and you hunt and then you reap the benefits of that for hopefully years. Years to come and the efficiencies just go through the roof.
[00:11:32] Erik Olson: Yeah, I would totally agree with that. It seems like most freelancers start at about $50 an hour because they do the math. They know that if there were 40 hours a week times 52 weeks, that's roughly 2000 hours in a year. So, 50 bucks an hour is a hundred grand and they're like, Oh, cool. I can make six figures.
[00:11:49] But the reality is you don't work 40 hours a week when you're freelancing because of the reason that you just cited. You'd have to go find the work. Also, one of the things that I realized is that I need at least
[00:12:00] half a day, sometimes a full day per week just to do the administrative tasking, sending out invoices, and going to the bank.
[00:12:08] whatever I needed to do, I just needed time to get all that done. So I either did it on the weekends or I would do it during the week, and then on the weekends I would have to actually do my billable work. Somehow you have to cram that in as well. There's a lot that has to be done to run a business.
[00:12:23] It's not just doing the work.
[00:12:25] Michael King: The bigger you get, the more of those things there are. The more vendors you have, the more you have to do. You're paying more invoices, the more clients you have, so you're invoicing them more. That means there's more bank reconciliations. It means that there's more massaging of relationships that has to occur.
[00:12:41] And so as you grow. You lose efficiencies, you know when you're a solopreneur and you grow, you lose those economies of scale in a lot of ways, and so your team has to kind of grow with you, which we'll touch on in a minute. I'm curious though, if you would dive in, tell us a little bit more about what you do and what the recurring revenue was.
[00:13:00] That you finally landed on that worked for your model.
[00:13:03] Erik Olson: Sure, so my company used to be a software company and then I ended up merging with a web design company. That happened three years ago, and at that point we took the opportunity to re-brand both of our companies and then merged the companies together into a Ray Digital.
[00:13:18] The idea was that there were a lot of clients that I had that needed web design work, and I didn't do it because I did different kinds of web development, and he had a lot of clients that were doing that needed a marketing website, but they also need things like mobile apps that I could do. And so we were passing work back and forth and we thought, hey, let's just join forces.
[00:13:39] And what we could also do when we joined forces is, we can hire a digital marketing person to continue to service those clients after we've delivered the product. So we knew that our clients needed things like search engine optimization. So we hired a person to do that in the holidays of 2017 I believe it was.
[00:14:00] A lot of work for us is project based work. It dried up, the clients just weren't responding and I knew going into the next year it was going to be trouble and I was looking at our finances and I was looking across all the different revenue streams and every single one of them at that moment in time, if nothing else changed, we were going to lose money on.
[00:14:23] Which meant that we had to go out and we had to go kill something and bring in the project work, and in order to at least break even compared to the previous year, except one category, which was digital marketing. So in this one category, we already had the contracts in place with the recurring revenue, and I already had a person and we only had one person at the time.
[00:14:44] So, I had his salary cupboard with those contracts. And then some. That's when, I realized that was the one area of our business that was doing really well, and at the time I had spent like the last year deep diving into that area of the business, Frankly, I didn't really understand it. Okay, that's all. It was just nonstop for a year learning about it.
[00:15:05] Or what I realized was that the small amount of money had a big profit margin, and if I could just grow the revenue in that area. Then we can get the recurring revenue that we wanted, and we could actually shift business models, which is what we ended up doing. So that was a very big risk that we were walking away from our biggest profit center, which was software development to go into digital marketing eventually exclusively.
[00:15:32] But that recurring revenue was there, and that was what I was after. And so we started to just focus on it and build it up and build it up and build it up. And it took about six months before we were ready to start cutting some of the software clients and we stopped going after them altogether. Our software developers went elsewhere.
[00:15:48] I know we let them know what was going on, but we took a big drastic shift in the business about six months after I came to that realization.
[00:15:55] Michael King: It is a risky decision. What gave you the confidence that, hey, this is risky, but I'm informed and we're going to do this. How did you think through it?
[00:16:03] Erik Olson: Okay, so interestingly, it would be riskier at the time for us to do nothing because we had four or five custom software developers on staff. They're not deep six figures plus per year. No, these are very skilled people. But we didn't have the work coming in for them. And so I knew that the most riskiest thing that I could do was to do nothing.
[00:16:29] And that was the reality that we were in. So I'm not just saying that because of sales need or whatever, but that was literally the case. I knew that I had to take action, and if I didn't, then we were going to ride this thing potentially down to zero. And I've written other ventures like side gigs, side projects and attempts to sass projects down to nothing and I wasn't going to do that this time.
[00:16:52] I knew that I had to make a big change, and I had to be really bold and I just had to completely believe in what I was doing now, luckily there were a lot of benefits to the place that we were going. One was the recurring revenue, and to digital marketing. It just so happened about three years ago. It was super-hot.
[00:17:12] You could do no wrong. Everybody was looking for digital marketing and that was the area that we were going into and wanted to go into. And so everything just really lined up and it was just a matter of making it.
[00:17:23] Michael King: Software developers, Exodus, six months later they're gone. So that's off of your overhead.
[00:17:29] How did you then build the team back up? Was it just you and your partner or were there other people on the team at that point?
[00:17:35] Erik Olson: There was a total transition, almost one person at a time. One software developer, what do we use? And then we would hire a digital marketer to replace him or her. No one would leave.
[00:17:46] We'd hire another digital marketer. So it was literally a transition one person at a time, and we're extremely transparent about it. I didn't want anyone to be caught off guard or I'd call them in one day. They didn't know what the heck was going on. And then I'm telling them to pack a box and get out.
[00:18:02] We were very super transparent, especially with the people that were on their way out. We gave them a lot of options and we told them exactly what our time frame was. We were pretty lucky that we were able to match that timeframe. One of the last people that was here as a software developer, he knew exactly what was going on.
[00:18:22] He had about six months’ notice and he agreed to stick it out. And then he also agreed to work with us as an independent contractor once we transitioned him off of the payroll. So we were still paying him just little by little. We were transitioning away from software development.
[00:18:41] Michael King: What percentage today is recurring revenue?
[00:18:45] Erik Olson: 100% which was a big, big deal for us, especially for something like a website, a marketing website. So, almost every other agency in the world is going to charge you five, 10 $25,000 depending on the agency, depending on the client. Well, they're going to charge you a price, and it's the district's price. If you're creating a website.
[00:19:07] We did the same thing, so we would charge our clients a fixed price for the website. We would deliver it, and then we may get a little bit of recurring revenue off that for like website hosting, which is basically nothing. That's $30-$40 a month if you're lucky, and then maybe like an hour or two of work a month.
[00:19:27] It was really actually quite difficult to convince people to continue to pay us after we just got a big check from them. So that was the one hardest part to try to figure out how to convert that into recurring revenue, because we had in our mind, let's just say $10,000 we had in our mind, and if we delivered a brand-new website, it was valued at $10,000.
[00:19:49] Again, I dug through the numbers and I asked a lot of questions and when I realized that the labor that went into that project was not $10,000 of labor and it wasn't even $10,000 minus the profit that we want to make. The labor that went in was much, much less. In some cases, we turn around websites in a matter of days, just depending on weather.
[00:20:11] Everything is organized. They have all the pictures and all the words that we need and all that stuff. We've had instances where we've turned them around overnight because the web developer just went on and did it until he was done. So we can produce these websites actually relatively quickly when we're organized.
[00:20:31] And so it doesn't actually cost us the same amount of money that the price tag of 10 grand represented. So there was a disconnect there, and I realized that disconnect. For us and frankly for every other agency out there is because when you deliver that project, you get one shot at making money, so that one shot I'm making money has to cover your labor for as long as the person's not building your website.
[00:20:58] Basically, you have one shot, you gotta charge a pretty high number. Well, we weren't trying to take one shot anymore at a client. We were trying to shoot them every single month, if you will. And so we decided that we could charge a significantly lower amount per month as long as we got an agreement for a minimum number of months.
[00:21:19] And it doesn't even have to end up culminating to the same amount of money. Because we had another realization was that we're going to pay this web developer, no matter what, whether he does a project or not, he's going to stay on staff. So we just need to really cover our overhead, make a profit, regardless of how many projects roll through here.
[00:21:37] So with that realization, the realization that we were going to get more than one shot at money from a client, we completely just destroyed the pricing model that we had before. And we just went with monthly recurring revenue. So the pitch now is, you don't actually, per se, a website from us, we're going to provide you unlimited content changes, unlimited hosting, unlimited updates, and if we need to build a brand new website for you, which we usually do, then we'll do that too.
[00:22:03] So the new webside is almost a freebie. And once they were satisfied they paid on commitment, it's theirs.
[00:22:10] Michael King: Interesting. What if they cancel halfway through their commitment?
[00:22:14] Erik Olson: If they cancel halfway through the command, we have clauses in our contracts and a lot of them to get out.
[00:22:18] There can be someone who went into damage if they just, yeah, really stiff us. We could just keep the website, but the idea is that we're taking what would normally be a one time price and we're amortizing it over time. It's like a mortgage on a house. The banks to give you say, $300,000 they're going to amortize that over 30 years.
[00:22:38] Expectation is that you continue to pay that off. You still own it, but if you stop making those payments, the bank takes it back. Very similar economist situation. So we do ask for a minimum commitment clearly, we hope that we get it. If we don't, It's okay because we didn't miss out on a $10,000 shot at money.
[00:22:55] We just missed out on getting more months. So it really required us to just rewire how we think about the value of these projects.
[00:23:03] Michael King: Interesting. And I'm sure from a business owner's perspective, knowing how much money's coming in next month and the month after lets you sleep just a little bit easier cause you get now to tell your CPA, next month we're going to make this pending any new business.
[00:23:20] Erik Olson: That's right. So once a month, towards the end of the month, now I have a meeting with Katya who is our executive assistant, and we asked her to project out all of our expenses and all of our income. And there was a time about a year and a half ago while we were doing this, we do it every single month.
[00:23:36] We know what the expenses are. There are no big surprises there. But she actually made a comment. She goes, yeah, this was probably around like September timeframe of 2019, I guess. And she said, well, I could actually project out the rest of the year if you want me to. And I thought, wow, this is amazing.
[00:23:53] Like this is what we didn't have a couple of years ago.
[00:24:00] like I said before, we're either going to double in size. or we're going to be out of business. I don't know where it is. Somewhere in between. And now we know within a couple thousand dollars.
[00:24:09] And so it's quiet, it's quite precise to actually, it’s a great feeling for us, but one of the things that we also recognize is that it's a really good feeling for our customers because number one, we have stability. They're not going to get some crazy bill from us every month. Number two, they don't have to pay a big check upfront, right?
[00:24:30] I mean, who wants to pay 5, 10 or $15,000 up front. That sucks as it does a seven that's a huge hit that you've taken their finances. I'd much rather pay a few hundred dollars every single month, know what to expect, and now I can project out my expenses
[00:24:45] Michael King: From the work that we've done and with small businesses and as a small business myself, one of the things that I've noticed is typically somewhere around, I don't know, I'll call it the end of year one to the end of year two, maybe two and a half.
[00:24:58] There's normally a transformation in the business and it likely coincides with what we were talking about earlier. That transition from our lead a project to recurring, and those transitions typically require an update on the website. Probably a significant update on the website and so through that lens and that understanding is if I'm a business owner, particularly if I'm just getting started, I want this website, but because Mike has told me so I'm probably going to meet, need a meaningful update sometime in the next 12 to 24 months.
[00:25:31] This helps make everything a lot more predictable, so I'm not cash heavy upfront. And I don't have to worry about being cash heavy again in the next year or two years as I figured out the model and figure out what works and doesn't and have to make updates, so it's smooth to have that curved out. It makes everything a lot more predictable.
[00:25:49] I think the other benefit is because like maybe I need to make these changes, but boy, I don't want to shell out another 15 grand. And so I stay with a subpar website
[00:26:00] that doesn't really reflect my brand today. It's kind of a no brainer to just give Eric a call and get those changes made.
[00:26:07] Erik Olson: Yeah, you're absolutely right. So people will avoid the pain of having to write a check and with the website or any of your marketing, really what that means is if you know that you're going to get charged by the hour, you're very likely to just not send it in as an example, in a different field. Lawyers.
[00:26:26] A lot of times people will review their own contracts. Right. Or they won't send an NDA that they received. They won't send that into the work because they know it's going to cost them 500 bucks every time they get on the phone, you're going to get charged by the 10th of the hour, and so you take risks.
[00:26:43] Or you just avoid it altogether. Well, it's the same with your web presence and your digital marketing. If you know that every single time you reach out to your marketer, it's going to cost you money. You probably just won't do it. Which means that things like a website starts to get out of date potentially and not patched, run a security update.
[00:27:02] All of a sudden it gets hacked. I mean, there's a lot of things that we've seen over the years that can cause a website and to start to break one piece at a time or the whole thing all at once. So one of the other big, I think that we had to overcome ourselves and our thinking was, well, if we offer unlimited content changes, what if a client wants us to produce a brand new website every single month?
[00:27:28] What are we going to do then? So we really had to kind of think through that situation. Why would someone ask for a brand new website every single month? Just to the extreme, right? Maybe it's once a year, but why would they ask for a new website on a frequent basis? Well, maybe they want to change the color.
[00:27:47] It's a blue website. They want a green website. Okay, well we can make that change without rebuilding the whole website. That's on another $10,000 project. What if they want a new WordPress theme? Okay, well we can make that change relatively quickly as well. So a lot of the situations that we could think of when people would demand that we created a brand new website, they probably aren't going to do that.
[00:28:08] They're just going to demand changes, which we can implement very quickly. And so we've been doing this for about three years now as a recurring service and recurring revenue. And we have not yet had a client come to us and demand a brand new one. Was that just because they can get it request changes?
[00:28:28] Well, we make the changes and since we're updating their websites on a regular basis, it's up to date.
[00:28:34] Michael King: One of the things that I've been guilty of this too, but I see a lot of other people falling into the trap of trying to solve problems that don't exist yet. And so you get this dialogue in your head of what if the client wants this?
[00:28:49] And what if they do that? And it can be paralyzing as much as data analysis as an example, but with some measure of professionalism, you have to be able to say, okay. Let's just wait until this actually becomes an issue. And if it's an absolute shit show, then we'll just tell the client
[00:29:11] here's your website. Thank you for the seven months that we worked together. We're not a good fit going forward. We wish you all the best, and we'll take that loss of the last, maybe five months of the contract. But yeah, don't let the exercise of solving problems that don't exist paralyze you from trying new things and just seeing what happens.
[00:29:29] We have a similar issue. When we moved to a recurring model last year we were worried clients were going to call us all the time. You know what if they are constantly calling and what I found was just having a discussion with them of, hey, we're not going to put a restriction on this. But if we get to a point where we feel like you're abusing it, we're going to have a conversation, and 100% of the time people have said, yeah, that's reasonable.
[00:29:55] Let's do that, and guess what? We've never had a problem with it. Yeah. But we were really worried about that, Eric, that was something that we talked about. I mean for days, not days straight, but it was a thing that we were worried about and here we are, on the other side of a year later and it's literally never been a problem.
[00:30:12] Erik Olson: Yeah, it is pretty surprising how you can conjure up these worst case areas and it's probably a good exercise to go through it and try to figure out what it really means and what the likelihood really is. Cause you certainly don't want to not think about a risk. And then it just happens and you're completely surprised.
[00:30:29] But the reality is that I've found that a lot of times it's just not quite as bad as the absolute worst case scenario.
[00:30:36] Michael King: So shifting gears a little bit, we talked earlier about hiring employee number one and what an adjustment that is in mindset is an entrepreneur. Carlos has been on my team for about two years, and boy, he's been around for so long now.
[00:30:53] I don't even think of them in that way, but I recently had this epiphany that I need some administrative help. And so, I went about the business of hiring an executive assistant. It sounds like you've had one on staff for at least a little bit. It's been an exercise all over again and trust, and I'll give you a great example.
[00:31:15] Yesterday I had asked her, and just to be fair, today was day two with the new executive assistant. But yesterday I had said, Hey, I'd love for you to follow up with this person that emailed me and tell them this and this and this. And then yesterday afternoon, before I left, without even thinking about it, I responded to the person that I had asked my assistant to respond to.
[00:31:36] And then I look like a fool because the person responded and she said, Oh, your assistant emailed me about this two hours ago. So I emailed Jamie and I said, oh boy, I'm really sorry I had asked you to do this. And, um. I think subconsciously I just didn't trust that it was going to get done, won't happen again.
[00:31:53] So there's some definite adjustments that have to be made. One of the scariest things for me though, I think, and for a lot of other people is, I'm kind of responsible for this person now and making sure they get paid, and that can be a scary thing. Tell me about the first time you had to hire somebody and what that adjustment was like for you, Eric.
[00:32:11] Erik Olson: So, I had the exact same situation as far as really the fear of responsibility or maybe fear is not even the right word, the acknowledgement of the responsibility. So I had gotten to the point, I was a one man shop. And I was working, a relatively big project and I won a second relatively big project. I was going to need at least three months to wrap up the first project that I was on before I could shift gears and focus on the second project.
[00:32:42] But I also knew that the first project was going to need a little more love and attention after I delivered it, they were going to have change orders. I just knew that, so I realized I was going to be pretty wrapped up with finalizing the first project and I couldn't get to the second project for three or four months and that's just unacceptable.
[00:33:01] It was time to hire someone, but with those two projects together, I knew that I only really had on paper enough revenue to cover the two of us for a balanced six months, but I really needed that person. I put out some job as someone responded, I interviewed her, she was great. I was ready to pull the trigger.
[00:33:21] The night before I sent out the offer, I was at home. I was talking to my wife about this and telling her my plan. She knew it was going on, but I was telling her, Hey, I'm getting ready to hire this lady to come work for me, and I'm nervous because every two weeks she's going to receive a paycheck. I'm going to guarantee that for sure.
[00:33:45] The question is, will there be enough money left over for me to make any. And I knew that I was going to do okay for a few months. I just didn't know what was going to happen after that. And it really was a huge leap of faith for me because I had to go secure even more work. So I had to have confidence in myself that I could generate the leads, close the leads, and we can start working on additional work that I didn't even know where it was going to come from at the time.
[00:34:15] So it was a really big commitment and lucky for me, I was always able to pay myself. I never had the problem where I had to go without, and I also paid her. And we continue to grow, but I knew that was it, a big change for me, and it was a huge sense of responsibility because now not only was someone else's career on the line because they were coming to work for me, but also their finances.
[00:34:38] Michael King: That's somebody's mortgage, somebody's kids, somebody's food that now all of a sudden. Eric, has to provide for, I mean, in a very direct kind of way.
[00:34:50] Erik Olson: That's right. And it's scary. If you've never done it before, it's different. When you work for a company and you're a manager and you have people working for you, it's a lot different.
[00:34:59] You don't have to worry about the money. You just assumed there was a ton of money in the bank and everyone's going to always get paid. But when you're the person that's actually generating the business and having to fill it and having to pay those bills. It's just a big burden and you have to make sure that you're ready for it and you also have to make sure the person understands what they're about to get into.
[00:35:20] Yeah, you're a small company you're confident in what you're doing, but they need to be honest with them. They're taking a risk.
[00:35:29] Michael King: I think that's really wise of you to point out, cause I don't know that a lot of people think that as business owners, when we talk outwardly about our business we'd send a focus on all the great things and you're hiring somebody and you want them to come to your team and you're like, Oh, we're doing this.
[00:35:46] And we have plans for that. And that's great. But I think it takes a little bit more maturity and emotional intelligence to be able to step back and say, and while all these things are true. There's also another side of this that I want to make sure you fully understand and that's that we're a small business and if one client leaves us as a small business, or one client decides they're not going to pay us.
[00:36:08] That can introduce a shit storm.
[00:36:32] Erik Olson: That's right. And you could find yourself in the middle of that, and I'm going to promise you, you will always get paid first. Right? And all other things come later. But there is still a level of risk that maybe this thing doesn't exist in six months. And so that's, that's a really hard thing to do because as business owners we tend to be type a and very proud and kind of out there.
[00:36:33] And we also have different personas. So what I mean by that is when we're talking to a prospective client, Oh yeah, we kick ass, everything is awesome. We're Jamming like that. Like you want to be with us because everything is just amazing. So we don't have any problems. But the reality is, as probably every listener who owns a business.
[00:36:56] Can attest to. There's always something going on, right? You have a problem client. You have cash flow issues. There's this thing going on that you don't necessarily reveal through that other persona. And so if you're going to bring someone in close to you, like a new employee, and especially the first employee, you really do owe them the information that they need to make an informed decision.
[00:37:21] Michael King: How do you think through how much information they need? How transparent do you really get?
[00:37:27] Erik Olson: So, I used to be very closed off. I would not give a lot of information really to anybody. And over the years I've become a little more transparent. So I have a podcast, it's called a journey to $100 million.
[00:37:45] And the whole point of the podcast is that we tell stories about lessons that we're learning along the way.
[00:37:53] Michael King: that sounds familiar.
[00:37:54] Erik Olson: Yeah. Oh yeah. Oh yeah. A lot of those lessons are frankly, from mistakes. We all make mistakes. We learned our lesson, and then we correct, and we do it better hopefully in the future.
[00:38:05] Okay. And so I've been doing this podcast for about. 14 – 15 months. And what I realized is that I was pretty much all of the stories. There really is not that much these days that I haven't done. Relayed through the podcast and my employees here, they actually do the editing. So they hear a lot of these stories and a lot of the mistakes that I made before even starting this company.
[00:38:29] And so there's really not all of that much that we hide these days between the podcast. And then on Twitter in particular, I'm very, very active and I've put a lot of entrepreneurial, tips and experience sharing on that. I mean, we share, we share our finances. To a certain extent. No, we don't go all the way down to like how much each person makes or things like that, but we share big ticket numbers, our revenue, our growth, all the problems that we have on the podcast.
[00:39:00] I may talk about a problem that we have with a particular client. I'm not going to say the client's name, so we're not transparent like that but we're pretty transparent about what's going on and even with our strategy. We'll share what our feed is, certainly with our employees because they need to know, but on the podcast, we'll talk about exactly what our strategy is.
[00:39:19] At first, I didn’t want to do that because I thought that people would, yeah, steal my strategy or that they counter maneuver me and box me out in the market or something like that. And then it was just paranoia. It took a while, but I realized that it's not even the strategy or the idea of that has an execution.
[00:39:38] And if you can't execute my plan the way that I'm going to execute it, it doesn't really matter that you even know what my plan is.
[00:39:44] Michael King: I'll take that one step further. It's your strategy with your execution, but also with you. That's the differentiator. I'm working on a course and a book right now and I even got some of the same feedback with the podcast and people said, there's already other people that do that.
[00:40:00] Why are they going to buy yours? And the light bulb came on one day and I said, cause it's me. People are buying me as much as they're buying the work that we're doing or anything else, or the pies. You know these other podcasts that talk about similar things. I didn't know you existed, but I started with a podcast.
[00:40:21] Erik Olson: Our podcasts are very similar on paper.
[00:40:23] Michael King: But I bet there are very differences in execution. The personality that you bring, the perspectives that you bring are going to be very different than mine, and that's why people might listen to yours over mine or vice versa. Maybe they listened to both of them, but I think that's the thing that maybe other people lose sight of.
[00:40:40] I know I certainly did for a long time. I'm the difference. Carlos on my team. He's the difference. My new assistant, there is a difference, right? And it's our team and it's us in what we bring to the table. That's the difference. And so, yeah, you can rip off my strategy and you can rip off my client list all you want, but you're not me.
[00:40:58] So ha ha. There you go.
[00:41:01] Erik Olson: And then they're not going to respond the same way that you would. Right. So even if they were successful in pulling off your exact strategy and implementing it, well, things change constantly. Every single day, multiple times a day. You have decisions that you have to make that are going to affect the future of your company, and they're not you.
[00:41:18] They're not going to make the same decisions that you are. They're going to have a different outcome. So I'm perfectly fine sharing at this point. Things like strategy, lessons learned, and we do it on the podcast. I do it for masterminds. I'll do it with anybody. Anyone can call me and I'll provide them with my experience and what I learned from it.
[00:41:39] Michael King: What do you think is a positive unintended consequence of that transparency on the culture of your business, or whether that's with employees or vendors or customers.
[00:41:51] Erik Olson: Well, what does it matter? I think it does matter. It's certainly fundamental to the culture to be transparent. We have core values.
[00:42:02] And one of our core values right now is honesty, because for probably pretty obvious reasons, if one of your employees, or it's all one not honest, and we have a major problem. So the expectation is we're not going to play stupid bureaucratic games where you don't really do what you say or say what you're going to do.
[00:42:21] Want honesty. But what I've actually come to realize in the last week is that we need to change that. It's not just about honesty, it's about being transparent with your intentions. So transparency is a big deal for us, and we expect transparency out of everybody. So we expect you to openly communicate.
[00:42:42] We expect you to let people know what you're about to do. Oh, we expect you to communicate the impact of your actions. So transparency is a big thing inside the four walls of this office. And it conveys to our interactions with the clients, but it also conveys to me as the business owner, transparency is expected of me if I expect it out of my folks.
[00:43:05] Going back to the first hire, one of the main reasons I hired a full time employee instead of hiring a freelancer, and I had tried freelancers before, but what I realized is that I wasn't committing to them. By not giving them a full time job and in return, I was not getting that commitment from then back.
[00:43:26] I had to commit in order to get the commitment and this exact same thing with transparency. I can't expect transparency if I'm not transparent. First you have to give before you receive, and that just applies across the board. So for transparency, it's a no brainer. For us, we are transparent. We're going to update our core values within the next couple of days that I frankly just get around to it.
[00:43:49] We already talked about how we're going to change the honesty, core value to transparent.
[00:43:56] Michael King: I heard countless people complain about how they get a lack of commitment from subcontractors. I can't find a subcontractor that will really commit and make me a priority, but I think you hit the nail on the head, Eric.
[00:44:09] You've got to give first. And if you want them to commit to you and your team. Then you've got to commit to them first. And the best way you can do that is by saying, Hey, come on board as an employee and all of the things that go along with that. I guess it's a lot like dating in that way.
[00:44:26] If we're dating and, I can't find a girl that will only stick with me, but I'm out seeing four other people. Well, obviously in this, I mean, working is a relationships too, so why should it be any different?
[00:44:42] Erik Olson: Yeah. If you're going to keep people at arm's length and they're going to keep you at arm’s length too, you'll never be a priority.
[00:44:47] Michael King: That's a great light bulb realization. Thank you for sharing that. All right, so if people want a brand new website every single month, flat rate, where can they come to find the area?
[00:45:01] Erik Olson: Well we won't do a brand new website every single month, but, we will build a new essay and we'll keep it up to date.
[00:45:07] So we also offer online advertising, search engine optimization, and social media. The name of the company, again, is Array Digital. The website address is https://thisisarray.com. And if you want to reach out to me directly, I hang out on Twitter the most. My handle is iamerikjolson.
[00:45:40] Michael King: I will post that in the show notes, the links to your podcast journey to 100 million, your Twitter, IGA, Facebook, all the things so people can find you. Eric, thank you so much for joining us this afternoon.
[00:45:51] I really appreciate the wisdom that you've shared. I'm certain that our listeners will be better for it, so have a great rest of your day and thanks again.
[00:45:58] Erik Olson: Well, thanks for having me. It was a ton of fun.
[00:46:07] Michael King: Thanks for joining us today. Please don't forget to subscribe to In the Trenches with Michael King on your favorite podcast platform like Apple, Google, or Spotify. Once again, I'm Michael King with KFE Solutions. We'll see you again next week.