How Jeff Newcorn Built His Company to $1 Million & 80% Profit Margin with Just 4 People!

Do you want to drastically increase the productivity of your employees?

In this interview, Jeff Newcorn CEO of R. Jeffrey & Associates, Inc reveals how he transformed his company so that with only 4 full-time employees it generates over $1 Million in annual revenue with an 80% Profit Margin. You will discover the importance of systematization and measuring your business by using key performance indicators to track your profit and team performance.

Jeff Newcorn CEO of R. Jeffrey & Associates, Inc


Tweetable Quote:

In this Episode You will Discover:

  • How Jeff is able to get more done with the same amount of resources.
  • How Jeff came to realize that he needed to run his business by the numbers.
  • How Jeff used the RARA (Roles, Accountability, Responsibility & Authority) system to define job roles.
  • Why Jeff decided to seek out coaching for his business.
  • Why Jeff believes you need to look at systematization if you want your business to be sustainable.
  • Why Jeff believes you need to have a system for tracking data as your business begins growing.
  • How Jeff uses the RARA system to measure employee performance.
  • Why Jeff intends to build a new system to help his clients take advantage of more tax credits.

Episode Transcript:

OWEN: My guest today is Jeff Newcorn and he is the CEO of R. Jeffrey and Associates, Inc. Jeff, welcome to the show.

JEFF: Good to talk with you Owen.

OWEN: So this show is all about getting guests in here who have been able to systematize their entire business so it runs successfully without them. Let’s dive right in. What are some mind-blowing results that you now experience as a result of going through the process of systematizing and automating your business?

JEFF: First of all we’re now a million dollar company, and we’ve been able to get there with just for people. Some of the analytics we used we realize we measured gross product margin, and our profit margins are north of 80% which I think would probably be the envy of most small businesses.

OWEN: Eighty percent for a service business? Wow. That is something.

JEFF: Yeah, it’s pretty impressive. And I think we also do a good job of watching cost of goods sold. We have some good controls on there, some systems in place to make sure that those types of cost are controllable and predictable.

OWEN: Wow. The next question I have for you is how is your company being transformed as a result of systematizing your business?

JEFF: Well, the transformation has been really getting word on I’d say the same amount of resources in terms of people, in terms of the results that we get are very predictable. We have added in a system that’s pretty much scalable to grow with us. There’s less stress because there’s more procedures in place, there less stress because there’s a solid system in place. And I think I do a really good job of communication priorities to our staff. The staff response is very well to that because sometimes priorities shift. We do things like weekly staff meetings which are a great way. Talking about things like clients, problems, and challenges. That way if things shift we can always re-align on what’s really important for us. And we’re a very open environment. Very transparent, our staff knows the kind of money we earn. They know the key issues. And the more I avail to them the easier it is for them to do their job knowing the important facts and the analytics of the business.

OWEN: How has your personal life been transformed as a result of systematizing your business?

JEFF: Well, I’d say we’re making more money.

OWEN: That’s good.

JEFF: And I’m able to enjoy it. In the early years of the business sometimes that’s not always the option that you have. One of the things we’ve done in recent years, we started to travel extensively. We did Italy in 2012. We did Alaska in 2013, and I just got back from 2 weeks in Hawaii in January. I love just going to great places. This planet has a lot of wonderful places to go and things to do. We’re even going to go to Paris this year. I’m very excited to go there too.

OWEN: That’s awesome. And since you have systems in place in your business that allows you to run without you, I’m just curious, what’s been the longest time you’ve actually been away from the business?

JEFF: Well, I’ll just say close to 3 weeks, just north of 3 weeks and that was kind of scary for me knowing that…

OWEN: Why?

JEFF: Well, because when you’re used to being in-charge and running things, and then you step away from the steering wheel that somebody else or some team has got your back and is going to make sure the boat doesn’t capsize. Although I have a wonderful team as a business owner sometimes the first time you take that big trip away you’re still a little nervous.

OWEN: Yeah. It’s kind of like you got the chance to actually test to make sure that the business can actually run without you, but you’re just a little bit nervous to see if the test works out the way you planned, right?

JEFF: Yeah. Actually it worked out even better than I planned.

OWEN: Awesome. Here’s the thing, we want to give the listener some context as to what your company does so they understand. When you tell them how you systematize your business, once they understand the context they will really understand what you’re doing. What exactly does your company do and what big pain or problem do you solve for your customers?

JEFF: I’m in the business of managing tax credits, sort of an esoteric credit if you will, not really that well-known. Instead of dealing with the traditional sense of pain that businesses go through, we kind of deal with the pain of not knowing or ignorance. They’ve ignored these types of thing or they’re slow to catch on to. A lot of businesses don’t know about some of the more lesser known tax credits. I think looking… We want to make sure the companies who are looking at things that would be god for their business, not just the traditional sell more and save money and cut expenses, but other things, and that’s where tax credits fit in. We’re not just focused only on just businesses, we’re also spreading the word out there to CPA’s and other tax professionals so that they’re aware for the benefit of their clients these types of esoteric things.

OWEN: Awesome. How many full-time employees do you have?

JEFF: There’s just four of us. And it’s pretty amazing we do all of this with just four people.

OWEN: Including yourself, and I guess you also use some temps as well too, right?

JEFF: We try to fluctuate a little bit of the volume with temps. But yeah, we do have one to two temps from time to time. Yes.

OWEN: Is the company profitable? I’m wondering, what was last year’s annual revenue and what do expect to generate this year?

JEFF: Yeah, we’re very profitable, last year was around 1.2 million. We expect this year to be somewhere north of 1.4 million.

OWEN: Awesome. Here’s the thing, we want to go back to when the business was not systematized and automated like it is now so that we can learn what was wrong with it at that time?

JEFF: I’d say in the early years we’re kind of running our business by the seat of the pants or managing by the checkbook. Do we have enough money to pay the payroll. It was pretty scary in those early years.

OWEN: How did that feel though? Let’s go into the emotion a little bit.

JEFF: I was just glad to be out there getting clients but I had really no clue in terms of how well I was doing. I didn’t really measure other than at the end of the year when you do your taxes you got to come up with some sort of PNL. But during the middle part of the year I really wasn’t doing that. I didn’t have a system in place to take a look at these. What didn’t exist I guess in the beginning I didn’t have a flight plan and i was kind of running on hope. But good businesses and solid business, you can’t run on hope for very long. So we’re trying to deal more now in reality what are the numbers.

OWEN: Back then when the business was not systematized what will you say was the lowest point and describe how bad it got.

JEFF: We had an employee who was actually taking money from the company which we had to… I didn’t have anything internally in place to know that but the bank called me and said, “You’ve got an out of sequence check being cashed here.” Fortunately, they had systems in place to watch my back so I guess I was lucky in picking a new bank. I think the other thing that’s unique about my business is it’s legislation enabled, which means every couple of years these tax credits actually expire. And sometimes they expire for a period of almost a year. So we don’t know if we’re going to have almost a business going forward or if our clients are going to have a tax credit going forward. So sometimes we’re wondering if Congress is going to do the right thing and extend these credits. So it’s pretty touch and go especially the deeper we go into these delay or hiatus periods.

OWEN: So I guess that’s kind of the thing where if you are providing people, understanding of the tax credits that are available to them and not really now any government is going to get rid of it or is going to come to an end, that kind of side. Let’s see how that can be an issue. You also mentioned about not being able to keep track of all the moving parts. This was during the pre-interview.

JEFF: The more you grow, you have people, you have more customers, you have more customers, you have just more moving parts of the business. And I realized I could keep track of it in the way I was doing it. So I realized I had to manage the business by the numbers. I think many entrepreneurs who are just hoping to make a profit and just go from there. And I realized at some point, I don’t know if it was an epiphany that I realized I need to get me a financial forecasting planner in there to help me at least measure what I was doing in terms of the basic stuff like PNL, balance sheet and cash flow because it’s kind of scary not knowing whether you’re going to have enough… If your business is even getting the kind of results you’re hoping for.

OWEN: Wow. And what will you say back then was the breaking point? Do you remember when you realized that you needed to systematize and automate the business? What happened?

JEFF: I kind of dropped this business like some other did, kind of [Unintelligible 00:09:29] with some friends of mine. We thought it was a good idea. And I thought I could probably run this business on an Excel spreadsheet. And nothing against Excel but I realized early on we couldn’t do this on Excel. I needed something more robust if I was going to be taken seriously in this business. I spent about 30,000-50,000 of money I really didn’t have at the time. And I had a friend of mine build a system for me that to this day parts of it are still working for me. So that was a key system piece that I just had to have or I wouldn’t be in business today.

OWEN: Was that like a custom workflow software that you employees used to carry out their task, just so the listener knows what you’re talking about.

JEFF: It was more I’d say a custom database. Access is more the robust version of Excel, and building a programming on top of it allows you to gather data that’s necessary for the throughput of our business. And to be able to not only gather but also provide our clients with the results that they were getting. And you just can’t do that in Excel. So I had to do something much more significant so that I can repeat and continue to grow. And I was able to do that from the very early on to over several hundred clients.

OWEN: Wow. What was the very first step you took back then to systematize your business?

JEFF: Prior to my doing the tax credit, I had actually worked in the software business. And I knew what software’s capable of doing. And I knew that I had to know the math behind this. And so I did a good job with actually having a programmer work alongside of me. I could talk about the needs of the business, the program that could figure out how he’s going to code it. And we did a very good collaboration of coming up with a software program that still actually in some regards works to this day. We’re in the process of creating a brand new system. But the core processing part of it still works and that’s a testament to having a great system right from the get go.

OWEN: Basically what I get them from that is you understand what it took to run the business but you wanted to scale it up so you had a program that worked with you as you went through that. What is a regular workflow of what you had to do in order to do your role. And he came up with a custom program that kind of makes it automated to an extent. And so, what is the second step you took to systematize your business?

JEFF: Once we start getting more moving parts as I talked about before it was really just having what we’re going to do, what each person was going to do. It’s just me, I had one other person. Then I started getting even more people. And we really needed to have a clear job definition of what people were supposed to do. Who’s going to do the selling, who’s going to do the processing. And I realized I had to get very granular about the roles what people had. And we came up with something called  RARA. It’s kind of  unique term for roles, accountability, responsibility, and authority. And I took quite a bit of time to determine for each person’s position what they were supposed to be doing. So that way we could realize where there’s some overlaps, redundancies, and they were clear about what they were to be doing each day, each week, or each period. That made a huge difference in our business, that they almost had a system in place knowing instead of just guessing what they’re supposed to be doing today, they knew very clearly, without being a stranglehold.

OWEN: Yeah. What were the steps did you take to systematize the business back then?

JEFF: We started having regular meetings. I don’t know how I had this epiphany but I thought it would probably be a good idea to have a business coach, a CEO Coach if you will and to start having regular meetings with somebody who could have an objective view of my business. And to actually start reviewing some of the vital signs of my business, sales, AR, and things like that.

OWEN: Do you remember why we had that epiphany that you needed a coach. You think of entrepreneurs and the guy who’s in charge who knows what to do and is always trying to push the company forward. And now, you are thinking of having a coach. I’m curious, what was that about?

JEFF: First of all, I kind of realized there are people out there smarter than I am. So I wanted to tap into that because I value other people’s ideas. And this person was very organized. And I didn’t want the business to fail. We were getting such good forward momentum, year-after-year sales growth. And frankly, I didn’t want to lose it and get beyond my comfort zone. And hiring a CEO coach sometimes bring in outside expertise to help you become a better business athlete as I’d like to say. And really take you through some more dance drills. And he was really great at that. We’ve grown and expanded our role. We’ve added in more than just the bi-monthly meetings. We do our financial review meeting every month separate for this. I even go through and do a post mortem every month looking back to say, “What happened last month?” Sort of an introspective, what might have I done different, and have a chance to reflect on the business because we get caught up in the day-to-day stuff. But sometimes we don’t think about what happened because we’re moving on to the next thing. I found that exercise of sort of looking back at last month very helpful.

OWEN: Yeah. And I’m curious, back then when you’re trying to systematize the business how did you prioritize what other steps to take, as in what systems to build first and what to build next, stuff like that.

JEFF: I think in the early days it almost came kind of organically. When I reached certain stress points I couldn’t manage the data or it was getting out of control. And I realized in talking to my coach I’m going to lose people if I can’t get them really a clear direction of what they needed to do. That’s where the idea of this job, clear regular job definition came into place. And it allows me also to know when the people are just really stressed out, that they were getting more than they can handle. Also, we can eliminate some of the things in terms of their role for the benefit of the business during certain high volume periods.

OWEN: Let’s talk about how exactly you documented procedures and processes for your business and what tools do you use. Earlier you mentioned RARA which is an acronym for… What is it again?

JEFF: It’s roles, accountability, responsibility, authority. And each person kind of has their own unique roles. Sometime you got more than one person sharing it. And it takes a lot of thinking. I had to actually sit down and draw this out. I kind of knew what the staff was doing but I hadn’t actually written it out. It’s actually pretty impressive to see what they do. And they appreciate that I’ve gone to this extent because they want me to appreciate all the different things that they do.

OWEN: Yeah. Because if you know what they do then there’s no argument on the benefit and the input they’re bringing into it. You can literally see it if you knew exactly what they do.

JEFF: We went even one step further. In addition to writing down the actual things that they do, we actually developed some screenshots of the process that we do. Just in case someone where to leave someday and they take their job with them so to speak, we wanted the next person to be able to step in and look at the RARA, and also look at the screenshots so they could be more comfortable with a system that works and be able to be more productive quicker.

OWEN: That’s good. Now you have the RARA and outline of what they do, and even screenshots. What other tools do you have in place to make sure your employees know what to do?

JEFF: I’ve become a big fan of Google Calendar. I’m the kind of person who tends to keep some of my schedules and still do it on paper. I’m a very visual person. But Google Calendar, really in a very fast paced business allows everyone on staff to know what each other’s doing so that we’re not overbooking.

OWEN: So you have a company calendar for everybody?

JEFF: We have a company calendar. I could check from my phone, my iPad, from the computer. We’ve also gotten into more visual tools like having a whiteboard. For some companies that’s automatic. For a small company it’s like, what do I need a whiteboard for? But it also allowed us to really take a look and review some of our processes. And what was really great is when we’re starting to build this second generation of our tax credit software, we really had a great tool for the programming developer to come in and whiteboard this stuff with us. We thought that we were working on it with paper. And this was a much bigger tool. It sounds kind of simple but it was very helpful to everybody look at it and go, “That’s what we’re trying to do.”

OWEN: You also mentioned something during the pre-interview about how does the payroll data play to the system you have?

JEFF: We need certain types of payroll data in order to calculate tax credits. What we did was in coming up with the claims, facing parts of this, the systematized is we’ve developed a front end view where our clients can actually do some of the necessary if you will entering of client data over the internet. And on the back end to the payroll piece we realized instead of doing it what was up to that point kind of manual and paper-based, we actually put a system in place that allowed our clients. In today’s day and age you could digitize and download large amounts of data very easily where 15 years ago it was much more difficult. And we’ve actually created portals that allow our clients to interface their payroll data with us, which then allows us to calculate these tax credits for them much more straightforward than we had done in the earlier years.

OWEN: So by building a software for your company, it seems like you also make use of your clients to do a lot of work. And then it reduces the amount they need to hire people to do the stuff.

JEFF: Well, it’s certainly easier for us to do this than our clients to do it for themselves. We tried to build a business model where the client doesn’t have to do a whole lot of work. But we’ve created these electronic passing of data instead of having to do things more looking up, or mailing things. Now we’re getting the benefit of the internet to pass back and forth data that 15 years ago would’ve been very difficult to do especially for a smaller company like ours. And a lot of the scale to the multiple in terms of where we are right now versus the earlier days. It’s amazing. Believe me, even though we’ve grown from one to four people our revenues have more than quadrupled during that time.

OWEN: I see you guys are using a lot of technology, even e-signatures and all that too.

JEFF: Yeah, the e-signature was a recent approval by the IRS to allow companies to do some of the electronic front end work that we’re asking them to do by just hitting a button instead of having them mail papers to us like they…

OWEN: I know. That’s the real pain. Doing taxis and just sending all those papers.

JEFF: For the client it’s a burden having to physically do that. The reception we’ve got from our clients now that we’ve systematized and made this electronic has been overwhelmingly in favorable of using their current technology instead of having to use old fashioned technology like paper.

OWEN: at the time when you were actually working on systematizing and automating the business, what books or even mentors had the most influence on you and why?

JEFF: There’s a couple that come to mind. One of them was a book called Confronting Reality. Larry Bossidy wrote this book and it really taught me as a business owner that I couldn’t run a business on hope and aspiration. So he hadn’t fly a plane on hope and aspiration. And the confounding reality, now they had the admonition to look at your numbers. But also to deal with the realities of the nature and flow of your business. And so we make sure that you’re dealing with those things. And the other book, speaking of numbers I read another book both recommended to be by my coach called Managing By The Numbers. I think Chuck Kremer wrote that book and it’s a book that’s really meant for not just accounting grads but more for the lay person to understand at least the basics about PNL. Because when you start the business and you want to make money, nobody necessarily wants to be an accountant or a bookkeeper but you got to pay attention to the numbers. They don’t understand some of the basics about PNL, pricing or cost. A great business can go into the tube because you have totally misjudged the viability of your business.

OWEN: And I think you also mentioned your coach earlier on how you played the role in that too, right?

JEFF: I think I mentioned early on, he’s smarter than I am and I give him credit for that. And I’m not bashful of saying, I surround myself with good people. My coach in particular very wise person. He’s been around the block a lot. And I have included other people into the business in terms of advisory when I have these monthly financial meetings I had mentioned to you. We have our bookkeeper there, my wife is there offering ideas. My director of operations is there. We all contribute to the greater good of the business. And everyone has good ideas, and everyone is heard.

OWEN: I’m curious, that just made me think of something. Your wife, is she a member of the company in terms of an employee. I’m just curious as to…

JEFF: She’s not.

OWEN: The reality is most entrepreneurs who are married, when you have a spouse and you’re an entrepreneur, whether they’re not even in the books as employees they’re literally part of the business because they have to deal with all these stuff you’re going through. So I see the benefit in having her be part of that meeting too.

JEFF: Yes. In the early days she actually was part of the business but just kind of outgrew here. And we included her to the extent that I do well in the business, she’s impacted. And on those days when it’s kind of troubling, I want her to understand some of the things we’re doing.

OWEN: What was the biggest challenge you experienced when you initially tried to systematize the business and how did you solve those initial challenges?

JEFF: Because we’re dealing with tax registers, we’re dealing with numbers, I thought we had built-in all the right math to calculate tax credits. And the last thing you want to do is mess with the IRS. So one of my early clients actually detected a small math problem with our software, and I was just horrified that I had allowed that to escape all the testing. And we were able to correct it but if I can’t go to bed believing that my numbers were 100% accurate and it would stand up to any scrutiny by a CP or the IRS, then I’m in the wrong business. And god forbid, the IRS found any error in our work, that would just be terrible for me personally. I have a lot of integrity about what I would do and that would just be horrible. We’d never had any of our credits overturned upon review. So that’s a testament to being really careful about the numbers.

OWEN: What was the second biggest challenge that you experience too when you’re trying to systematize the business. How did you solve it?

JEFF: We couldn’t have anticipated some of the reporting that we would need to do in this system here and what these, our clients or the CPA’s would need. So we actually had to have external people come in, special IT people that could take data from different systems and blend it together so that our clients could have their own dashboard. They can see how well they’re doing with the program. And I think in the early days you could never anticipate everything, but I listen to my clients. And they said, we need certain things, or our competitors were doing certain things. We need to be able to mash or see that. And we’re only going to do that by just hiring additional resources to expand the strength of the system.

OWEN: What other challenges did you experience besides the ones you’ve mentioned so far when you were trying to systematize the business?

JEFF: Getting back to the numbers issue, I know it sounds like a broken record, but coming up with yearly, good financial forecast. In the business sometimes it’s obviously going to be a guess work and forecast are invariably wrong. But I need to have some kind of flight plan. The bigger I got, got to have good forecast to know, because you’re going to forecast, you’ll be profitable hopefully. And if you’re going off track, at least that way you know you’re going off-track. Here’s an interesting little perspective of how I was able to come up with the forecasting. Different than most people do I would think is if a coach would say as we approach the end of 2014, “What is your business going to look like at the end of 2015. And I would ponder about revenue, clause, and clients. How are you going to get there Jeff?” And I have to actually come up with a plan of how I was going to get there. And from that how I was going to get there I could build an operational and financial plan. It’s kind of a New Year’s Eve retrospective. It’s kind of a mind bend in some ways to get a business owner to think that far ahead. But if you know you’re going from point A to point B, you know you got to have a flight plan. Take a look at that point B and imagine looking back. It’s a very interesting exercise.

OWEN: Yeah. It’s like starting with the end in mind and find a field on how you’re going to get there.

JEFF: Normally most people would say, “I want to get to this number. Here we are, December 31st. I want to get there by next December 31st, you could do some of the same old things. This turning around and looking backwards exercise is a bit of a challenge where most people were thinking only forward sort of retrospective. And that really helped me uncover certain things about how… Because you can come up with any sales number.

OWEN: So it’s that like looking at what you did with last year and figuring out what you did wrong. Originally, looking back at what you did as oppose to looking forward to what you’re trying to do next.

JEFF: Well, certainly that factors in, what you did wrong, but I’m talking about actually sitting at the end of the year and looking out 12 months and not just saying, “I’m going to grow my sales by 10%.” But you can actually say, here I am at the end of that, that next year, and make believe, look back how did I get there.

OWEN: I see what you’re saying. So it’s like you’re even more engaged in it because you are imagining you are there already, and you’re imagining all the steps you tool to get there so you’re more actively thinking about it.

JEFF: Exactly. It’s creative thinking. Traditional thinking is fine. This was just a different thing that my coach had me do that was proven to be extremely insightful and helpful for me to see certain things about how I was going to get there that wouldn’t have happened naturally. Or they may have happened too late. I can predict how we were going to get there and actually make operational goals that we’re part of how we’re going to get there. Not just say I’d like to get there or get more clients. How are you going to go about getting those clients? What kind of events do you need to go to? How many calls do you need to make? It was a bit of a mental challenge but it really worked out well. I’d do it every year.

OWEN: I’m glad you mentioned that because during the pre-interview we didn’t quite understand them. But now we totally get what you mean. Given all the challenges that you mentioned earlier, I’m wondering why did you stay committed to the goal of systematizing your business?

JEFF: It just works. Having been resistant to it at the beginning, once I saw the value to allow the business to be able to scale up and to be able to do things in a repeatable fashion, for me it allowed me the luxury of not having to worry about is the business going to exist. I think a lot of entrepreneurs are so creative minded that they’re reluctant to look at some of the more less glamorous things such as systematizing, numbers, procedures, and formalities. But you got to have that if the business is going to get beyond the initial 3-5 years. You got to have something that’s sustainable. Someday, small businesses, are they ever going to look to be acquired or be looked at by a larger business. Those aren’t your businesses. You’re going to want to look at that small business and go, What are your systems? What is your business model? What do you have written down? What can we do to repeat and grow?”

OWEN: “Can we replace you?” stuff like that.

JEFF: Right. I want to know that my business at any point in time could be looked at in a way of saying, “That’s a really organized business, very sound, very thoughtful. It’s not reactive, it’s more proactive.” And I like it that way. I like to know with some level of certainty what direction the business is heading and when I’m off course. And without having systems you just don’t have that.

OWEN: And so at what point in time were you able to systematize your entire business and have it run without you successfully?

JEFF: It happened about 5 years ago. Fully systematized, our revenue really started to grow and I saw even after having it systematized with all these better financial and forecasting tools. I started seeing a consistent ramp up of revenue. And I knew that it was happening sometimes without necessarily my direct involvement, just kind organically the integrity of the business, the reputation of the business really started to take off when my attention actually focused a little bit more on business development and not just working on the business. I find that this thing is running great and I finally decided to spend a bunch of money to go to Italy. It’s been my dream to do that and I was always afraid to walk away. I’m thinking the business can’t run without me. But my staff knew better. They said you need to go. I think they just want to get rid of me for 3 weeks. They said you really need to go. It’s going to be fine. They said don’t call here. I did it twice just to check in. I thought, “I hope they miss me.” And they really didn’t.

OWEN: Yeah. The whole thing of this interview is giving the listeners the story of how you’ve systematized your business and the journey of where you are now where the business runs without you. But in addition to that I want to give them behind the scenes as to how your business works. Let’s imagine there’s a conveyor belt. On one end is somebody who’s interested in figuring out what tax credit their business can get. And on the other end of this conveyor belt, is that same person has used your service, they’ve got to know the tasks ready that applies to their business and they’re out there raving about you guys and even referring you guys customers because they love your service. But behind the scenes our systems and processes, parts of your business working together to make this transformation happen. Give the listener behind the scenes the different parts of your business.

JEFF: One of the key things we do… That’s a great question. I think tracking and analytics I think is the broad term. But the tracking and measuring of key data points for us is essential to know is our invoicing system working. The stuff that we get from our clients, how many are we getting, or how is it stressing the system. What is our accounts receivable look like from week to week, and is it becoming a problem. We basically have a process oriented business and we need to be able to track. Like even in a manufacturing business or service businesses, you’ve got a start, middle, and an end. And just like conveyor belts have barcoding and scanning, we basically are tracking the key metrics of our business as we go between from the start, the intake, what happens after they go to the intake because it travels kind of course. One of the greatest values we provide for our clients is frankly they don’t have the ability to track the journey of these tax credits that they’re to get. But they know we got systems in place that not only take in their information but turn that into tax credits through the way we catalogue it, move it into the government, make sure we get the information back from the government, and then provide them and their CPA’s with information that will end up on their tax return. So I’ve come almost 180 degrees from being averse to tracking all these things, to loving it. Because once I saw what it could do and I saw how the value maybe for our clients because we’re providing them this information. It was very comforting to know now I might be doing my clients great service and numbers they can trust, but I can see what’s happening internally. And it doesn’t happen by accident. Once you start growing you got to have a system in place to be able to track all these data that’s going back and forth.

OWEN: Let’s see if we can drill into this question a little bit more. When a customer comes in where do they start? I guess you did some networking or whatever marketing method you used to get them in. Take us from that very point what happens next.

JEFF: We basically talk them through the process. They have to understand something digitally or conceptually, and they’re basically saying, “Look, we’re in a tax credit business which rewards companies for hiring people who are maybe barriers to employment. People on welfare, food stamps, or certain other categories. And we explain to them that by doing this survey, by sending us the information that screens their hires. We can then take that information into the government within scores to determine if they really are hiring people with challenges to employment. And then the government gives us information back that says, “Yes, we agree. We hired somebody in one of those categories and there’s a financial reward that’s attached to their hiring practices. That’s where that payroll piece came in, because not only do we know who they’re hiring, not only do we get information with the government saying you hired the right kind of people here that we’re going to reward you with a tax credit. But we mentioned that payroll piece that comes in later, now it comes electronically. We’re able to merge together all that information and produce for our clients here’s how much of a tax credit you got because it’s based on payroll data.

OWEN: Yeah.

JEFF: It’s a beautiful thing.

OWEN: Wow, that’s awesome. I’m curious to know, you’ve already talked about this already but I guess we can also talk about it. What systems do you have in place to enable all the employees know what they need to know. So you’ve spoken about the RARA, which is the roles, accountability, responsibility, and authority document. What other things do you have in place to make sure your employees know what they have to do in addition to the software you have as well?

JEFF: Wow. I just think a regular serious of, we review our people regularly. And I hope I understand this particular question but the RARA is more than just telling the people what to do. It’s also a fabulous tool for when we’re doing our semi-annual reviews. To be able to say in almost on an object face is how well did you do against each one of your roles, against each one of your authority items.

OWEN: Okay.

JEFF: And it makes them feel better to know that they’re being measured against something, not just some general thing but some specifics on how they did.

OWEN: So it’s like a benchmark against their own roles so they can see how well they did against it, or if they did better and stuff like that?

JEFF: Yeah, we almost do it on a scale of 1 to 5 and how well they’re doing and where they can improve. And by having a clear definition of what they’re supposed to do and mathematically how they’re doing numerically, they know where they’re really doing great and they know where they have room for improvement, and that creates a lot of good conversation about a path towards improving on certain areas where they might be a little bit less than stellar.

OWEN: I’m curious, since we’re talking about measurements, how do you track and verify the results being delivered by the employees?

JEFF: Well, as I mentioned before, the RARA has sort of a numerical base part of it. We try not be extremely rigid in what we do. Part of an employee’s evaluation is also subjective. You got to be able to talk about not only what they do but the traits that we do. We measure not only internally if you will our own employees but we also measure our client’s performance. I think that’s very important because even though everybody would like to have a tax credit, some of our clients don’t always do the things they’re supposed to be doing. So the measurement and reporting back of our clients in terms of how well they’re has actually been very well received. They like to know if they’re slacking off in some areas that we have the systems in place to be able to remind them and tell them to do better. So if we didn’t have systems in place, we’re just going to get poor results.

OWEN: I like that too because it’s kind of like you can sell them your service and get the money from that but it’s more important if your customers are actually successful with the product you’re selling.

JEFF: They got to be very successful. There’s other companies out there that do this and if we’re not giving them a full view of what they’re doing and feedback then we’re not doing the right thing for them. We’re not getting them everything they’re entitled to get.

OWEN: You mentioned something about color coded post it notes and stuff. I’m wondering what system that is.

JEFF: We actually have the forms that our clients would use when they’re doing paper. In the old days when they did paper we would actually color code their forms to make it easier for them to participate in the program. We took the basic black and white and did that. Not every business always runs exactly by the book and you’ll see on some of the computer screens they’ll have little post it notes on there on how to handle certain exception situations. So they do so consistently. And I think everyone probably has their own set of mental or visual post it notes to be able to always do not only the things that system defines but also the one-offs.

OWEN: Coming to the present now, since you have more free time in your business, I’m curious, which areas of the business due you focus on now and why?

JEFF: Tax credits relates to the IRS and the IRS is in Washington. And the program is also co-authored or run by the department of labor. I focus on legislative issues now. Having a system in place has allowed me to get out of my office and go to Washington, which I’ll be there next week as a matter of fact. Then I’m going to be talking with various members of the House and Senate about the importance of these for employers. And also, I’ll be working with the IRS and the Department of Labor on the running of these programs and it’s really great to see how the government does work. They do some really cool things in Washington once you have a chance to be there. And I love doing that.

OWEN: So now you’re becoming lobbyist now huh?

JEFF: We’ll, a lobbyist isn’t such a bad word, it’s…

OWEN: I’m not saying it’s a bad term, I’m just saying that you can be able to affect the change by being there and lobbying them.

JEFF: When you talk about to legislators about the good of hiring people who are returning veterans or people who have disabilities, they usually listen and they do want to help. And we need to explain to them sometimes how that’s beneficial in terms of these tax credits and how that works. And it’s very rewarding for us. Because sometimes they got so much going on they don’t know. And on a different level altogether when I go to Washington one of my favorite things to do is to strap on the running shoes and go running up and down throughout Washington. When I’m not doing the tax credit thing I’m a marathon runner. Everybody deals with their stress in different ways and I’ve made it a passion to run wherever I go. I guess having all these things in place force me the luxury and the time to be able to not only my passion for travelling but to run marathons. And I’ve tried to run all over the country and all over the world.

OWEN: That’s awesome. What is the next stage of growth for your business, what are you planning to achieve next, and why?

JEFF: Well, as I mentioned before we’re starting to rebuild some of the tax credit software that does work for us. But I would like to take on doing additional tax credits. We  kind of narrowly focused on hiring credits but I know there’s more out there. And by building a new system it’s going to be built with a design and the capability of handing many more types of tax credits that will be of greater benefit for my clients. I think they’re counting on me to be able to get them as much money from the government as possible so I can focus on all types of credits, a whole family of credits instead of just one or two.

OWEN: Basically, you want to be an engine where depending on the type of credit you can apply to that engine and it will just still give that same results of the clients being successful regardless of the type of credit.

JEFF: Yes. There are more credits out there than what I do but I’d like to be able to bring to their doorstep more credits than they’re currently getting now, and a new system will afford me the opportunity to do that.

OWEN: That’s good to know. Can you summarize the entire steps the listener would have to go through just kind of summary of what we’ve talked about in order to systematize their business so it runs without them.

JEFF: I think one of the key things is when you started in the early days of your business. Yes, it might be your idea. But I would suggest start by building a kind of a board of advisors. Other people you know that might be CFO’s, HR’s, executives, or other people who’ve done this before you and have made mistakes. Talk to them. Share the ideas that you have with them, by them lunch, sit down for an afternoon and kind of pick their brain, you’re going to come up with some great ideas by doing that in the early years. I’d say whatever reluctance you might have to doing things like non fun things like accounting, do it anyway. Because you’re really going to appreciate that discipline as you grow, it’s been much easier once you have an idea of the numbers. And analytics, not just PNL. But what are the certain things in terms of number of things you produce or number of clients you have. Or other things like the vital signs of your business. I go out there and sell with confidence.

OWEN: I love that, sell with confidence.

JEFF: Because Owen, if you know your system that’s on your back is working for you, you can go out there and tell your clients we can do a great job because we got great systems that are going to support what you want to have happen. And look them in the eye and say, I know the snap. This is going to be one. We’ve done it many times over with other people and we can do it with you. And just feel the conviction in your voice and your perspective clients get that when they know that you’ve got a solid, repeatable, trustworthy system.

OWEN: Yeah. What will you say is the very step that someone who is listening to this interview all the way to this point should take in order to get started with trying to transform their business so it runs without them?

JEFF: I’d say it’s kind of a hybrid. If it’s right for you I would say look for a business coach. Someone who can advise you on things that you don’t know and be willing to listen to that coach. Or bring in some advisors, if not in a formal role where you pay a coach to be with you. Certainly take your friends out to lunch or other business owners and find out what they’ve done to be successful, and mimic some of the great things that they do.

OWEN: That sounds interesting to me when it comes to hiring a business coach. Is it like looking for somebody who has actually has success in your specific field? I’m trying to figure out how one would determine how to hire the business. Does the person has to have an experience in my field… Do you understand what I’m saying?

JEFF: I would say probably not. If you hire a business coach that’s really, really good on the fundamentals, understands operations, sales, marketing, analytics, they could probably be a great coach for a number of different types of businesses and they’re out there. You can look at them on the internet and then interview a few. And let them interview you because it’s not always a great match. But there are some really solid business coaches in almost every community out there.

OWEN: Maybe you don’t have experience in a specific field but is it necessary for them to actually run a business and be successful with it? I’m just wondering.

JEFF: I would say not necessarily. I think if they were an executive in a business and understand it not only the bottom up but the top down. And they’ve been able to lead well, and be able to understand the important components of the business, I don’t think it’s absolutely necessary that they be an entrepreneur or have their own business, maybe they can empathize with you when you go through the various emotional and financial swings of the business. But I think someone who understands really good business fundamentals can come from industry, working for other people or be on their own. But they’re probably in both places.

OWEN: I’m glad you said that because sometimes that’s the impression people thinking about getting a business coach. And that’s something I’m struggling with. Is it somebody who’s on my field or… I’m glad you made that clear distinction. Are there any questions that you think that I should’ve asked you that I didn’t ask you earlier that you feel would add more value to what we’ve been talking about so far? If so, say the question and the answer.

JEFF: I think, if anything I would’ve asked what kind of people in terms of adding on people, or what are you doing for your people. In a small company, if you’re a 5-person company or 4-person company, 1 person who leaves, that’s a lot of information going out the door.

OWEN: Yeah.

JEFF: I would focus probably a little more attention over questions on what types of other things… Do you have a systematic way of motivating and challenging your people, not just measuring. But regular process of making sure where their growth is going and whether you’re likely to go with the company is being looked at. It’s not that hard to do. I think you create certain questions and challenges. Would you like to do this? Because of this, I’ve got operations people who are now going and selling for me because it’s like… I’d like to get out of the office every now and then, and I’ve sent them all over the country to stand in by themselves, representing our company to sell our service because they know it from the inside out. And they could sell probably with more conviction than I do because they’ve seen what it does. And I would not have known this if didn’t ask them, “What else would you like to do?”

OWEN: Yeah, I agree with that. What is the best way for the listener to connect with you and thank you for doing the interview?

JEFF: You want a phone, email, or both?

OWEN: Whatever you’re comfortable sharing with the audience.

JEFF: We’re in the Chicago area, 847-795-1400. My website is www.rjeffrey,com

OWEN: Awesome. I’m speaking to you the listener now. You’ve listened to the interview all the way to this point so obviously I’m positive that you’ve enjoyed it. If you enjoyed this interview please leave us a positive review on iTunes. To do that go to sweetprocess./iTunes. And if you have an Android phone, to leave us a review on the Stitcher app you go to If you know another entrepreneur who will find this interview useful please share it them. Finally, if you’re at that point in your business where you’re tired of being the bottleneck and you want to get them out of your head, and document step-by-step how you get tasks done so your employees know what you know, signup for a free 14-day trial of SweetProcess. Jeff, thanks for doing the interview.

JEFF: Owen, it’s been a…

Noteworthy item Mentioned in this Episode:

  1. Confronting Reality: Master the New Model for Success by Larry Bossidy & Ram Charan

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Here are 3 Steps to Take After Listening to the Interview:

  1. Start building a board of advisors made up of people who might be CFOs or executives and share your ideas with them.
  2. Even though you might have an aversion to things like accounting, make sure to do it.
  3. Go out there and sell with confidence. If you know your system is working for you, you know you can help your clients.

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