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What agency owners need to know about financial metrics

Published by Summit Marketing Team on 29 Jan 2020

The Virtual CPA Success Show for Creative Agencies: Episode 6

How much money should you be making if you're the owner of a digital agency? No matter how big or small your business, the percentage of revenue you are earning should be about the same.

In this episode, Summit CPA CEO Jody Grunden joins Jamie Nau to break down a basic income statement and explain the importance of each section. Listen to learn about where your revenue should be going to run a healthy business and how you can increase your profit margins.

Jamie Nau: Welcome to Episode 6. I'm joined once again by Jody Grunden, the CEO here at Summit, and we're going to answer everybody's favorite question: how much money should I be making if I'm working at a digital agency? How much money should my company bring in? So, Jody, I'm just going to throw that right at you let's start right away with that first answer. How much money should I make if I'm an agency?


Jody Grunden: A ton is the answer. A ton of money. No, no. So basically a service based company in general should be making at a bare minimum 15 percent net income. And we say 10 percent in income is kind of our break-even point. So anything south of 10 percent. and this is Angel Eyes. obviously each month we treat it a little differently, but on annualized trending you should be making, as a service based business, no less than 10 percent. You should be targeting at a minimum 15 percent. And the really successful agencies are making 25 percent or greater. So it really depends on a lot of things in your company, a lot of things that will trend to that but I say make as much as you can. And that's the key there. Net income is high you can bill cash easy.


Jamie Grunden: Great. So in your book, and in case you haven't seen Jody's book, Jody has an awesome book out there. So make sure you look that up. The link will be in the show notes. But in your book you talk about 10 percent being the new break even. So can you go into that a little bit and what exactly that means.


Jody Grunden: Sure. So 10 percent, we call it a break even because like I say, if you're not making at least 10 percent it's really hard to manage cash, you know, cash flows up and down all the time. You need that 10 percent really to come in you know, and help you do that. Because keeping in mind by 10 percent, well 40 percent, typically that 10 percent is going to go to the IRS. And so it really leaves you 6 percent or 60 percent left. So 60 percent of 10 percent is really all you have to build cash and so if you're goals are pretty high that hey, you know, you think we've got this building that we want to purchase, or this down payment on this big thing, or this big new hire you're making less than 10 percent that starts getting into risky water. So that's why we say 10 percent is kind of a break even you want to make at least that. The higher you make over and above that, the more you can do fun things with.


Jamie Nau: And we'll get into the categories here in a second, but one of the things I want to point out here is oftentimes, the smaller the company the higher the profit margin. The net profit margin at the bottom in a lot of reasons is because there's just less overhead costs spending and it's a little bit easier to make that higher profit. So oftentimes we see companies coming in with you know, eight, nine employees, making twenty five, thirty five percent as they scale, and as they get bigger those amounts go down and they like, what's going on? And oftentimes we'll have to have that conversation. Like well, you've had to hire a new marketing person, and you had to do this. You had to do that. So that's one of the things I definitely want to make sure people are aware of as our listeners. If you're at that small size company, and you're making much higher numbers than this, and you plan on growing, just expect those numbers to be a little bit lower. The bigger you get.


Jody Grunden: Yeah for sure. Because when you get that million dollar mark you really start becoming you know, where you are the producer, or predominately the producer, you really have to kind of roll back your sleeves a little bit. Now you become more the non-billable type personality, and then as you get even bigger then you'll have to hire again, the other people. The marketing person, the COO, the CEO, you know all the different people needed to manage that company. That's why Jamie's saying your profit margins will get smaller and they do. So the fact is, like I said, 15 percent is what you need to be making. I'm talking about a company over a million dollars. If you're less you probably should be targeting more towards 30 percent. as a good benchmark for you.


Jamie Nau: When we say less, and make sure this is clear, we're talking about percentages here. We're always talking percentages. So your dollar amounts should go up. Your net income dollars coming back into the company should go higher, but the percentages are getting lower.


Jody Grunden: Yeah for sure for sure.


Jamie Nau: Great. So one of the things that I like, that Sumner does, is we try to simplify the income statement. So that's what we are going to go through throughout this podcast. Go through the sections of the income statement, and why they're important and how they're calculated. And at the end we can talk about how we can improve those areas. So let's start with the top. So we talked about net income being on the bottom. At the top of the line is obviously revenue. And then right below there you take out your production costs to get gross profit. So if I want to be a 15 percent profit company where should my gross profit be and how do I make up my gross profit?


Jody Grunden: So it's important to understand what production expenses really are. First of all, with production expenses it's similar to a manufacturing company, but in the service base business it’s called cost of sales. And your cost of sales are basically the employees that are used in the production. So this is what we're talking about. We talked about that. They are basically the producers, the project managers, the account managers, everybody, that's the designers, everybody that's in that top end bucket should be in that one. So your office manager, your marketing person, your sales, your business development person, a lot of times the owners are going to fall outside of that, and they're going to be below the line, what you call below our gross profit margin. So it's important to understand, hey we've got those salaries in there, so if your average salary is whatever. Whatever your accumulation of volume salaries would be there, plus any direct costs related to that individual and the direct costs, we typically call that burden costs. And the burden cost that we define are just simply those that are direct burden costs. So we don't look at the indirect burden costs. A burden cost would be like your payroll taxes, your 401(k) match, your health insurance, disability insurance. If you have you know, you've got to allocate the amount of money that you spend on equipment through technology so there could be a direct technology stipend which are very easy to manage. Giving your employees a two thousand dollar a year technology stipend so they can upgrade their equipment. Or if you don't go that route, but you actually supply the equipment, then you need to put that above the line so that your depreciation for those in accounting terms is going to be within that cost. That's important. Others would be like your education. You know they always say if you're not educating employees the next employer will. And so the key there is to keep your people, make them smarter, make them more efficient, and so we also would include your educational stuff up there too. So if you're setting up conferences like Drupal Con, or something like that, that's going to be above the line and the production costs, which is really important to understand when you're comparing apples to apples. So in addition to the actual employees the other, I'd say soft expenses would be, your software expenses and direct line of production. So if you got specific software that you use that are production based software, then you would include those above the line as well. So things like Slack and GoTo Meeting, Zoom and stuff like that, that's going to be below the line, and if you’re using something more towards your clients then you're going to want that being above one as well. And so once you've done all that, and you're looking at your total expenses that we call again, production expenses, subtract your revenue from that, and this should be roughly 50 percent of your total revenue. That is what we typically see in a successful company. When it gets north of 50 percent then one thing that's going to hit is your bottom line and that's going to shrink your net income. If it's higher than that, and those are the companies that we're going to see that you're your gross profit will be higher which again will also traced right down to your net income. So it's important to have that 50 percent or greater as a good benchmark, and that's typically what we see with our clients right around 50 percent.


Jamie Nau: So Jody, how do I handle the employee that does two things? I have the guy that's a producer. But I also have a really good salesperson. So I have him below the line as well. So how would I handle his or her cost?


Jody Grunden: So if there's a distinct distinction between the two. Like let's say, like you're saying, a producer or a salesperson, I would typically take 50 percent of that person's salary and that would be above the line, and then 50 percent would be below the line. And the same goes with the owners because a lot of times the owners, or especially when you're in that one million dollar mark where they are wearing several different hats. You have to bifurcate their salary also. So that part of it goes up above the line and production is they're still doing production. And marketing, typically we see a lot of owners in the business development in the sales and marketing bucket, and then other owners might be partly in admin. So you have to technically divide it into all three areas to give a good comparison when you're comparing company to company. Or really to see how well you're doing, because what the problem is, that if you're producers, if you're a producer and you're an owner and you're up in the top part or you're not in the top part, it's going to distort your numbers, and look like oh, well my numbers are doing really well there. And then you look down below line it's like, well my sales and marketing has kind of blown up, or my admin has blown up or vice versa, where you've got everything above line and nothing below line and you're like, oh well I'm doing great. I hardly have a marketing expense when you find out that the owner is actually the one that's doing it and the majority of their salary should be in that in that bucket. It distorts that as well. So it's important to bifurcating now. I wouldn't get so granular to separate that out on a weekly basis. or I wouldn't go through that pain unless you were to hire a bunch of accountants to actually do that for you because it doesn’t give you a whole lot of benefit. But just take it at generalities, if you take the last six months and you know, what have they been doing over the last six months or over the last year. That will give you kind of an idea. Then you simply break it out through journal entries into the different buckets


Jamie Nau: You can also look at it for what you hired them for. Again it doesn't really matter where they're putting those hours. But if I'm hiring someone to be 50 percent production, and 50 percent marketing, that's a great way just to split those costs, and because some weeks they may be a little bit heavy towards one side, or the other, but I think it's just important to have it consistent along the line again. The reason we do this is because we want to be consistent with other companies. You know oftentimes we'll go to events and we'll talk to five different companies and everybody will tell us their gross profit, and someone will say, oh I'm at 70 percent gross profit, and someone else will say, I'm only 40 but then I look at the bottom line and they're exactly the same. They're both around 50 percent, and both times it's just because of the way they're allocating these costs. And so we really want to make sure when those two companies are talking to each other that they're talking about the same thing, and that's why with all of our clients we make sure we get them consistent. So we're comparing them. It's easy to say, oh this is where you need to improve. There are areas to get better.


Jody Grunden: Yeah. Keeping in mind when you're comparing against another company that doesn't necessarily mean you are doing better or worse than that company, because you really have to compare against yourself and what your forecast and vision was supposed to be. So when you forecast all your numbers out for the year and you thought well, by the end of the year we should be at 50 percent, and in reality right now we're at forty five percent, it doesn't make a difference what everybody else is doing, you're comparing against yourself and what your vision is. So it's important to understand what everybody else is doing. And to Jamie's point, so that you have a good idea if something's going wrong you can kind of look back and say, oh maybe it's in marketing because we're spending too much there, or maybe it's facility, or maybe it's an admin you know, we can trim a little bit there. Or maybe it's in production, which is where it's at 90 percent of the time, you can look at that and kind of tell. But the biggest thing is to compare against yourself and your own goals first, and then go to the industry second as a solution or to try and figure out what where you're going wrong.


Jamie Nau: That's a great point, and I think just looking at that bottom line 15 percent, if you think, you have 50 percent net income, that means you have eighty five percent costs. Where that eighty five percent falls is up to you. Really it's just a matter of how you want to run your company, and so that's always how I've looked at it as you know, this is your bucket to play with. This is your salary cap. This is how much you can spend. You might decide to spend all of it in marketing and only have two producers, and as long as you're still hitting that 15 percent more power to you. Whatever it takes to get there.


Jody Grunden: Yeah. It also depends on what type of business you want to run. Are you running it so it's more of a job? Or it's something that you can walk away with and it's not worth anything when you're done? Or do you want to build a company bigger than yourself? Or you can actually sell it someday. So that's also going to play a big factor into it. You know, you may want to take all that burden yourself and be a workaholic, and work your butt off, and be the biggest producer in your company and your gross profit is way high, or net income is 30, 40 percent, and you're like, ah I am making better than you are. But guess what? When it comes time to sell, you're not going to sell for anything. whereas the person maybe taking a lesser net income, you know, maybe that 25 percent, 20 percent they're removing themselves out of the business, and when they go to sell its going to be a better multiple because they're no longer the big influence for the business. They've made their self-relevant which is really important.


Jamie Nau: That's another great point. Depends what your long term goals are, and there’s a lot of ways to look at this and how you set up your business. So that's great. So before we get to the overhead, one thing you talked about a little bit earlier was burden. I just wanted to make sure that our listeners get an understanding of that what we normally see for burden as a percentage of an employee. So just to kind of put it in simple terms: if I'm paying my average employee one hundred thousand dollars, how much do we normally see in terms of burden costs on top of that?


Jody Grunden: In burden costs the percentage is going to scale based on the dollar amount of the employee. Obviously the higher employee the less burden, less percentage, you’re not dependent upon the dollar amount, but we typically see, I'd say between around 25 percent. Is that is that pretty much what you are seeing Jamie?


Jamie Nau: Yup


Jody Grunden: And again we don't get as granular as to take a percentage of their desk, a percentage of utilities, a percentage of this and that, we only take the direct costs related to that employee, basically a variable cost. Everything else we slide into the different buckets to make it easier to read. You know I talked with an accountant that worked for another firm, and what she was doing is she is really breaking it out so granular that she knew exactly the percentage of floor space that every person had, and for a service based company that's really not necessary. If you know what your percentages are below the line you can get that same information. The problem is it took basically a full person to do all that calculation and do everything. And it really didn't give them any more information that they could make an informed decision. So it's important not to get too granular I guess, see as high as you can at a higher level, just knowing that hey, that gross profit, that first number we talked about has to be roughly 50 percent. We told you everything that goes in there. The bottom line has got to be roughly 15 to 25 percent. The rest is your overhead, I think Jamie that what we're getting into next.


Jamie Nau: Yeah let's go there. Let's go into overhead. So if I'm spending 50 percent of my revenue on production what is the other part? What is the overhead? I know there's three categories there, so let's just start with the first one which I think is probably the most difficult to put your head around and how much to spend. But let's talk about sales and marketing.

Jody Grunden: So overhead is made up of three buckets: the admin bucket, the marketing bucket, and then the facility bucket. Each bucket is its own, and you should have your employees within those buckets. Obviously facilities is not going to have employees in it typically. And so you're looking more or less for the employees to be in the sales and marketing and also in the admin bucket. And so for the sales and marketing bucket you're going to include all the conferences that you're going to as a business development type conference, you're going to include the salary for the salesperson, a salary for the marketing person. If the owner is part of that group, the owner's salary, if not all their salary, will be in there in, and any kind of dues subscriptions are going to belong in there. Typically we see about 9 percent of our revenue goes towards sales marketing, and that's going to vary dramatically based upon the recurring revenue that company has. So keeping in mind that if a company has a very high recurring revenue model, where they don't have to replace everything as often, well then that percentage will go down typically. If they've got a low recurring revenue model where they're out there hunting for the next client, then they have to replace the client as soon as one leaves and that's how they make their money because they don't have recurring revenue, then typically you're going to see it close to the higher level of you know 9, maybe 10, 11 percent. So it's really going to vary a little bit upon the structure the makeup of the company and the type of model they have. But if they're at 20, 30 percent, there's something wrong. They need to figure out what's wrong because that will eat into their bottom line pretty quickly. It is typically a salesperson not selling, or the marketing is not driving enough business. Maybe the marketing is in the wrong bucket and you should be focusing in a different area.


Jamie Nau: I think that the great point there, especially on marketing and admin. They are different. Marketing is meant to generate revenue. So if you have 20 percent marketing costs, then the question to the marketing team is: why aren't you generating more revenue? Or what can we do to generate more revenue on that side? Because if you have too much marketing costs, and they're not paying for themselves, which they really should be doing.


Jody Grunden: Oh for sure. And then the easy bucket to talk about outside of sales and marketing would be facility, because that's kind of the pretty basic one. That really is going to be the lease payment. It’s going to be the interest on your mortgage if you own it, and everything really associated with a brick and mortar company. We typically see that being about three and a half, to four percent is what we see, and that's pretty much how it is all across the nation. We don't see it really big huge spikes in New York, or San Francisco, like you would think because typically your revenues a little bit higher in those cities. So when it all falls off as a percentage, the dollar amounts a lot bigger. The use of the revenue is too. So as a percentage though it's typically relatively the same amount there.


Jamie Nau: So what about distributed companies? So if I'm a distributed company can I just assume I'm going to be 4 percent profitable than everybody else? Or will I make up for those costs?


Jody Grunden: Pretty much. You don't have anything in that bucket but you'll have more in the admin bucket. Because admin bucket is the last bucket that we're going to talk about and that's going to include a different things like a company retreat. So for instance a distributed company may not see 3 to 4 percent, it probably won't be that high. It all depends on how big the company is of course, but with that, it also depends on how many company retreats that the company does. But a typical distributed company will have about two retreats a year. One retreat is typically a companywide retreat. The other retreat is typically a departmental retreat where they're getting together and kind of sharing things on a more personal basis, getting to know each a little bit more on a personal basis which is important for distributed team members. And so that cost is going to typically be in the in the admin side. So what also is on the admin side? Well your office manager or receptionist. If you don't use a receptionist but are using a third party like a Ruby Receptionist or something like that, the contract costs will go up if there’s any kind of fee that's associated with the day to day stuff, your mail, your dues subscriptions, anything that’s not related specifically to production, or that's not really specifically to marketing goes into the admin bucket. And so the key to that bucket there is you don't want all three of them as an accumulation to grow greater than 35 percent. So it's kind of like your slush bucket, you know, your default. What doesn't go into the facility bucket, and what doesn't go into the marketing bucket ends up going to the admin bucket, and again you don't want it to be greater than thirty five percent. The better you get, the more that you can scale, the recurring revenue that as a percentage will start going down, the dollar amount doesn't change a ton, which is kind of cool with the admin side, because most your change is going to happen with the people side at the top and on the production side as a percentage. So you should typically see a flat admin. Maybe a growing dollar amount for the marketing, and facility costs will typically get a little bit lower, maybe equal, as a percentage as you get bigger and your company starts to scale.


Jamie Nau: So we've done the math to back into that 15 percent. So just to summarize, 50 percent gross profit. 35 percent total overhead gets you to 15 percent. Obviously improvements you can make in either area will get you over that 15 percent. If you are a low overhead company you might get 25 percent, and if you're really efficient producing company you can get your gross profit tp 60 percent of both of those will fall to that bottom line to improve that 15 percent. So let's talk a little bit about those improvements.


Jamie Nau: If I'm a listener to this podcast. I went and did the math, and I'm at 10 percent gross for our net income. What can I do to bring that number up?


Jody Grunden: A big tip would be, first look into software expense because a lot of times we find that software is a place that a lot of the unnecessary expenses are high. And what I mean by that, it could be that you're paying for a software that you thought was a great idea a year ago, but really aren't using today. That happens quite often. Or maybe the users that you're paying for, maybe you've gone down a number of employees over the last year or you're still paying for 15 of your employees not 40. You know there's 5,10 seats on there that you could probably scale back on a little bit. So software is one that I look at right away because typically it's the low hanging fruit. You know you can usually find something in there that you probably don't need. One tip I would have for you to prevent that from happening, because it happens to everybody all the time, we get so busy, is putting software on a prepaid card so that you know that after a year the prepaid card is going to run out of money. So then you have to make a hard decision, do we renew it or not? And if we renew it, then we find another card, or we actually put it to our main bank account. Bur for brand new software I highly recommend putting it on a prepaid card just so that you don't forget you did it. If you're paying 39 bucks, times 10 people for 5, 6, 7 years, and you realize by the end they even have a subscription to that software that you don’t even really use anymore. You don't want to come into that situation. You just wasted a ton of money. So software I would say is the probably the number one thing. Number two I would say, is probably your insurance. You know we all love insurance but it's probably not a bad idea to shop your insurance every couple of years to kind of see what else is out there and available, or maybe even going to a different policy within yourself. Or if you feel that your insurance is getting out of line, your company can't afford it but you really need to retain it, you know maybe go to a different model where you pay a specific dollar amount, and each state can be a little different with those specific elements of the premiums. Maybe you're paying 3 or 4 hundred dollars towards the insurance and then the employee picks up the difference here, or something like that. It really depends on the insurance. It also depends on the state you live in to dictate how much you can actually do. But that's something to take a look at. I like it because a lot of times the employee can also bear some of that burden, because a lot of times when it comes to insurance it's one of those compensations that people just take for granted, and don't even realize that you're paying out all that money for it and that kind of brings it to light a bit. But maybe it hopefully makes employees a little more grateful if you're providing that type of a service for them. So I'd say insurers definitely take a look at that. Can you think of any others that pop into your head Jamie?


Jamie Nau: No. I think the other thing is obviously similar to what you said with insurance is just evaluate every cost you have. Going through and doing analysis of vendors you're dealing with, and making sure that they're the cheapest vendor, or that they're the right one for what you're actually using them for. And so I think that's the biggest thing. You'll need to do that two times a year. But I think at least once a year, every couple of years, going through and just evaluating your vendor list. Making sure it makes sense of what your current service packages. And so I think that's the biggest thing, is again, for service based businesses that list isn't going to be that long. And so it's a really easy practice just to go through and look at, who am I spending money with outside my employees, and making sure that it all makes sense. And you know especially when it comes to technology, and even any services that are provided to you, the industries are changing so much that things change so quickly that a lot of times costs are cut so quickly that something you are paying a hundred dollars a month for, a year ago, there’s another provider out there that's doing the exact same thing for half that price because you know it's a very competitive market out there when it comes to providing services. So that's the key is just making sure you're evaluating it I completely agree. So I have one more question for you but before I get to that question, I wanted to plug our email address. So we have an e-mail address: vcfo@summitcpa.net and I would love for our listeners to e-mail me if you want to be a guest on the show. If you have any topics you want us to talk about or if you just have any questions for us in general please e-mail that account and reach out to Jody or I and one of us will get back to you fairly quickly. Again the email address is vcfo@summitcpa.net


Jamie Nau: So I want to throw that out there before I ask my last question here. So Jody it's been a while since our last recession the further away we get from the recession the more people worry about it. So what are your thoughts on a recession and how would I prepare for something like that if I really feel strongly that one is coming?


Jody Grunden: Yeah recessions are kind of funny, because really it's a normal business cycle. So it's not nothing out of the ordinary. Typically happens about once every 4 and half years. So it's one of those things that is just a regular business cycle—it's a big part of a regular business cycle. So when you pop on and you notice that on the news that we've been on the longest growth cycle in history ever and you see all the different predictors saying, hey there’s going to be a 30 percent chance, 50 percent chance, 20 percent, 15 percent, all these really smart people that are economists that really know what they're doing, they all give different answers because they really don't know. But what we do know is it's going to happen. It may not happen this year. The chances of it happening in 2020 from my understanding is pretty low, but that chance gets greater and greater as the years go on. So what's really important to know is, hey it's going to happen. You know, it's not a big deal. Meaning a big deal that doesn't last forever. Our typical recession lasts no more than 18 months. That's what the last recession did. You'll find that it's probably closer to a year is what you're really looking at—a really tough year. Now with a company that's very prepared for that, it’s not as huge of a deal. For companies that are not prepared, it is a huge deal. So it's important right now, while the going is good, because 2020 looks very strong, especially the first two quarters in the last year have been very strong economically. It's really important to fix all the ills that you have in your system. So if your net income is not where you need it to be, you've got to get it to where you need it to be. This is the time to do it, when things are going really well. And when they're not going well it's very difficult to turn the ship around. So it's important to get there. If you don't have cash in the bank, get cash in the bank. Bill money and all you can do to bill money is to improve that bottom line net income. So that's really important to understand how much net income you'll need to have in order to generate the cash that you're going to need to have in your company. And we always say you want at least 10 percent of your annualized revenue in the bank at all times. That's for operating purposes. And that basically comes to about two months’ worth of expenses. If you're thinking that there's going to be some economic downturn or economic issues why not have closer to 30 percent in the bank. You know, you may think that's a lot of money, but you know what? That's six months’ worth of expenses. Typically recessions last only a year. You've just secured, you've taken most of the risk out of your company. So if you think it's really important to have money in the bank for a recession that's going to happen eventually, don't see it happening in this next year, but going to happen eventually, this year is the time to really take advantage of it. Make sure you bring your net income closer to 20 percent. Figure out what you need to do it. Hire consultants to come out and help you out, either long term or short term, but do not just stay at 10 percent, have a maxed out line of credit, and go into recession and think you're going to be OK. Because more than likely you probably won't be. So it's important to build that cash, get the line of credit paid off. Another thing I say, a line of credit, you know, your line of credit should be used as line of credit, right? So as money comes in, up and down and that sort of thing, a lot of times you'll see people’s line of credit stagnant, don't do that. Pay that line of credit up and down. Really important, because what's going to be another key I'm going to mention, this is is the perfect time to go to the bank and get a two year renewable line of credit. Meaning instead of renewing it every year like most people do. If you built a good business, ask for two years. And so what that means is they're not going to look at it for another two years instead of one. And guess what? A recession lasts, at most, 18 months. So that recession is going to allow you to have that line of credit available during that time if in fact you do have it and you have a zero. So just another question to have, really important, go to the bank now and negotiate solid lines of credit. Bill cash. Those are really the big keys, and the only way you can do that, unless you've got a lot of money outside the company that you personally can stick in there, the only way you can do that is to improve that bottom line. Prove that net income. Make sure that your minimum should be 10 percent. If you think it should be 15 to 20 percent you need to figure out what you need to do in order to make that happen.


Jamie Nau: No I think it's a great point. I see a lot of businesses use recessions for growth, and you know, if you have a lot of cash going into a recession you can take advantage of a lot of things. One, you could find a company that didn't prepare like you and you could acquire them because you have the cash in the bank, and you could grow through acquisition instead of through organic growth. I’ve seen that a number of times where a company has been prepared and they've had enough cash during a recession to get a company at a discount or on the other side. A lot of vendors like we talked about earlier when a recession hits they're going to get desperate and they're going to be willing to give you a deal and say, hey if you pay for the next year we'll give you half price on this product, or half price on this service that we provide. So a lot of times you can really use the recession to your advantage. If you go into that recession prepared. I think that's a great tip.


Jody Grunden: I love to spend some time on another session or another podcast to talk specifically about recessions. Maybe we can invite some of the CFOs and kind of get their take on it as well.


Jamie Nau: That’s a great idea! So that's all the time we have for today. So we have another podcast coming out in two weeks. It's going to be kind of fun. We're going to turn the tables around and Jody is going to interview me as we talk about the pipeline, and how to prepare your pipeline. What to think about on your pipelines. So that should be a fun episode and we're looking forward to recording that one. But I appreciate your time today, Jody. Hopefully listeners got a lot out of this.


Jody Grunden: Yeah thanks, Jamie. I appreciate it.

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