Author: Kansas City Web Design®

Chad Peterson is an entrepreneur, author, and award-winning business Broker. His firm, Peterson Acquisitions, was recently acknowledged as one of the best business brokers in the nation. Chad successfully handles business transactions across the United States, and occasionally around the globe. His M&A firm works on deals from $1 million to $25 million, and in some cases exceeding $25 million. He handles the transactions from start to finish with tenacity and results. He lives great life, traveling and making deals with movers-and-shakers around the country, but Chad started out with a more humble beginning.

Chad business journey started when he was a child.  He hustled as a kid, walking dogs, shoveling snow, mowing grass, trimming trees, and cleaning out gutters.   He developed a thick skin by and ‘can do’ attitude by cold calling and knocking on the doors. He learned how to prospect, how to garner the trust of clients, and a how-to work hard to earn every dollar.

Chad also wrote the book From Blue to White, A Working Man’s Guide to Self-Employment, where teaches people how to transition from employee to self-employed.  This book was well-received and garnered attention from the likes of Scott Alexander, author for Rhinoceros Success, one of Chad’s favorite authors. Scott Alexander not only endorsed the book, but he also wrote the foreword.

 

Learn More About Chad Peterson

• Peterson Acquisitions
• Chad Peterson on LinkedIn

 

Meet Chad Peterson & Peterson Acquisitions

Phil Singleton:  Hello, everybody, and welcome to another episode of the Local Business Leaders Podcast. I’m your host, Phil Singleton. Today our featured guest is Chad Peterson, founder and CEO at Peterson Acquisitions, an award-winning M&A firm. Chad Peterson is an expert business broker that helps business owners sell their businesses and move on to new business opportunities. Chad, welcome to the show.

Chad Peterson:  Thanks, Phil.

Phil Singleton:  First before we start talking and digging into the nitty-gritty about what you do and how you help companies sell their business, tell us a little bit about your background as an entrepreneur, a little bit about your beginnings. What got you into the business world and your journey basically and to become a business broker?

Chad Peterson:  I hate to go all the way back to childhood because I know we don’t have that time and I don’t think everybody wants to hear it, but in short, I was that kid that was always doing something. Before I was even strong enough to push a lawnmower, I was doing it. I’ve always been an enterpriser. Business for self has always been my deal. I knew the school wasn’t for me. I knew that it didn’t have … The education I need was not in those walls. I was always trying to figure out a way to make my own money and follow my own sword, so to speak.

Chad Peterson:  I built several companies. Even just as a young kid, I sold my first company when I was 19 years old and moved on to flight school, became a pilot and lost my career in 911. In fact, I was flying an airplane while 911 happened, about 15 minutes from where George W. Bush had Air Force One parked, and my flying career was over, and so it was back to, well, what do I do now? I just went back to my self-employed roots and started a company and had 120 employees, and I ended up missing the boat on selling it before the ’08 crash. At that point, it just sparked a real big passion inside of me to make sure that I went out there and let people know about timing and selling their business, and when is the time to sell your business?

Chad Peterson:  I started helping people package their business up and sell it because I’ve built and sold several companies of my own. I know it inside and out. A dear friend of mine just told me very lightly, it was just such a soft suggestion, he said, “Chad, you’re so good at this. Why don’t you help other people do it?” That’s when it really got created, because I had never thought about helping other people do that. I was always doing it for myself. Long story short is I built and sold companies my entire life. I know exactly what business owners go through. Really I think what every business owner faces is burnout and boredom. It’s right around then that you want to sell your business.

Chad Peterson:  What I can do is I can take somebody that has done well. They’ve built it. They’ve made themselves good money. They’ve really done well, but their passion is waning and they’re getting bored. They’re getting burnout. That’s when I want to sell what they’ve built and get that business owner on to a new opportunity. I always tell people, I don’t retire people. Those that think that they’re going to retire and get a new set of golf clubs and golf every day, that doesn’t work. People get miserable. Everybody has to keep working. Everybody has passions they have to pursue. I don’t retire people. I just get them on to a bigger and better thing, something they’re more passionate about, something that gets them out of bed every day because they want to go to work.

Chad Peterson:  It’s not about retiring. It’s not about giving up. It’s about finishing well. I’ve done that for myself countless times and moved on to other ventures that I’m more passionate about. That’s what my passion is. I’m passionate about helping people sell what they’ve built and move on to something else.

Phil Singleton:  That’s so awesome. Tell me a little bit about that because one thing I think is really interesting about you, Chad, is that you don’t fit the typical profile of I think what many of us would think as a stuffed shirt M&A finance person that probably has never actually run a business or have been in the trenches type of thing. When I read about you and when we talked in the past, one of the things I know about you is you actually built businesses, main street businesses too, not just fly by night internet type things just as a hobby but actually built real businesses with employees that built real things.

Chad Peterson:  Right.

Not Your Typical Stuffed Shirt Business Broker

Phil Singleton:  How has that served you and how has that do you think make you different I think than the typical business broker out there, at least the typical impression other people have about the industry that you’re in?

Chad Peterson:   That’s a great question. To my surprise, I have not met anybody in this industry that can even compete with me. That sounds like a very braggadocious statement. That sounds very pompous, but the fact is that most people that are in my industry, they might have been a VP somewhere. They might have been a C-level executive somewhere. They might have had a good management job or perhaps they were in the real estate business, didn’t do too well and then saved up enough money where they could go work for a firm such as mine and survived maybe a year without a paycheck because in order to get in this industry, you do have to have some savings because you don’t have a book of business. You really have to really work hard to get that book of business. People just don’t have the grit that I have, period.

Chad Peterson:  I’ve been self-employed my whole life. Hard work, that’s just what I know. I’m not trying to be a jerk or anything, but the people in my industry, there’s no competition. These guys are in the office around 8:00 AM, maybe 7:30 even, and nobody wants to hear from anybody at 7:30 or 8:00 in the morning, not in our industry. They usually take lunch around 11:30. They take an hour and a half lunch, come back to the office, and they’re usually having a cocktail by 2:00 PM. That’s who they are. Typical profile of a business broker is mid-50s, maybe even getting into his 60s, not highly motivated. Maybe they’ll close two or three deals a year, and they can make a living, and that’s what they’re happy doing. That’s not who I am.

Chad Peterson:  I do more deals individually than anybody out there, and I’ll put my money on that. I work nonstop. I love what I do. I’m passionate about what I do. It’s one thing to be a broker, and to get two people put together and be looking for a commission and letting those two people work it out and seeing what happens. That’s not what I do either. I get two people together and, number one, I start with the right people. I don’t bring on the wrong sellers, and I certainly don’t introduce the wrong buyer to the wrong seller. I make sure it’s a match first because guess what? The bank is going to do that too. Why would I waste my time? I get the right buyer and the right seller put together, and then I teach both of them through the process to get to the finish line. I assist them in creating a friendship.

Chad Peterson:    I told a guy just last week, I said, “Jim, treat this gentleman like he’s your best friend because when was the last time that even a great friend put $1 million in your pocket?” His answer was, “Nobody has ever put $1 million in my pocket.” I said to him, “This guy is your best friend.”

Chad Peterson:  I make sure that people approach the transaction properly. I’m very hands-on. I’m in the mix. I’m making sure that the buyer and seller are on the same page and we’re getting to the banking process, and I’m not checking out at 2 PM to go have drinks, and I’m not putting in three-hour work days. I think there are two types of hunters. The guys that are sitting in the lodge talking about that one that got away, and the guy that’s out there taking thorns in the side because he’s out there hunting it down and trying to get things done. I’m never going to be the guy-

Phil Singleton:   Yeah. Let me bring it home for you here on this because what I think … Look. I’ve never actually sold one of my own business. I guess sold some parts of businesses before and have been involved in some transactions, but my main point here is this. You got to have somebody that’s really confident working for you. You want a killer. You want somebody that’s really confident that they believe that they’re the best at what they do because who wants to work with somebody who’s not, especially in your field?

90% Closing Rate

Phil Singleton:   One statistic I want to bring in here I think that really, really brings this home, and that is, I think I picked this up on your website or some other industry thing I was reading here recently, is I think the industry average for a sell side business broker engagement is somewhere around 11, 10 to 25% closure rate, and yours is up around 90%. Well, I don’t think you get into that level without being an absolute killer.

Chad Peterson:    Yeah. There’s a few reasons for that. I do close 90% of what I bring on. There’s a little catch there. I don’t bring people on … I have criteria to bring people on. Just because you have a business, it doesn’t mean that I’m going to bring you on as a client. You have to have something that I know that I can sell, something that I can match up a buyer with. I would say as far as my competence level and what I know and how I go about it, I am head and shoulders above the competition. I’m relentless. I don’t give up. I make sure that the business gets sold, but more than that, I do it with integrity.

Chad Peterson:   I do it to make sure that the banks don’t have a loss, that the buyer doesn’t put his family’s life on the line with these banks, with the SBA loans and everything else to have their houses repossessed, things like that. I make sure that never happens. In all the deals that I have ever done, I’ve never had a single failure. That means that I could call any buyer out of all the businesses that I’ve sold, and all it is say hi, check in and just have a good conversation. I’ve not had one loan go bad. Not only do I close 90% of what I bring on, I make sure it’s a good fit. Yes, absolutely.

Chad Peterson:   It goes back to your previous question though, comparing me to other brokers. I got to tell you, folks, whoever is listening. Most brokers will bring on any business because there’s no downside. It’s all upside. If they bring you on to sell your business, they don’t have any skin in the game. They’ll say, “Yeah, sure, we’ll try to get it sold.” Next thing you know, your competitors know that you’re selling. They’re sending out mass emails. Everybody knows that you’re selling, and that’s an improper way to go about it. I don’t do that. I make sure that whenever I go to sell a business, I use more of a rifle approach rather than a shotgun blast approach. I work with individual buyers and individual sellers and non-disclosures and discretion is always held to the highest degree because I want to make sure that nobody knows those businesses are for sale, and the competitors don’t know that you’re selling.

Chad Peterson:   That’s what really separates me. It’s tenacity. It’s integrity. It’s also my approach. Just not letting everybody know that it’s for sale. Like I said, I’m head and shoulders above my competition.

Dealing With Business Seller’s Emotions

Phil Singleton:    Well, let’s segue into something else because you touched on a couple of things that I think of as a business owner who will eventually sell my business someday, and that is my business is my life’s work. It’s my masterpiece. If I’m going to sell it, I want to sell it to the right person or somebody that’s not going to maybe pick it apart. Maybe some people don’t feel that way. Maybe they do. I’m thinking about how I think about my own business. I’m going to probably be a little bit emotional about selling it, and I probably would need some guidance. Is that unique? Is that me? Do you feel other people have that same feeling about their business? They’ve lost their passion or they’re just trying to get rid of it like an unwanted stepchild. How does that work?

Chad Peterson:    As direct as I am and as forceful as I can sound, I’ve got a whole lot of bedside manner, so to speak, when it comes to working with business owners because, to agree with what you’ve said, this is not just selling your business. This is like putting your kid up for adoption. It’s something that’s taken more time, more money, more investment, more emotional investment, financial investment, risk. It really has been everything to a business owner. It’s their dream. It’s their vision and everything. Now that they’re not as passionate about it, they decide to sell, well, it’s like their baby.

Phil Singleton:   It’s still important to them, right?

Chad Peterson:   It’s like an adoption. You want to find the right buyer for it. A lot of my job is navigating that seller to let go of his or her business because to your point, it’s what you built. It’s like your baby. I do have a lot of bedside manner to get people over the emotional humps to get them to the ultimate goal, which is to sell when they’re doing well and to get them into something else that’s more suitable to their current passions.

No One Ever Really Retires

Phil Singleton:  What percentage do you think of the people that you work with actually move on to another business versus some that “maybe try to retire” for a couple of months until they pull their hair out or is it pretty much all of them?

Chad Peterson:   I’ve never had anybody retire. It was about two years ago. I sold a drug and DNA testing company down in Texas. He intended on retiring, and I really believed he was going to retire. He was in his late 60s. He sold the business and less than a year later, he called me back and said, “Chad, what else do you have on board?” The one that I was betting on retiring, he didn’t retire. He called me back and wanted to get started. The gentleman that bought his company paid cash for it, and it was a lot of money, and paid cash for it, and he was 73 or 74 years old. I just don’t see people retiring. If anybody knows, it’s me because I’m at the forefront of selling businesses, that people actually don’t retire. They don’t. They got to stay busy.

Phil Singleton:   Awesome. Let’s get into some nitty gritty questions about how this stuff is actually done. You mentioned about buying and selling businesses. I’ve talked to you in the past earlier about, hey, I’ve got some interests myself. When somebody wants to, like a small business owner or a business owner or anybody else wants to buy a business, what are the ways that they actually end up buying one from somebody who is selling? Is it their owner financed a lot when people are selling? Are people buying them for cash? Are there loans involved? How is it you break out from … I know it’s probably a whole mix of everything, but I’m just curious what the typical percentages are that way?

Chad Peterson:   Well, a cash buyer is like Bigfoot. I’m sure it exists, but they’re seldom seen. Out of all the deals that I’ve done, I’ve done two cash deals. I can’t tell you what the percentage would be, but it’s definitely less than 1%. You can’t bet on a cash deal. Number one, money is too cheap. You can go to the bank right now and borrow money. Number two, people just don’t have that kind of cash lying around. If you go to buy a business for $1 million, you’re not going to write a check for that. You’re going to go to the bank. You’re going to get a note on it, and you’re going to pay the debt service because the company is going to be generating enough cash that it pays the debt service.

Chad Peterson:  As far as seller financing or owner financed, there is always a component of that, but it’s usually only 10% maximum 20% of the purchase price.

Phil Singleton:  Why is that? Are there people that just want to be out or that’s just a common way to keep people involved? Why is that?

Chad Peterson:   Well, there are a couple of reasons. There are different vantage points. I could give you three reasons from different vantage points, but the main reason that the banks like them is because the bank knows that the seller isn’t going to walk off into the sunset. Let’s just say the bank wrote $1 million check. The bank wants to know that the seller just isn’t going to walk off in the sunset and not train the buyer properly.

Phil Singleton:   Got you.

Chad Peterson:    The bank is always going to ask for a 10% seller carry. Let’s just say it’s $1 million business. The seller still owed $100,000 so the bank feels pretty confident knowing that the seller has to ensure the buyer’s success and give the buyer a good transition. That’s why the banks like them.

Phil Singleton:   Are they expected to exit out of the 10% over time or are they expected to just hang onto it?

Chad Peterson:   No. The 10% seller carry is usually on a one-year standby. The seller wouldn’t get paid for the first year, sometimes two. It’s usually put on a 24 to 36-month note after that. Let’s just say you’re a seller and you carry $100,000. You should expect to get your payment back in 36 to 60 months with 7% or 8% annual percentage rate with this type of that note.

Phil Singleton:    Most people are going out and putting some money down, 10, 20%. Is that right? What does it look like?

Chad Peterson:   Yeah. Typically as a buyer, you’re going to come in and put 10% down, and then the seller will carry maybe 5%, maybe 10%, and then the bank is willing to go in on the 85 or the 80% at that point.

Phil Singleton:    Is it any bank?

Chad Peterson:   No, it’s definitely not any bank. These banks’ climates change all the time. Banks that I was really doing a lot of business with last year, their climate has changed now. It comes and it goes. A good broker like myself, an expert business broker should know where to go to get these loans. Like I said, right now, I’m in the middle of it right now. There’s a local bank that has done countless deals for me. The last one that I sent to them, I barely got done and I just thought it was that deal alone. Now I’m in the middle of this one. Actually, I’m almost done with it, but they’ve gotten so tight that part of my job is that I’ve got to go find the banks that are hungry and have an appetite for loans. Otherwise, it wastes everybody’s time.

Chad Peterson:   No, not every bank, Phil. A good business broker is going to know where to go to place these loans. That’s again what separates.

Phil Singleton:    What does the business owner look like? How long is it … What are the length of the terms usually?

Chad Peterson:   A business loan is usually 10 years, unless there’s real estate involved. If there’s real estate involved, there are some things to consider there. As a general rule, you’re looking at 18 to 20 years on a term if there’s real estate involved. If there’s not real estate involved, you’re pretty much looking at a 10-year term.

Phil Singleton:   Is there a range of percentage rates on what the business loan would go? Is it-

Chad Peterson:  It’s usually 2.5% plus prime. Right now, I think that’s right at 8%, somewhere in there.

Phil Singleton:   Is it possible to pay them off earlier? Are there all sorts of things like that or you can’t do that?

Chad Peterson:   Yeah, you can pay it off early. Yeah, you can.

How Much is Your Company Worth?

Phil Singleton:   Awesome. That’s really, really good info. Tell us a little bit about some of the type. Obviously, confidentiality, you can’t get into the exact names, but I’m really interested. There’s a lot of people that are listening to this podcast right now that are business owners. A lot of them are probably going to be agency owners. Some of them just traditional maybe home services or main street small business owners. If you’re ball-parking something, what is my business worth, I guess, so to speak? I know there’s a lot of factors into it, but if somebody is trying to ballpark something like, okay, I’ve got a digital agency. Can you give us some insight about is it worth anything? How much is it worth? What will be good to be start thinking about?

Chad Peterson:   Well, it’s an interesting question, and I want to preface this with this is a ballpark, and this is a general rule of thumb. All you listeners out there, your business is roughly worth three times cash flow, or another word to use is seller’s discretionary earnings. What is cash flow or what is seller’s discretionary earnings? Cash flow or seller’s discretionary earnings is the bottom line. It’s your salary, plus the company profit, plus your cellphone usage, meals, entertainment, travel, 401(k) contributions, IRAs, key man life insurance, automobile payments, automobile maintenance, fuel that you put in your car for personal use, personal expenditures on credit cards, things of that nature.

Chad Peterson:  What we do is we go through the tax returns and then what we do is we add any add backs. It’s called recasting the cash flow or recasting the tax returns. We go to what those business owners can write off in accordance to IRS tax code, and we add that back in as an owner benefit. Let’s just say that I came up with $200,000 in seller’s discretionary earnings, which could be $150,000 of that could be salary and company earnings.

Phil Singleton:  Is this pre-tax or post-tax?  Is that before or after tax?

Chad Peterson:  Well,  the personal income tax for a seller is added back in, but the bottom dollar is cash flow. We use that number. Let’s just say you’re living a $200,000 lifestyle out of your business. As a general rule of thumb, your business would be worth 3X. That puts us to $600,000. If your company is earning between you and the company and all owner benefits comes to 200 grand, your business will be worth $600,000 as a general rule of thumb. It changes. That multiple can go up. It can go from three up. It can also go down as well. If you’re on a business that is not highly marketable, if you’re in a business that has a lot of problems with keeping employees, that multiple can go down to say 2.75 or 2.5.

Phil Singleton:   There are all sorts of variables. It’s a total ballpark.

Chad Peterson:   Yeah, there are all sorts of variables. Guess what? If you’re in a business that you can run from a laptop and there’s freedom involved and you get away from corporate America and being chained to your cubicle, you can get as high as 5X depending on earnings. Anytime that you get above $500,000 in cash flow, your multiplier will go up.

Phil Singleton:   Wow.

Chad Peterson:   There are all sorts of little things, but as a general rule, 3X is what I tell people, depending on how sexy your business is, depending on how much that multiplier can be raised or lowered.

Phil Singleton:   Some might have recurring income that’s coming in. That’s got to be more attractive than people that are just getting fixed businesses, I guess. I would think so. That would probably add and things like that. I’m still a little bit confused. Sorry if I’m being dense on this, but let’s say somebody earned $300,000 as a business owner and paid $100,000 in taxes and took home and lived off 200,000. I’m still confused. 3X of what? Is it 300 or 200?

Chad Peterson:   The federal taxes would be an add-back. It’s hard to answer that question, but they’re not going to pay $100,000 in taxes. How do I answer that? Basically, we take the top line revenue minus your cost of goods sold and then add back … I’m sorry. Take off all your operating expenditures, and then add back the owner salary, and then add back the federal taxes, payroll taxes for the owner. If there’s any rent regarding real estate, we add that back in as well, any disparity. If you’re making $2,000 a month off your rent, that would be a $24,000 add back. We add back anything that the company is paying for that is personal benefit like automobile, 401(k), all that.

Chad Peterson:   The cash flow, to answer your question, is based off of the top line revenue minus expenses and then adding back everything that’s a lifestyle. The individual taxes that that person paid income tax, that’s a separate issue. It’s based off the corporation and then whatever the income tax, the federal income tax of the principal owner would be added back to that. It would be an apples to apples comparison. Yes.

Phil Singleton:    That’s awesome. Again, as a general rule of thumb, somebody is thinking, well, we’re talking about dental, lawyer, home services agency, anybody.

Chad Peterson:   Yeah. I’ve sold digital agencies. I’ve sold countless service companies, service-related companies, home service companies. I’ve sold a law firm. I’ve sold an accounting firm. I’ve sold manufacturers, distributors, suppliers, parts manufacturers, restaurants, hotels, foundation companies, roofing companies, any type of service-related business.

Phil Singleton:   There’s just no end.

Chad Peterson:   There’s no end. Yeah, no end.

Phil Singleton:    Talk a little bit about, bringing home with this and wrap up with this. Of course, a lot of our listeners are going to be agency owners. Like I said, there are some small businesses, a lot of business owners out there too. Just from your perspective, how do you see marketing playing a role in the companies that … particularly if somebody is going to buy a business or even selling it. Does it help to have a business that has good lead generation in place, has a good online reputation, maybe has been working on their reviews? Does that factor in at all? I could see as a potential buyer, geez, if somebody has been in business for 20 years and has 105 star reviews online and I can see that they’re getting a lot of leads coming from all sorts of different areas, that would be more attractive to me than maybe coming into one source. I think everybody has got a different angle.

Does Marketing & Reputation Help Sellers?

Phil Singleton:   Maybe some people are just looking at, what does the financials tell us type of thing and just make a calculation based off how much money it’s running. Talk a little bit about that. The marketers out there, of course, are going to want to hear that marketing helps, but maybe it doesn’t. Tell us how it goes.

Chad Peterson:   Yeah. It’s a strange deal where I can’t ever place my finger on what makes somebody buy a business. Everybody has their own passions and desires and interests. Sometimes I look at a business, and to me, I’m just like, what the hell? Why would anybody want this? There’s a market out there for it, and there’s somebody who is passionate about that. I remember selling a circuit board company, and I thought, who in the hell would want to buy a circuit board company? To my surprise, people … I had geeks coming out of the woodwork. It was unbelievable. What somebody wants to buy is … I just quit even looking at it anymore. I don’t even make my own judgment on it anymore. If it’s making money and somebody wants to sell, there’s usually somebody else out there that would like to have it.

Chad Peterson:   As far as the marketing, I find that everybody I speak to has a marketing problem. Literally everybody that I speak to. Everybody should be spending 10% of their gross revenue on marketing, and almost nobody that I see does it. Yes, marketing … People that have a real strong marketing budget, 10% of what they bring in grows. They’re the ones that are winning, always. A big thing today that people don’t really pay attention to is reputation management. It used to be … and I don’t mean not too long ago. Even just six or seven years ago, it used to be, well, are you a member of the BBB? I’m not saying that the Better Business Bureau has no relevance. It just doesn’t have much relevance. 15 years ago, it used to be let me look you up in the Yellow Pages. I’m not trying to say to the Yellow Pages doesn’t have any relevancy, but not very much anymore.

Chad Peterson:   It’s reputation management between Google and Yelp. These are things that people really need to be paying attention to. As long as business owners are focusing on the reputation and doing business right, and people are going online to report that they’re doing it right, I think that’s a big thing. I think if you can get your customers to go online, and hopefully you don’t have to ask them because they’re just great people and they want to go online and give you a good review, but more often than not, you have to ask them to go on there. I think that’s one of the crucial key components of selling your business, to have a really good reputation out there.

Chad Peterson:   If somebody is thinking about selling their business, I usually tell them they’re at least a year or two late to actually engaging in the process. They should be having a reputation tip top. They should have a great reputation online, any cleanup … I’ve seen people go and get reviews removed by just taking care of the customer. If it’s a service company, let’s just say it’s a hardwood floor company for instance, and a message got dropped, somebody didn’t go out there to fix it, whatever. Because people are 12 times more likely to go online and slander you than they are to give you a good review. If somebody slanders you online, whether you did something right or wrong, you have to call that customer and see if you can take care of them in some way and kindly ask them to remove the review because it is everything.

Chad Peterson:   To answer your question, yes, reputation management, making sure you have a good reputation online is everything anymore. It really is.

Phil Singleton:    Actually in your business, it’s probably just going to get bigger and bigger because look, you’re going to sell a business. It’s not just to sell a business, they’re going to sell it to a buyer, and the buyer is just a buyer, a bigger buyer. They’re going to do their homework and due diligence. A lot of it is going to be done online. I can assume that they’re going to look up-

Chad Peterson:   I think frankly … Well, here, there are two ways to look at it, Phil. You can go buy a company that’s already ranking on Google. If you search organically and, boom, they pop up and they’re number one or number two, man, that’s attractive. It really is.

Chad Peterson:   There’s also another way to look at it too though. Let’s just say you run an organic search for that industry in your town and let’s say they don’t pop up. Let’s just say they’re popping up on page number two. Well, that’s also good because that shows that there’s room for more growth. There’s room opportunity.

Phil Singleton:    Well, you just got me fired up here. You got me fired up. A lot of the people that you’re talking about aren’t even spending the 5% or 10% they should be to be the market leader even maybe. Well, look, if you can come in as a buyer and all of a sudden just get a real marketing and marketing partner or a marketing plan in place on your own and willing to buy the company, invest what it can be to reach its potential. You could literally take somebody that’s built a business probably the hard way on the old, making the personal connections, word of mouth, all that kind of stuff without spending a whole bunch on marketing. You go in there and fuel it with a real professional marketing plan. It won’t take you too long to take that million or $2 million business you took to maybe to 5 million pretty quickly.

Chad Peterson:    Exactly. Yeah. As I read in your book, SEO for Growth, the best place to hide a dead body is on page number two on Google. Sometimes those are good businesses to buy because they’re not doing the marketing and they still have a book of business. Let’s just say you can go buy a business that’s making a half million dollars a year. By the way, I think it’s important for your listeners to understand this because we’re throwing all these numbers out there. Let’s drill down on this real quick so your viewers or your listeners understand.

Chad Peterson:   Let’s just say you bought … Remember 3X, three times cash flow. If they’re going to buy a $600,000 business, theoretically that should pay them $200,000 in earnings annually. Here’s the good news. If you want to go buy a $600,000 business, it only takes you as a buyer 10% of that, $60,000 to go buy that $200,000 a year job, so to speak. If you can find one that doesn’t have a good strong marketing budget in it that has room for growth, I call it selling the deficiencies. Find one that’s deficient in marketing and just break it wide open because if you come to it with passion and marketing, you can do 10 times more than what the current owner is because the current owner is burnout and bored.

Chad Peterson:   That’s really what I do. I take people that are burnt out and bored and replace them with somebody who’s passionate. Almost every time, I see the numbers go up. As long as they’re willing to spend the money to put the marketing in and they’re passionate about it, I see the numbers skyrocket.

Phil Singleton:  Huge. Well, we’re going to wrap it up on that. Chad, this has just been so awesome. Tell our listeners where you hang out online in terms of where they can follow you, your website address, and how they can get in touch with you.

Chad Peterson:   Yeah. I’m really easy to get in touch with. No matter what I’m doing and where I’m at, this cellphone is like a shot collar and I’m not hard to reach. If you just go to www.petersonacquisitions.com, fill out the contact page. Like I said, I love the work. I’m responsive. I tell people I work nine days a week and they say, wait a minute, there’s only seven. I said, no, I think I work nine. I’m always working. Saturdays, Sundays, it doesn’t matter. I’m always responsive. Go to petersonacquisitions.com. Contact me and let’s start talking.

Phil Singleton:  That’s so awesome. I recommend everybody to go check out your website. Whether or not you’re ready to sell your business right now, if you want to learn on what steps to maybe learn a little bit more about how to prep your business for sale and just get some more great information about the business broker in this whole process, please visit his website because I’ve already learned a ton. Chad, thanks again. This has been so awesome and hope to have you on again at some point.

Chad Peterson:   Hey, thank you, Phil.

 

About John Jonas Founder of OnlineJobs.ph

John has been making a 6-7 figure income online since 2004.

He has helped thousands of entrepreneurs succeed by teaching them how to replace themselves through outsourcing.

He created OnlineJobs.ph, the largest marketplace to find Filipino workers. He also teaches his system for how to find great Filipino workers for free.

While making a full-time living he rarely works full time. His team of 27 full-time Filipino virtual assistants do the work in his businesses, while he manages the process. They range from programmers, designers, and webmasters, to writers, researchers, a project manager, and just general VA’s.

John has made millions of dollars online directly from work that his Filipino workers have done for him and now teaches others exactly how to do the same thing.

If you’ve tried outsourcing before, but haven’t heard what John has to teach about it, give it another try. John’s teachings are SURE to change the way you look at running your business, outsourcing, and the success you have in doing it.

 

Where to follow John Jonas

OnlineJobs.ph

 

Meet John Jonas

Phil Singleton: Hello, everybody and welcome to another episode of The Local Business Leaders podcast. I am your host, Phil Singleton. Today, our featured guest is John Jonas. John is the Founder of onlinejobs.ph, which is an online marketplace for finding talented virtual assistants and more in the Philippines. Hey, John, welcome to the show.

John Jonas: Hey, thanks for having me.

Phil Singleton: Before we get into what I’m excited about and we kind of talked about in the green room before recording here, I’d like to just get a little bit of background about what got you into this. Tell us kind of your first steps out of graduating school and what got you in the business world and kind of what led you here today.

John Jonas: I’m a terrible employee.

Phil Singleton: I already like this story.

John Jonas: I graduated from college in 2003, I think 2003, and I had a job for eight months out of college and my only goal during that job was to quit because I just found the incentive system doesn’t work with me with being an employee. I do good work, I get paid, I do bad work, I get paid. It’s the same thing, it doesn’t really matter. My only goal was to quit. It took me eight months to figure out how to make some money online and I quit. That was fine. I was making a little bit of money and I had some contract work. I was making a little bit of money online but I could see, there’s something here that I can do.

John Jonas: For the next couple years I kind of struggled through stuff. Maybe the next year I struggled through stuff. I was working on my own. I was doing everything. I was working 60 hours a week and I tried hiring other people to do some stuff for me and just kind of leading into what we’re going to talk about today, I had a conversation with someone who, this guy owns backcountry.com. Huge, huge, even in 2004 or 2005 when this was happening it was huge.

John Jonas: He said, “You know John, when you really start outsourcing some of this stuff, make sure you go to the Philippines with it.” I was like, huh, that’s interesting.

Phil Singleton: Were they even on the radar for you at that time?

John Jonas: Not even close. Why would you even think to go to a specific country? Everybody goes to India with outsourcing. That just is what it is. He was like, “Yeah because in India when you tell them something and they say yes, that means yes I heard something come out of your mouth. It doesn’t mean yes I understood what you said.” And I was like, dang, that’s super different.

John Jonas: But what it really did was it kind of gave little bit of hope that the four different times that I had tried to outsource stuff either to local people or to contract workers or to India, it just hadn’t worked out and what it did is it gave me some hope that I might find a different experience. He gave me a reference where I could hire someone full-time and I hired them full-time and that, it took me a couple months before I actually did it because I debated, I didn’t know if I could afford to hire someone full-time. This was the beginning of my business. I didn’t know if they could good work, I didn’t know if I could keep them busy full-time. I ended up taking the leap and that really changed the future of my business across the board.

Phil Singleton: That one hire basically was a success.

John Jonas: Oh dude, that was the single most liberating experience of my life where I was working 60 hours a week and I was doing everything. I was doing the accounting and I was doing the content writing and I was doing the webmaster stuff and I was doing the programming and I was doing the marketing and I was doing the crap that I hated. I hate writing content. But I was doing it because I knew it had to be done but I just hated my life when I had to do it. I hired this guy and I had him starting writing content, which I tried doing that before on it was oDesk at the time. Now it’s Upwwork.

John Jonas: I tried doing that before and it was just a failure because what I found was, and this is kind of the difference between what I stumbled into and what I was trying to do and what most people try and do. I hired this guy to write this content for me and he was a content writer and he wrote the content. And fine. Then he sent me the 50 articles that he had written and I had to go through them and check every one of them because he doesn’t work for me so his only goal was to get paid. I checked them and the first few are really great and then they get worse and they start getting plagiarized.

John Jonas: Then, I had to go back to him and be like, no dude you plagiarized these fix them. Fixism fine. Then I’m done with that process and that’s when it really hit me.

Phil Singleton: You were done when you realized they were plagiarized and then it was just like, how can I get out of this with the least amount of damage?

John Jonas: Well yeah, totally but that’s not the worst of it for me. For me, the worst of it was, I had gone through this whole process to get these articles written and now I had them written and that dude was done. He’s a writer. And he’s a contract worker, that’s what he does. He writes and he gives you your crap and now it’s up to you to do the rest of the work. That was to me the biggest issue was I have all these articles and now I have to go and add links to them and better titles and good resources boxes and submit them and link them together and all this crap. I have to go do all this. I just left myself with 50 hours of work to do from these 50 articles that was supposed to take a burden away from me. Now it just added a burden to me.

John Jonas: That was the first thing I had. I hired this dude, his full-time job was to do anything I asked him to do and that was the first thing I did was I taught him how to do this process. And that was why it was so liberating to me because I could have him write the article then I could have him do the rest of the process. I hated that whole thing and I never had to think about it again, once I taught him how to do it which took a couple weeks.

Phil Singleton: That’s a big part of it. I’d like to talk about that later. I think having a process set up and a step by step thing is something you got to kind of invest in to probably make it work. I’m guessing because I’m going through it right as we’re talking about. You kind of just brushed over it but I do think that’s a big part of probably the whole being successful is knowing that you’re going to hire somebody for and giving them direction, right?

John Jonas: Yes, absolutely. Here’s kind of what I stumbled into, a lot of people, Michael Gerber and the EMR, the E-Myth Revisited, he talks about you have to have these standard operating procedures before you hire someone. You have to do this. Dude, I suck at that.

Phil Singleton: You got to hire somebody, I know, I feel the same way right now. It’s like, I got to hire somebody to help document my procedures.

John Jonas: Creating procedures is hard. It sucks and it’s a burden and I don’t want to do it. When I hired this guy, this was this magical liberating experience for me. I had no idea at the time what I was getting into. I hired this guy and I started teaching him and I taught him to do his stuff and one of Michael Gerber’s biggest things, which is even worse today than it was when he wrote it which I don’t know, he wrote the book 20 or 25 years ago, something like that, is that people just leave today. People don’t stick with jobs at all for any reason except in the Philippines which is this super weird interesting characteristic of the Philippines where they’re super loyal and so that dude who I first hired, still works for me today. It’s 15 years.

Phil Singleton: That’s awesome.

John Jonas: I taught him that one thing and I never had to deal with that thing again. He’s taught other people how to do it since then. And then I’ve taught him other stuff and I taught him other stuff. For me, one of the biggest deals was, I don’t have to create these standard operating procedures that I can pass off when someone quits because people don’t quit. If you treat them well. That’s not to say that you shouldn’t create standard operating procedures because you should. I’m just crappy at it. It sucks. What I found was I can kind of train this person as we go. I can give them this training and I can …

Phil Singleton: Document his training while you’re training.

John Jonas: Yeah.

Phil Singleton: Exactly.

John Jonas: Yeah, and then he can do it and he can mess up with it and then I can correct it and he can do it and mess up and I can correct it and it’ll take us two, three weeks, whatever. And then we get it right and I’m done man, I’m out. That’s the end of this.

Phil Singleton: That’s awesome. The fact when you said 15 years ago, what were you doing at that time where you’re trying to build a business? It wasn’t onlinejobs.ph, was it a website? Something else that you were?

John Jonas: I was doing tons of affiliate marketing.

Phil Singleton: Okay cool.

John Jonas: I had built tons of websites and we were marketing those websites.

Phil Singleton: Got you.

John Jonas: It was super effective once I had people to do the work for me.

Phil Singleton: Awesome. Awesome. And so when did onlinejobs.ph become a real thing? How long has it been around? Tell us about it.

John Jonas: I was part of a mastermind group when all this was going down. In that mastermind group, there was nine of us in the beginning and then we kept adding people, got up to 15 people in this mastermind group, which, just for future reference, 15 people in a mastermind’s too many. We had phone calls every week and after I had had this person working for me for a year, I just found the group was asking me every single week to talk about it. Every week I was telling the same things over and over again because it was so dang good for me and everybody else wanted it. They just weren’t doing it.

John Jonas: After six weeks of this I was like, guys this is ridiculous, I can’t keep just saying these same things over and over again so I recorded myself talking for 45 minutes and I kind of put it out there on the internet and people just went crazy. I was teaching this thing and people went crazy for it and then all the guys in mastermind group starting asking me to teach to their audiences. I was like, okay, I’ll teach it to your audience, fine.

John Jonas: Couple years of teaching it and finding people sucked. It just sucked. One of the things you and I talked about in the green room was the first person i ever hired I went through Agents of Value. They’re an American company, they’re an agency. They recruit Filipino workers, bring them into their office in the Philippines, they mark up their salaries, two, three, 10 times and they lease them back to you. I was paying them $750 a month, they were paying him $250 a month.

Phil Singleton: When did that realization come? Again, we were talking about this before and we just dig right into it now. It was like, I think until just recently, that I had the epiphany, I think a lot of people look online and you got guys like me that are helping maybe virtual assistant companies or virtual assistant services, websites rank and stuff and they’re paying a lot of money so you think that’s where you need to go to get access to the workers but then at the end you start looking, wait a minute, there’s good wages X and these guys are marking it up two or three X. Dominated by middle men even now. Look this up online.

John Jonas: Which, that’s not the worst. It’s not the worst that they’re charging you $10 or $15 an hour and they’re paying them two or $3 an hour. It’s not the worst thing ever. But it just didn’t sit right with me and it certainly didn’t sit right with him when he found out. I think it took me six months to kind of put it together. I said to him, actually what I think happened was he told me, “Hey I’m quitting.” It was like, why? He was like, “I can’t handle to office politics here.” I was like, office politics? I don’t have, your my employee and we don’t have any office politics. There’s nothing of the sort. He was like, “Yeah it’s the managers here at Agents of Value and it’s the people around here. I just can’t do it.” I was like, “Well you can’t quit because you’re amazing now.” I was like, “How much are you making.” 2.50, I was like holy crap, I had no idea.

Phil Singleton: Is this the first guy that’s still with you or somebody else.

John Jonas: Yeah, this is the first dude. Still with me. I was like, I’ll double your salary but you can’t leave for 30 days because that’s part of the contract. The next day he was like, “I quit, I’m working for you today on my own.” I started paying him 500 bucks a month, I doubled his salary. I cut my costs by a third and it’s been amazing ever since.

John Jonas: But still, when I went back to find someone else it was like, this sucks. How do I find someone? Couple years later, I decided to start a marketplace because there wasn’t anything. That was onlinejobs.ph. Starting building it in 2008, we launched it in 2009, that was 10 years ago. For five years, I completely ignored it and didn’t really for five years, I didn’t touch it. It was I think it was when there was 70,000 employees or 70,000 worker resumes in it that I thought, dang, I should probably do something with this thing.
Phil Singleton: Wow.

John Jonas: Today there’s over 700,000 resumes there. That’s kind of how this came about.

Phil Singleton: Yeah, it’s amazing, full disclosure for me, this is one of the reasons we’re having this podcast. I went through it, I was pretty impressed with the whole process. My experience was actually had heard about your website from a second employee that we had that had heard and he’s in and one of them was from home services and the other guy that just recently was kind of in home buying, real estate investment type stuff. He had mentioned at the same time and I wasn’t even really half paying attention but I heard onlinejobs.ph a second time. When I heard this the second time, so I’m going to go check this out because in his mastermind or his group or whatever company he was affiliated with, the guys that were in that kind of business were all kind of talking about it. I was like okay.

Phil Singleton: I went and checked it out and I signed up and really clear what you guys do on the website. I signed up for it. I love the way you guys structured the subscription and the payment. I think it’s very fair. But I went in there so seamlessly and I went in, I paid a reasonable fee. I put very quickly, put up a resume of some of the key tasks that I was trying to look for. Within a couple days over the weekend, I got some great resumes. I found one. First of all, the people were very responsive and I thought that was great. Lots of great feedback and then I ended zeroing in on one person.

Phil Singleton: Talked to her and then what ended up really getting it for me is she gave me the reference of a previous person that she was being a VA for and this person was out of Chicago because I was still a pretty, I was like, this sounds really good, it almost sounds too good to be true to be doing this. Is this going to be one of those, it’s like you were talking at the beginning, so many people go through the heartache of hiring somebody on Upward or on Five are not realizing how much hair they got to pull out and that the money they paid that was so low actually ended up costing them a lot in redoing or editing yourself or going over or have to try it over and over again. It’s kind of deceptively expensive even though it seems like really, really cheap.

Phil Singleton: I had already been burned many, many times but I had never kind of gone this route. But anyway what did it for me is I ended up getting a reference. I got the best reference on this person that I’ve ever gotten for anybody that I’ve hired. And I’ve hired many W2s over the year for my own company and businesses and stuff like that. I was like, okay, I was thinking no matter what, if I get somebody good that’s coming in at a lower risk kind of a salary and is this good, I’ll find something for them to do if they’re really this good. Is hardworking and stuff. And it was great. Has been. It’s been seamless couple days and I still now, I’m thinking I posted for this but I might actually be using her for something different. I’m not really sure. It’s like you said, the passion’s there.

Phil Singleton: You’re talking to somebody here that she already has her own restaurant so she’s already working a full-time job basically I would think. But just the, and I lived in Asia for 10 years so I know what kind of the southeast Asian work ethic is for a lot of countries out there. It’s just different than it is here. We’re all hard working in our different ways but it’s definitely different.

Phil Singleton: I was just super impressed and I’ve had a super great experience and now my mind’s like we were talking about again, in the green room, really excited about it. The possibilities I think of just being like wow, this is just one person but I could actually have a team for what might cost me one employee here where I’m based in Kansas City. I might be able to get two, three, maybe even four, a team of people to help me do many more things. I want more versus I was thinking well if I do this gosh, if I hire one of these through these, one of these virtual assistant companies and they charge 10, 12, 15 bucks an hour, it’s a discount and I’m sure it’s there but it’s not like that. You start talking about five or $10 an hour more, you’re getting into where you can hire some entry level people with a few years experience here in the States, you know what I mean?

John Jonas: Yeah, right.

Phil Singleton: But I had no idea that it was for some of these folks, was three, four, $5 an hour and you’re getting people. And the other thing is I have to mention, the first thing I did was I had a phone call and of course just I already knew Filipinos had good English but I was just like, it almost like she grew up here with a slight accent. I was just completely blown away. The English was good as it was. Obviously I’m really fired up but I just, I wonder, did I just get lucky and you just happen to pull one out of the pack? And I was like wow, this is really great. Or is this kind of norm? I guess you can kind of tell me based on the feedback of the excitement that you’ve had, the people that have hired one and gone on to hire many. Tell our listeners a little bit about how that goes.

John Jonas: I can’t tell you how many times I’ve heard from people, man I just got really lucky. I hear this all the time. No, you didn’t get really lucky, you did a good job of recruiting and they’re really good. Not everybody has a great experience the first time. A lot of people don’t do a good job of recruiting but if you do a good job of recruiting, your chances are pretty high of getting lucky. And then you said something else, a bunch of the thing that you said are things that I hear over and over and over again. There was a light bulb that went on for you, when you recognized, I can get really good talented people. It’s two to $5 an hour. They’re thinkers. It’s not just a robot. They’re willing to work hard. It’s a different hard work than here in the US.

John Jonas: Some of the things that I’ve found culturally with the Philippines that I didn’t know about was, they’re loyal and I already talked about that. The first person I hired still works for me. If you treat them well, they’re loyal almost to a fault to where they’ll never quit. It’s not a matter of, oh they got another job offer, they’re going to jump ship. That’s not a thing in the Philippines. They’re honest to the point where my guys in the Philippines have my credit cards, they have my bank account numbers. They have access to my personal email account. Don’t go doing something you’re not comfortable with and get yourself ripped off but the only situations where I’ve seen people get ripped off in this is either they did something dumb or the tried to rip the worker off. They tried to get them to do a bunch of stuff and not get paid or not pay them.

John Jonas: They speak American English. Like you said, her English was amazing and obviously not everybody’s English is amazing but dang it’s a lot of people. And then they’re not entrepreneurial so they don’t want to steal your idea. They don’t want to take your domain. They don’t want to hijack your hosting account. They don’t want to do any of that stuff. They just want a job and if you’re willing to give them a job, you just found this really great situation of it’s hard to find a job in the Philippines. It’s especially hard to find a full-time job and you’re working from home on your own hours and you’re working for a foreign boss which in most countries is kind of a joke but in the Philippines it’s an honor which is different. It’s like a bragging point. They’ll brag about you their foreign boss to their friends.

John Jonas: You end up getting this situation where this person has a full-time job. They’re working their own hours, they’re working from home, they have a foreign boss, they’re getting paid well and they’ll go above and beyond what you ask them to do to keep their job. Not always, and again it completely depends on how you treat them, and this is especially the case in the Philippines with how you treat them makes a difference on the quality of work they’ll do but they don’t quit. That makes such a huge difference for a small business. And it makes a huge difference for the amount of effort you have to put in. The standard operating procedures, the rehiring. When you lose someone, everybody know this, the cost of losing an employee is double their annual salary or something like that because there’s so much pain involved.

Phil Singleton: Well even time wise. I’ve been spending a couple hours a day already and I’m just thinking, wow, that’s a lot. I’m the most expensive resource in my company but I feel the risk is pretty low. But point, that’s where I think people get it, the hidden cost of hiring. If you don’t like them.

John Jonas: Let me get into kind of a side thing that people don’t realize in there. People here are thinking something and it’s wrong. What most people are thinking of is oh I don’t want to take the commitment. I don’t want to make the commitment. I just want to someone out. I’ll just hire someone hourly in the Philippines and get the same thing. You won’t.

John Jonas: There’s a big difference between hourly work and full-time work and that’s on you, on your end. It’s not such a big deal on their end. It’s much more of a big deal on your end. And there’s a big difference between contract work or freelancers and hiring full-time. Let me just explain these because this makes a really big difference on your business success.

John Jonas: A contract worker or freelancer, this is someone you hired to do a project or to do a specific thing and they don’t work for you. When they’re done, you pay them and they go and do work for someone else. That’s all good and fine but it doesn’t allow you to give them things that will lessen your burden. For me, all of this is about lifestyle. I work 10 to 15 hours a week. Right now it’s summer, my kids are out of school, I’m working 10 hours a week and I’ve been at 10 to 15 hours a week for 10 years now because I get people in the Philippines to do my work for me.

John Jonas: With a contract worker you can’t do that. That person doesn’t care about your business success. You’re still going to have to spend the same amount of time hiring and recruiting and training as you would a full-time, long term person. Just because you always have to bring someone up to speed. But once you’re done with them, they go away and now when you need something done again, you have to go through the full process again. That’s kind of a contract worker, freelancer and that’s a big deal.

John Jonas: The full-time versus part time thing or the hourly versus full-time, part time, if you pay someone hourly and they’re not busy, you don’t care. They do the job that you gave them, they’re not working, it doesn’t matter to you. And that’s a really nice feeling of oh let me do what I’m comfortable with and just continue working on answering my emails because I don’t have to worry if they’re not busy. When you hire someone salaried, either part time or full-time, if they’re not busy, it’s on you. It’s your responsibility and that little change of giving yourself giving that responsibility, forces you to become the CEO. To work on your business instead of in your business.

John Jonas: That was probably the biggest thing that I didn’t realize that kind of changed my life was, this dude who I’m training, I just gave him this task to do and it took us a couple weeks to get to the point where he was getting it done faster than I thought but then he was done and I had to keep him busy. That had to take, that kind of jolted me out of oh man, I got to respond to this email. Oh I got another email I got to respond. Oh I got another. This endless cycle of garbage working in your business to I have to step away and think and give him something else to do because otherwise I’m wasting money. It’s not a lot of money but it’s still wasting money. Then I had to think of …

Phil Singleton: Then I also wonder, I’m a little bit in the spot of now where it’s on me to train. I can’t really give a full-time thing until they get up to speed and we’re both comfortable but my bigger fear to take a step back on this is, which I don’t mind right now that I might not be having full-time hours or work but I also don’t want somebody one, get in the habit of I don’t have enough work for them right now. And two, is that okay, are they going to be bored? If I’m like geez I just do some stuff, here’s some stuff to study but I can’t give you the full workload over day one so it might take a few day or couple weeks even to get the rhythm and the routine where I can start passing some stuff off.

Phil Singleton: And you mentioned a little bit of that. You had some stuff right off the bat then it was kind of like okay, you’re going to have to fill the plate up probably a little bit over time versus on day one. Especially for people that are smaller agencies or maybe a solo printer that’s just hiring their first person.

John Jonas: Yeah, but get on it. Start teaching stuff because it’s going to force you to start thinking about your business instead of thinking in your business. And that will make the biggest difference for most people of growth, success and growth. The other thing you mentioned if I don’t give this person enough stuff to do, are they going to get bored? Yes, and the result of getting bored is finding another job or taking a second job which is not a great situation. You want to keep them working for you and only for you.

Phil Singleton: That was my other fear of hiring actually was how does it work? Is it I’m going to hire somebody and I had this discussion, am I going to hire somebody and the reason it’s the pricing seems really super awesome is because they’re trying to take on three on four, quote unquote, full-time jobs. I was, well that wouldn’t really be fair either if somebody’s trying to take on. I actually was upfront about it. I was like, well what thing, what other responsibilities do you have? Would you be exclusive to me? Would you be taking on a lot of part time work and stuff like that?

Phil Singleton: That’s when it came out. Well I’ve got this restaurant during the day, doesn’t take a lot of my time. I just kind of have to be around but I can work upstairs. That was one thing. The other thing was she was really upfront, was that from time to time taking a couple little small, one or two hourly things, is that okay? I have something now to do, I don’t know if I’ll do them later. I feel like it was, but we had that discussion ahead of time. Is that common? Is that something to worry about?

John Jonas: No, that’s common, you did a great job. Just being upfront about it is a really big deal.

Phil Singleton: Is it common though? Is that a way for people to get ripped off is somebody just come on and they just basically took four full-time, they’re trying to squeeze four full-time jobs into one?

John Jonas: It definitely happens but if you can usually tell. You hire someone, you’re happy with their work, they’re doing good work and all of sudden you’ll see oh your productivity went down, what’s going on? And you need to approach them about it and say, “Hey, I can see that your productivity went down, what’s going on?”

John Jonas: I don’t use a time tracker. A lot of people do, I don’t. I don’t like it. They don’t like it but I can always just gauge like hey, I can tell that you’re not getting stuff done like you should. What’s going on? Or if that starts from the beginning, stuff’s not going on, then that’s when I know this isn’t going to work out.

Phil Singleton: And how quickly and how easy is it to get onto to, hey this isn’t working out. Do people get, they get nasty on you? Is it kind of like …

John Jonas: How easy is it?

Phil Singleton: Or just what’s the recommended way to do it in a way that saves face for everybody I guess?

John Jonas: There’s not. It sucks if you’re firing. Firing people sucks. But, they’re not going to do anything to you. If it hasn’t worked out, it hasn’t worked out. They’re not going to go try and rip you off. They’re not going to steal your crap. Unless you try and not pay them. It’s worse, the worst of it is on you. You’re letting someone go and that sucks. But they’ll go find another job.

Phil Singleton: And one of the things I wanted to dip into now is also to me, the way a lot of these services are pitched and even on yours on your website, onlinejobs.ph, it’s kind of opens up and I guess it’s kind of the common buzzwords is virtual assistants, virtual assistants from the Philippines. But really what I found, even on your own marketplace is you can hire way more than just a virtual assistant for just random tasks. There’s people like skilled website developers. There’s graphic designer. There’s all sorts of skilled people that are maybe would fall outside just what some people think of as a quote unquote virtual assistant. It can get pretty deep with some pretty solid skillsets.

John Jonas: Anything that can be done on a computer, you can hire someone in the Philippines to do it. I have 26 people, we just hired someone today to do customer support. 26 people in the Philippines full-time. I have obviously customer support people, I have graphic designers, I have web designers, I have video editor I have.

Phil Singleton: And those are all under kind of the onlinejobs.ph company?

John Jonas: Yeah.

Phil Singleton: You have actually have office space or all they all remote and somebody manages them remotely?

John Jonas: They all work from home.

Phil Singleton: That’s awesome. Wow.

John Jonas: Programmers.

Phil Singleton: That’s got to be, that’s a plus too for all of us. A corporate job can work actually out of our house.

John Jonas: Yeah, yeah, they get to work from home. You don’t have to pay for office space or utilities or insurance or any of that stuff. Plus their salary’s tax deductible. Really, depending on how much you’re making, it’s saving you one third of their salaries each month. It really is a good situation that is it’s like having a local person without the local issues.

Phil Singleton: And the other thing I was going to mention, is there a few things I’m learning, some of this is on your website too but you take the leap, you get somebody, you find somebody you like, you spend some time training them, hopefully you already have her in the process of kind of documenting some of your tasks and procedures. Just for the long term benefit of your own company, your own operation but for certain hiring somebody I think really does kind of jumpstart that. But there were some things, certain things I just recently learned about the Philippines.

Phil Singleton: There was the salary negotiations that went I think very smoothly. There was an ask to include, I guess a budget for I think she called it HMO or some type of a health kind of a stipend almost for that. Some kind of common and then also the quote unquote, 13th month which I guess was a, there’s some expectation for some of them I guess to pay a bonus that’s equal to about a month of the salary. Is that, hopefully you’re not hearing that for the first time.

John Jonas: The 13th month, if you are in the Philippines, if you’re a Filipino employer, it’s legally required that in December you pay them a bonus of one month’s pay. You pay them November’s salary on December 1st and then some time during the month of December you’re going to pay them one month’s salary.

Phil Singleton: They get doubled up in December.

John Jonas: They get doubled up in December, yeah. It’s not legally required for you because you’re not a Filipino business but it’s something you definitely should pay. And, you’re hiring someone like July 1st, that’s halfway through the year, you should prorate the 13th month so in December you’ll pay them half of one month’s salary.

Phil Singleton: Right, that’s kind of what we talked about. I actually, I didn’t know any better but I just said, “Would that be okay?” And she was cool with it.

John Jonas: Yeah, that’s correct. The HMO, the health insurance is a totally won on a case by case basis. A lot of people will ask for SSS and Phil Health. SSS is their social security. Phil Health is their national health insurance thing. But it’s not really health insurance it’s just kind of a discount thing. It’s kind of silly but it’s also 10 or $20 a month. It’s pretty cheap so it’s worth saying, “Okay, I’m going to pay you this much and here’s your, I’m going to add to that this.”

Phil Singleton: To cover those things.

John Jonas: To cover these things, whatever.

Phil Singleton: I thought that sounded reasonable. It wasn’t like I didn’t know it was going to come. It was like, 10 or 20 bucks. It wasn’t like another $200 a month or something. But that’s what it is here in the States, man. You hire some W2 and put get the insurance going.

John Jonas: Right, you get all that extra stuff here. You don’t get that there. We recently did health insurance after 15 years, we finally added full on health insurance to people and it was an extra $100 a month per person but we had to do a lot of work to get that done. It’s something that I guess we could talk about it on the website.

Phil Singleton: At some point. Look man, this has been super awesome and like I said, I was so excited about that I literally reached out to you and said, “Gosh, I’d love to do a podcast on this because we do, half of our listeners are agency owners. Other half are basically small, larger maybe small businesses and stuff like that.” I think honestly, with the way things are digital, especially in the marketing space, so many, a lot of agency’s owners already need help all over the place. They’re already looking for any kind of assistance they can get to kind of help them scale so they can grow their own business without having to hire too many W2 employees or what have you.

Phil Singleton: And then you got actually a lot of small business owners that could use, they can’t really afford to have a full-time social media or marketing person just to maintain some type of a presence on social media or anything really. It’s either all or nothing. They hire an agency like mine, helps them do everything, gives them a presence like they have somebody in house. But this is a huge opportunity for small businesses, if they can take the leap and train people and trust them to do stuff because it’s, I can see anybody considering this, there’s just no, you don’t just hire somebody and then just press a button and it works. There’s definitely the one thing I think I probably didn’t anticipate was but now I understand, is you just definitely have to take time to train people and tell them what you want them to do.

Phil Singleton: You just think some of the people are going to know coming in the door, know exactly what. It’s not. It’s the same way you hire somebody locally. You have to go through a lot to get them up to speed.

John Jonas: Yeah, for sure.

Phil Singleton: It doesn’t change anywhere.

John Jonas: My advice to people is when you’re getting started, hire someone to do something you currently are doing. Get something off of your plate and yeah, it’s going to add. You’re working 50 hours a week, you’re going to work 55 or 60 the first few weeks. It just is what it is, you have to spend more time.

Phil Singleton: I’m spending a couple, probably two hours, I getting up 6:00, 7:00 in the morning and spending two hours, three hours even. I think I even spent four hours literally just trying to go through every employee.

John Jonas: But then after that, you’re going to work 45 hours a week. You’re going to get time back into your life. If you hire someone to do something you’re currently doing. And then after that you work less and then you have this understanding, this full new world exists for you that you can hire someone else to do.

Phil Singleton: Well then you mentioned something else John, was like how what I’m really hoping is if I have as much faith in this person I have, if she can really understand different parts of the business and get one or two of these things down, can she help me train somebody else?

John Jonas: Yeah.

Phil Singleton: So I don’t have to do it?

John Jonas: For sure.

Phil Singleton: Which is why I really want to put my time and effort into one person that can help me document stuff, understand, they go through all the processes then she can spend 20 hours a week for a couple weeks training somebody. It would totally help. Then that really starts to scale for you.

John Jonas: Yeah. Let me just, let me tell you really quickly how I train people. And I will train two, three, four people at a time on a single thing. For example, we’ll create a process in the backend of Online Jobs where we need to have this monitored. The way I do that is I use Snag It. Have you used Snag It?

Phil Singleton: Yeah, screen capture.

John Jonas: Yeah, screen capture. It’s creating a video of my screen. It’s recording my voice and my mouse and my screen and I’ll just talk through the entire process and whether it takes me one minute or five minutes or an hour, I’ll just talk through it. And then I’ll send it to all of them and say, “I want you all to learn this,” even though only one of them is going to do it. You’re all going to learn this because the more they know, the better off they’re going to be at whatever else they’re doing. And then they’ll come back to me with questions and I’ll just do it again. I’ll spend five.

Phil Singleton: That’s like us as business owners. You know pretty much everything that you’re doing. The process, you’ve gone through it before. You know how to change stuff on your website. You know how to add a blog post, whatever, all that stuff.

John Jonas: Yeah. You want to modify WordPress, fine, talk someone through it. Here’s how we do this. Or you have your Shopify store or whatever, hey, here’s how I do this thing in Shopify. Whatever it is. Open up Snag It, start talking your way through it. It’s so much easier than writing an email and trying to describe every little thing. Or when you are writing an email, take a screenshot and draw an arrow on it so people know exactly what it is.

Phil Singleton: Love it.

John Jonas: It’s so much easier to do that. I do that.

Phil Singleton: I actually use, I use one called Loom, you got Loom US, it’s the same thing sounds like. You go in, do a browser plugin and just screen capture stuff.

John Jonas: Yeah, I do it probably 10 times a day. And that’s how I communicate with people. And everything goes into a project management system for me.

Phil Singleton: So sweet. Last but not least, I always like to ask people that have successful growing online businesses, what kind of things are you doing for marketing for yourself? Obviously you guys know something or do your own kind of SEO. You rank for certain special keywords that you’re doing so that helps. Is there any other things that you guys do for marketing. I’m sure it grows and there’s some, I got to you by a traditional offline referral. Somebody else had heard about you or was happy about it and they were like, hey, check this out and I did and here I am.

John Jonas: For us, that’s one of the biggest things that we have is we just get a lot of word of mouth. But outside of that, one of things I learned a long time ago and this was with that very first person, I do everything. We implement everything we know of, everything we hear of, I just don’t do the work. I just get other people to do the work. We’re implementing everything. I don’t really know what it is that’s working super well.

Phil Singleton: You guys are just trying it all. Last, last question is, of your team members, 26, 27 of them, what does that look on a day, what does, just give me a breakdown of the percentage wise. Are 10 of them customer service? Are they in general, a lot of them just multi-tasked, multi-talented people. You got graphic designers, what’s it look like?
John Jonas: Yeah, I think we have five programmers, I think we have four customer service people, I think we have five or six admin people, no there’s probably more than that. People that are working on data security. We do a lot of work in Online Jobs to make sure, not to make sure, to try and have a clean set of worker profiles. We get scammers. We get people from India. We get all kinds of stuff and we spend a lot of time trying to clean that up. We have a bunch of people that do a bunch of things to clean that up.

Phil Singleton: Got you.

John Jonas: I have a couple front end webmaster kind of people, HTML, CSS. I have a couple designers. I have a girl that does HR. She does recruiting. I have a couple social media people, content writer. I have a project, kind of a project manager. She kind of helps oversee a bunch of different things. What else do we have?

Phil Singleton: You’ve got one or two right hand people. I’m sure that one initial hire is one of them.

John Jonas: Yeah, he definitely is. He manages all the admin backend people. And I could ask that guy to do anything I want. He’d do it. I have a Facebook ads person. A couple of people that write content. We have a pretty widely varied team. They all work from home, they’re all in the Philippines.

Phil Singleton: Sorry, I’m going to wrap this up, I really appreciate you spending this much time with us. So much great info, I know we’re going to have a lot of people interested in this particular episode. What would be the range is usually starting from whatever, two to three, four, $5 an hour to I’m sure it can go up from there. People that have had more experience for other type things. In a general sense, what are we talking about for people with a couple years of experience out of school maybe? I think the person I hired is probably in her early, mid 20s versus maybe somebody that’s in their later 20s, has maybe different degrees. What are we looking at for those types of hires and stuff? What would be a web designer versus kind of a general just virtual just assistant, general assistant? What kind of?

John Jonas: I’ll just kind of change the paradigm here. I have no hourly people. I don’t know how much anybody makes hourly. My people are all full-time. They make between 400 and $1,600 a month and so at the upper end of that I have a really good Facebook and Google ads person or a designer who’s amazing or a couple really good programmers. In the middle end I have these, I have good content writers would be in the middle of that. Good front end people. On the lower end of that I would have probably customer support people or some admin people. At 400, she’s an admin person. Most of our people are probably between 550 and 850 a month.

Phil Singleton: And what would be a let’s say a talented graphic designer? You guys have really great stuff on your website. That’s obviously probably part came from your team, no?
John Jonas: Yeah, 1,500 bucks a month. You can hire a really good graphic designer between a 1,000 and 1,500 bucks a month.

Phil Singleton: Somebody who know what they’re doing with WordPress and stuff like that? Making a WordPress side.

John Jonas: Somebody who knows what they’re doing on WordPress between 500 and $800 a month. A video editor would be 700 to a 1,000. A good content writer would be 550 to 950.

Phil Singleton: Content, that would be a big one. That’s the one thing. Is that really even possible? Your stuff, it looks like you do have a content writer. I forget her name but there’s some really good posts you have on your website.

John Jonas: Yeah, stuff on the onlinejobs.ph.

Phil Singleton: That’s all from your team from the Philippines, right?

John Jonas: That’s our team, yeah. A lot of it’s well, they started posting it is as them but a lot of it was posted as me and I don’t know that I wrote anything.

Phil Singleton: Right.

John Jonas: They wrote it, yeah.

Phil Singleton: But content writer, around a $1,000 a month.

John Jonas: Yeah, you could, I would be less than that, yeah.

Phil Singleton: For a good something that would, even if I have to edit.

John Jonas: It just depends on how you recruit. You do a good job recruiting, it’ll be 700 bucks.

Phil Singleton: Are you looking for somebody that has, how easy is it to hire people in this kind of a system that have maybe secondary degrees or even English type stuff. Is that what you’re looking for for this kind of stuff? That’s why I’m asking so much. Is your marketplace more kind of people that are coming in in that early 20s range that are looking for experience? Or is it all over the map?

John Jonas: It’s all over the map. It’s all over the map. Here’s a couple things. In the Philippines, almost everybody you find will have a degree. That’s just across the board.

Phil Singleton: That’s a baseline.

John Jonas: That’s a baseline in the Philippines of you’ve gone to grade school, middle school, high school. If you have a high school degree in the Philippines, basically the only thing you’re qualified to do is be a nanny. It’s socially you’re kind of an outcast if you only have a high school degree. After that you have a college degree of two to four years, two to five years of college degree and basically everybody you find is either going to have a degree or they’re going to be working on a degree.

Phil Singleton: Got you.

John Jonas: That is just a matter of how much experience are you hiring for? For my, what I would recommend to people is, you’re hiring someone to do something you’re already doing. Unless it’s a technical position, unless it’s programming, design, webmaster, WordPress, whatever, unless it’s a technical position, you’re going to hire them for their English because you can teach them how to do social media. You can teach them how to write content. You can teach whatever if their English is great. Hire for their English skills and then worry about the specific skills after that.

Phil Singleton: Thank you so much for doing this John. This was so awesome. It was one of my favorite episodes. This is going to be I think a great one to kind of promote. I’m sure we’ll get a lot of downloads off of it. Tell us where we can follow you. I know the one thing we’ll have in the show notes is onlinejobs.ph. Is there any particular social media place where you connect with people more? Is it LinkedIn, Facebook, something else, let us know and we’ll make sure that we let people know how best to follow you.

John Jonas: You can follow me on Facebook. I’ll be totally honest, I hate Facebook.

Phil Singleton: Me too.

John Jonas: And if you follow me on Facebook you’re probably going to see …

Phil Singleton: A post a year, something like that, like mine.

John Jonas: No, you’ll see regular posts I think. It’s just not done by me. But if you want to get in contact with me, I’m contactable. If you use the contact desk link on onlinejobs.ph, it doesn’t come to me but if you say, “This is for John,” or you say, “I have a question for John,” I will be the second person to see it. They all know just to send it to me.

Phil Singleton: Awesome.

John Jonas: And I’ll respond.

Phil Singleton: Awesome, awesome, awesome. Well I’m definitely going to type up some notes and let people know that this is one of these things where I actually tried and I’m very, really excited about honestly. I’m like, in my mind I’m imagining a much bigger team over the next months and year so maybe but then you also kind of temper it. You want to make sure that one step at a time. Works out. I can definitely see the potential here for me but for lots of other people. Hope a lot of the people kind of check this out.

John Jonas: Sweet. Love it.

Phil Singleton: All right man.

John Jonas: Hey, thanks for having me man.

Phil Singleton: All right, have a great rest of your week and Happy Fourth of July.

John Jonas: Talk to you later.

Phil Singleton: See you.