This episode is sponsored by 5stepmarketing.com and BVOIP.com. Check out Josh Whitford and his offering at 5stepmarketing.com/audit, and learn more about the perfect channel only offering for your IT firm and MSP business at BVOIP.com.
|Ryan Goodman:||Welcome to the Confessions of an IT Business Owner podcast, where we believe that healthy cash flow is critical for your IT business. Automation is paramount, and building trust with your clients by looking professional will help grow your business. I’m your host Ryan Goodman, and today you’ll learn about some profound struggles related to owning and growing an IT business and how Peter Kardel from Clever Ducks overcame them.|
|Peter Kardel:||The only way that you’re going to be able to grow your business is if you are able to develop a management leadership team that can take over more and more important parts of the business.|
|Ryan Goodman:||Here’s the podcast with Peter.
Peter thanks for joining us today. Why don’t we kick off by you giving us your company name and tell us where you’re located.
|Peter Kardel:||Well, thank you. It’s a pleasure for me to be joining you this morning. I’m Peter Kardel, CEO of Clever Ducks. We are located in San Louise Modesto, California.
That’s halfway between San Francisco and LA, right on the coast.
|Ryan Goodman:||Well, that sounds beautiful. At this point, I’m not even going to tell you where I live because there’s just no comparison.|
|Peter Kardel:||Well, we do have to contend with earth quakes, fires and mudslides. So, if that makes you feel any better, it’s not all perfect here.|
|Ryan Goodman:||Fair enough. I stand corrected. There is a meme that I see floating around on
Facebook in the winter. Again, we’re based in Fargo North Dakota where it says,
“The air hurts my face. Why do I live in a place where the air hurts my face?”
|Peter Kardel:||Well, you know, I don’t believe that there is bad weather. There’s only bad equipment.|
|Ryan Goodman:||Ah, very true. So, why don’t you tell us a little bit about your business model, as well as really the passion behind starting it.|
|Peter Kardel:||Well, really how I got started was really something that veered me away from my dream. I wanted to be an attorney like my father, and practice environmental but, along the way I became totally infatuated with technology and automation, and how it could act as a lever, enabling a small town attorney to compete with the big law firms in the [inaudible 00:02:32] and in LA. That was my father. He used technology to go up against the Goliath in the industry. I was just fascinated by that leverage that you get from it.|
So, I started helping him with technology in his law practice. Pretty soon, other attorneys in his office building asked me to help them. It just all was history after that. I was referred into firms all over the town. Pretty soon, I was thinking, “Man, I want to get serious about this. I want to study technology and figure out how I can bring this leverage to folks in other industries.”
|Ryan Goodman:||Oh, that’s awesome. That’s a really cool why, and the catalyst to be a business. So, prior to being in business were you working for your dad full time, or did you have another nine to five? Were you in law school at that point?|
|Peter Kardel:||No. I was in high school at the time. So, I did work in construction because I love working with my hands and building things. I still do. Maybe that’s because that’s why I was interested in engineering and environmental law. But, it didn’t become a full time job really ever. I was always either having other work or I was in school full time, and using my IT consulting as a way to put myself through school.
So, I came out of school with very little student debt, which is great.
|Ryan Goodman:||That’s awesome. I think there’s a lot to be learned through this for today’s youth.|
|Peter Kardel:||It’s true. It also gave me contacts. So, while I’m studying, it gave me fuel really. I want to be better at what I’m doing, and be able to add more and more value. So, it made the study really a lot more appropriate. It wasn’t abstract at all.|
|Ryan Goodman:||So, as a young entrepreneur, your dad was of course an entrepreneur as well, and influence in your life.|
|Peter Kardel:||Oh yeah.|
|Ryan Goodman:||The move towards technology from legal, how was that perceived by your family and by your dad?|
|Peter Kardel:||Well, I think there was two things I did to disappoint my father. One was I decided not to go into law. I say that tongue in cheek because he was thrilled because he loved technology. I think that was almost his first love. Then, renaming the company from Kardel Computer services to ultimately, Clever Ducks. I mean, just like wow, you gave up the name. You’re not out there front man with the name.
You changed it to something that wasn’t the family name.
|Peter Kardel:||And we did that because I didn’t want … you know, when we did that I was very conscious. I wanted to grow an organization. Wanted to grow a team, and it wasn’t about me. I realized that my success was really going to be measured by the work that my team did. That’s why we did that renaming.|
So, fun fact though, though I didn’t go to law school, and he said every business person, every entrepreneur should take the first year of law school because that’s when you learn all the really important rules of business. That’s true. But, I’ll say that you can also marry somebody who becomes a lawyer. My wife is being sworn in to the California Bar today.
|Ryan Goodman:||Well congratulations for her.|
|Peter Kardel:||Really excited about that. So, I think I’ve out done you dad because I didn’t have to go through all the effort of law school. I now have my life partner, has all the skills so she can help me in the business.|
|Ryan Goodman:||That’s awesome. I bet your masters service agreement is going to be bullet proof here short enough.|
|Peter Kardel:||Yeah. A really good agreement is one where everything is just spelled out in plain English. Our service agreement is two pages long, and it’s incredibly transparent.|
|Ryan Goodman:||That’s great.|
|Peter Kardel:||I had a … There’s a pretty large, I think the largest law firm in the area, the senior partner looked at it, read it over, and he said, “You know what? Let’s do business.
You’re incredibly transparent and we can trust you.”
|Ryan Goodman:||So, the kiss model is truly working for you when it comes to legal ease.|
|Peter Kardel:||I hope so.|
|Peter Kardel:||I mean, if you take good care of people, and you treat them the way you want to be treated, and you treat them with empathy, and you’re fighting for their business’s highest and best good, it’s unlikely that you’re going to get into a place where there’s real conflict.|
|Peter Kardel:||It’s just important to make micro adjustments along the way. So, when you start to have issues that come up in personal relationships, maybe a difference between expectations and actual performance with a direct report or employee, or something is just not sitting right with a client relationship, it’s really important to
have those conversations early and often so you can make minor course corrections before things become more and more emotionally charged.
|Ryan Goodman:||That’s great advice. So, shifting gears a little bit here. Why don’t you tell me about some of the wins that you’ve celebrated in being the owner of a technology business?|
|Peter Kardel:||Something my father said, because he was a business and tax attorney, was that for most small businesses that only value at retirement that they will have at the end of their career will be their building that they do business in. So, he just encouraged|
his clients to buy the building, the place where you do your business out of because, that’s a way of storing up value that will be good for your financial future and retirement.
So, we listened to my father and we bought this building in 2012, down town San Louise Modesto. Big enough to rent out nearly half of it to some commercial tenants. That’s great, it’s a place to expand into some day. That was an amazing experience. Amy managed the whole construction process and the design, and the moving and everything. I focused on running the business. I mean the quarter that we moved to the new building, we have our highest quarter ever.
|Ryan Goodman:||Wow, no stress.|
|Peter Kardel:||[inaudible 00:09:05] you know. And make the move happen. The great thing about it is we had a space that was customized for us. We learned a lot from the previous couple of spaces that we’ve been in. We were able to build a lot of things that we wished we had had. It really increased our efficiency, on a great, great deal. So, having space that’s yours is incredibly valuable.
I think all the biggest wins really have to do … I’ve looked at the grand scheme of things as the owner of the company. I’m putting my shareholder hat on right now, not as the tech who started the company, who’s passionate about technology. But, I’m now wearing the hat as the shareholder who owns the business and, sees the values of business growing. I think all the biggest wins were cases where I’ve been able to, with the help of others like HTG and other peers in the industry, is to develop leaders in my company to take over roles that I had. So that things are happening. They’re doing better work in those roles than I ever did.
That’s just incredibly rewarding when you hear feedback from a client that, “Oh, you know what? You guys did great. This issues came up and you were able to work it out with the vendor.” I mean, you exceeded their expectations and I’m not even aware of all of the steps that had been taken. I just know that my team took care of it. That’s just incredibly rewarding because it’s not about me. It’s about the company that I’ve helped develop that has enduring value that could continue to deliver value when I’m on vacation, if some day I transition out of the company. It just continues to create value. I just love the thought of that.
|Ryan Goodman:||I love the focus. Again, it ties back to something that you talked about earlier, leverage through automation. You know, you’re really also speaking to leverage through staff and empowering other people. I think a lot of small business owners really struggle with that. Right? Because especially if they’re the owner founder, getting passed being in control of everything and empowering your staff to rise, and take control.|
|Peter Kardel:||Sure, I mean, it’s very challenging to give up those roles for key reasons. I’m a very intuitive person. So, a lot of the things I do I do intuitively. The challenge for me is to sort of reverse engineer what I’m thinking and how I … what my process is, in a|
way that I can teach others and systemize it so that it can be replicated through the organization. So, people with my personality, that’s the challenge to us, is to put it down on paper and document it, and train others. Do it in a way that’s super simple, so it’s easy to cross train those processes because then, I can focus on other things. I can invent other new ways to deliver value for our customers.
|Ryan Goodman:||I know we’re really talking in a theme here, and again, you mentioned this earlier, automation through technology. We’re talking through staff and leverage through staff, empowering staff, and documentation. So, I know we’re both on the same page. I mean, automation is critical to the success of a business. You saw this and learned it early on. What was the point inside of your IT business where the light bulb really went on off on the different parts of the business you could automate? What are some of the things that you do automate in your business today that would have eliminated maybe some of the struggles that you had in the past? That was a big question, sorry.|
|Peter Kardel:||I think that … Yeah, that’s a big question. When you’re starting to delegate processes that you’ve been doing and you realize that you’re starting to write down the steps that are taken and articulate all the exceptions that can occur, well it’s this way unless this happens. Then, you got to do this. The documentation can get really, really long and the process of training somebody can become more and more onerous. What you’ll find is that if you take the time to look at how technology can address this work flow, and what you’re trying accomplish, it has a potential of really simplifying and streamlining lots of processes. It makes the task of delegating and cross training, these important processes in your business, a lot easier.
There’s a concept called non value add. Looking at things you do in your business that add value and things that don’t add value. This is sort of advanced common sense but, anything that doesn’t add value, you want to stop doing or, reduce as much as you can, or automate as much as you can so you can spend most of your time and energy doing things that add value.
|Peter Kardel:||When I say add value, I mean add value to your customer because that’s what you’re getting paid for. Your gross margin is directly proportional to the amount of value that you can add to your customers, right? So, an example of a non value added process in your business is billing. You know, billing your customer doesn’t add any value to your customer. They could care less really if you bill them or not. Maybe they would prefer if you didn’t but, it doesn’t add any value to them. It’s incredibly important to you. You need to do it in order to get paid, and pay your people, and continue to grow and innovate. But, it’s a process that you want to streamline as much as possible so that you can bill the customer efficiently. There’s zero defects really in the billing process because anytime money is changing issues, it’s kind of a sensitive issue.|
|Peter Kardel:||So, eliminate defects. Totally reduce the amount of time and energy that it takes and just streamline it as much as possible. If we can get it as close to zero as possible, that’s huge. That’s something that we’ve done, and there’s a lot of parts to that. One of them is just how you structure your business relationship with your customer. If you can simplify it as much as possible and not have all these different ways of calculating how you’re going to bill them, but really realize, you know what? 99% of the time these very simple rules will govern and the 1%, don’t even worry about it so you can make the billing arrangement super simple. We fix feed everything. Almost never will we do a project and charge them time and materials.
We like the fix costs and customers like it too. So, they’re never surprised. They get a bill from us. They know what it’s going to be for the monthly service. We include everything in that monthly service that they need to run their business. Then, anything that’s a project, that we’re adding something that’s new or, we’re upgrading something or replacing something. Then, it’s a project and they get a fixed fee bid essentially for that, and we do it for that fixed amount. That eliminates just a lot of headaches from a billing standpoint.
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Now, back to the show.
It sounds like you guys have really refined, not only in billing but throughout your business in multiple areas, the make it easy to do business with you.
|Ryan Goodman:||I mean, that theme. Make it easy to do business. Let’s not complicate. Let’s not over complicate. Let’s take it down to its lowest common denominator and just make it very simple.|
|Peter Kardel:||Yeah. I mean, you’re eliminating a barrier to entry.|
|Peter Kardel:||To do business with you and continue to do business, and continue to do business. I mean, you know those vendors that it’s just a hassle, the way their bills come in and the way you pay them. They make changes and, and it’s really obtuse, they get things wrong. It’s so irritating and so, we’ve really strived to eliminate any way that it’s a hassle to work with us.
Then, another factor on the billing side is, well we had this experience that was just … I wouldn’t say life threatening but, it was pretty dramatic, where suddenly our accounts receivable started to just climb. Really quickly, and clients were not paying us on time, clients that paid really consistently were falling behind. It was very alarming. It just happened over the period of three months or so. And, what had happened was, we just weren’t getting the mail. We had a number of mail carries that had change. Yeah, and I don’t want to throw the US Postal service under the bus, especially since our current mail carrier is awesome.
|Peter Kardel:||I just want to say that right now.|
|Ryan Goodman:||Shout out!|
|Peter Kardel:||Shout out! But, yeah, I mean the checks just never showed up. They weren’t being stolen. The mail just wasn’t being delivered. That included bills too, accounts payable. So, we realized that this is a risk to our business, that we’re depending on this service. They’re talking about eliminating Saturday delivery. We need to figure out a way to dematerialize the cashflow into our business.
Then, another factor is, the check comes in, a staff person has to open the mail, take the check, apply it to the correct invoice, relieve the accounts receivable balance. Then, go prepare a deposit. Take the money to the bank or scan it and put it in the bank. There’s all these steps, right?
|Peter Kardel:||What if we were able to just eliminate all those steps, and by the way we’re eliminating a whole bunch of steps on the customer’s side of handling the accounts, their accounts payable, if we were to dematerialize that, and handle it all electronically through ACH. So, that’s something we did about a year and a half ago, using Connect Booster. We had heard about them, and I noticed the ATG started billing us through Connect Booster and, I had a very satisfying experience as a customer with that process. So, we implemented that, and it’s been fabulous to just send out the agreement bills and then, couple days later, all the cash is just in your bank. It’s just amazing. Like printing money.|
|Ryan Goodman:||That’s great. Hey, and I mean, automation in cash often times is the thing that will feed the ability to focus on automation in other areas of your business, right? You kind of choke yourself out on a lot of other initiatives if cash flow is not attended to first. I get it. I get it. Been there, and done that too.|
|Peter Kardel:||Yeah. You know, I just wanted to add, the challenge that all of us small business owners have is that our customers are all being sort of programed to expect service like Amazon. If you think about the customer experience with Amazon, it doesn’t matter what time of day or night, or on a holiday or what, if you want to order something, find something, look at a past order, look at an invoice, transact business with them. It’s very, very easy to do.
So, that’s kind of the standard that we’ve set for ourself. Like, Hey, how can we make this more like put the information at the customer’s fingertips so they can log in, and they can see, and get the information without having to call us. We want to make their experience with us more like the e-commerce side of the Amazon.
Along with of course that very personal high touch relationship that we have.
|Ryan Goodman:||I have lots of conversations with lots of business owners, you know, being in the payment space. And, not only IT service providers but, about any business type you could imagine. A lot of the things that I’ll chuckle at is making it often times hard for customers to pay you but then, I’ll ask, “How do you pay your babysitter when they come?” A lot of times it’s a VENMO or AZEL. It’s some simple way that they’re not even giving cash to the babysitter anymore but, they’re a technology company not using technology to make it easy for their clients to do business with them. A little ironic. But, you know, to each their own.|
|Peter Kardel:||I love that. A great example of how the consumer space, in this little shadow IT, is happening there with paying your own babysitter. That’s great.|
|Ryan Goodman:||Why don’t you talk to me a little bit about some of the struggles that you’ve gone through, and how you’ve overcome them in owning your manage service business.|
|Peter Kardel:||Do we have to talk about struggles?|
|Ryan Goodman:||Well, I’ll leave it up to you.|
|Peter Kardel:||I think the biggest struggle is really developing managers and leaders. The only way that you’re going to be able to grow your business if you are able to develop a management and leadership team that can take over more and more important parts of the business. I wasn’t taught that in school. It’s not something that attorneys learn. Doctors aren’t taught it. We’re taught our craft, but all the squishy human, soft skill development stuff, how to organize your business from a leadership standpoint. Many of us didn’t have any formal training in there. It’s very difficult.
You can’t be efficient with people and relationships. There’s a lot of skill involved.
That’s, I would say that’s been the biggest challenge.
|Ryan Goodman:||So, I think we’ve determined that first year of legal school and, psychology are two solid precursors if you want to be an entrepreneur.|
|Peter Kardel:||I think so. There’s some really strong leadership development programs out there. We stumbled on this program called Giant Worldwide. One of my peers had gone through this program, Matt [Highit 00:25:27], he’s got an MSP that’s just growing like gang busters in Atlanta, Georgia. I watched his leadership and his communication style of his leadership, he just transformed over the year that he was in the program. Then, I heard it through interactions with his leadership team, just permeate in his company, which is very unusual. A lot of times the leadership team will go to some kind of leadership training and get some valuable training and insight, and maybe some skills, but it isn’t easily just summing it down to a company. What you really want is a common language and a set of skills and tools that can be taught and just, have a self sustaining way of permeating throughout the entire company.
That’s what Giant Worldwide has been able to do. They’re serious, or their criteria is that the tools that we’re bringing to you need to be something that you can easily teach a 13 year old who can then go and teach her friends in 10 minutes.
|Ryan Goodman:||That is cool.|
|Peter Kardel:||It’s really, really … It’s not that it’s very simple, or not sophisticated but, it’s the great elegance and the tools you’re putting away that make holding powerful conversations with the people you work with, and clients, and family members and kids and spouses, very, very easy.|
|Ryan Goodman:||Well, that was a really cool bit of information. Appreciate you sharing. I’m over here taking notes just burning up my pad and pen here. That’s incredible. Cool, thank you for that. Shifting gears a little bit, if you could talk to your younger self after seeing what you’ve accomplished today, what would you say and, what wisdom would you try to impart on your younger self?|
|Peter Kardel:||Oh my gosh. Well, I would tell my younger self that contained in your personality are the seeds of success but also self sabotage. Now, let me explain that a little bit.|
If you look at my Meyers Brigs on INTT. So, I am very intuitive and I think in very big picture things. I like to art tech the future. I’m always thinking about the future and how things could be better, and how we could cheat. You know, not just make incremental changes but make some kind of curve jump. I love that kind of thinking.
But also, in my wiring is to be very detail oriented. It’s a little unusual. So, I often sabotage myself by diving deeply against the details and staying in the weeds for way too long because you know what, it’s safe to be in the weeds. You know, you can see the progress. You can check boxes, and I think that’s a lure that a lot of technical people have when it comes to reading and growing their business is that the safety, and what they’re familiar with and their technical skills can be something that derails them from doing the hard work of delegating more and focusing on the stuff where they can have the biggest impact on the business, which really you should be the CEO, the leader of your company, you should be thinking about how are you going to grow this company? How am I going to grow my team so that they can do their very best work? You know, what’s holding back my management team from their greatest influence?
The time you’re spending doing that is huge outside the return on fussing with little details in the business or working in the business doing direct, like delivery of service versus working on the business. And, thinking about how can our work be better? I find myself continually drawn in that direction because I love those details but, I think that sooner you can get out of working in the business and work on it, the better.
|Ryan Goodman:||Agreed. Boy, we’ve had quite the interview. I mean, chalked full of just awesome information. I have one more question for you, and it is along the thread of the last question. So, what would be the number one point or message that you would drive home to any of your peers as they’re listening to this podcast today?|
|Peter Kardel:||I mean, I think the number one thing is it’s not about you. You just can not do it on your own. You want to surround yourself with great people, and invest in them so that your work, or the value of your efforts will be measured through their work. Also, surround yourself with peers. Join the peer group. Reach out to other business owners and leaders that are struggling with many of the same things you are. Get help from them. Get insight from them.|
|Peter Kardel:||You can’t do it yourself, and why would you want to? It’s very rewarding to work with, to get and to give, in these peer relationships are just incredibly rewarding and it just will really accelerate your business. You can skip a lot of problems, you know? The best problem is the problem that you can skip.|
|Ryan Goodman:||Absolutely. Amen. Well, Peter, I want to thank you for your time today. Before we jump off the call, where can people find you online? What’s your website? Can they|
find you on Facebook? Twitter or, any other social media platforms?
|Peter Kardel:||Yeah. So, our website is www.cleverducks.com. If you were to look at our website, you would see that there’s really two audiences that we’re trying to reach on our website and in Facebook. That is potential or future employees, as well as new customers. So, our online presence really, I would say, it’s more biased towards finding future clever ducks.|
|Peter Kardel:||Yeah. So, that’s incredibly important. That’s like the fuel for growing our business is the people that we can attract and retain. I can be reached by email peter.kardel … that’s K-A-R-D-E-L at cleverducks.com. Facebook.com/cleverducks.|
|Ryan Goodman:||Before we end today’s episode, we’d like to thank our sponsors. Five step marketing and BVOIP. Don’t forget to take advantage of your free one hour marketing strategy session with Josh and his team. That link again is fivestepmarketing.com/audit. That’s the number five, fivestepmarketing.com/audit.
Check out BVOIP if you’re looking to improve your telecom strategy. You can find BVOIP online at BVOIP.com.
Well, thanks again for joining us. It was a pleasure talking to you. We really appreciate your time Peter.
|Peter Kardel:||Oh, I really enjoyed it. Thanks so much for inviting me to spend this time with you.|
|Ryan Goodman:||You bet. Thanks again for joining us today on The Confessions of an IT Business Owner podcast, where we believe healthy cash flow is critical for your IT business, automation is paramount, and building trust with your clients by looking professional will help grow your business. A special thanks again to Peter Kardel from Clever Ducks.
Clever Ducks can be found online at cleverducks.com. To download the full podcast or listen to some of our previous episodes online, check us out at connectbooster.com/podcast. Thanks for joining us today on The Confessions of an IT Business Owner podcast. We’ll talk to you soon.