Charging What You’re Worth

Charging What You’re Worth

Tim Fitzpatrick
Welcome to the Rialto Marketing podcast. Today's episode is a revenue acceleration series interview where we talk to seven figure B2B professional service firm owners that are actively trying to grow their business and get to the next level. We talk about the good, the bad and the ugly so that you can learn from their experience. Hi, I am Tim Fitzpatrick with Rialto Marketing, where we believe marketing shouldn't be difficult and you must remove your revenue roadblocks to accelerate revenue growth. Thank you so much for taking the time to tune in. I am super excited to have with me Jonathan addington from JM Addington Technology Solutions and CyberSecureRIA. Jonathan, thanks for taking the time and thanks for being here.

Jonathan Addington
You're welcome. It's a pleasure.

Tim Fitzpatrick
I'm looking forward to this, man. We had a really good, interesting pre interview call and I'm excited to dig into this. Before we do, I want to just ask you a few rapid fire questions to help kick things off. I'm going to start with just very quickly, what do you do and how long have you been doing it?

Jonathan Addington
We're a cyber security and managed services provider. We work with small businesses to protect their information, their operations, and most importantly, today, their cyber security. I've been in business on my own since 2010, but I've been doing this for forever.

Tim Fitzpatrick
What's the most important lesson you've learned in running your business?

Jonathan Addington
When I started, I thought that if I was the best out there, that would be enough. I learned quickly that sales trumps operations, and it's a lot harder when you're great at something in the field like technology, learning something like sales is an entirely different animal.

Tim Fitzpatrick
Yeah, I like that. One of the things I always talk about is, gosh, if you don't have marketing and sales generating leads that are then converting to customers, nothing else matters. You're just the best kept secret. So it's a fantastic piece of advice. Now, you've been in business for any period of time. You know that there's ups and downs. It can be challenging at times. Do you have any mantra or anything or something that you just continually focus on to help push through those times?

Jonathan Addington
Yeah, it's a couple of things, depending on the way you want to look at the question. Professionally as a business, everyone at JM Addington and Cybersecurity RIA strongly believes in protecting small businesses and protecting their data. And again, cyber security is such a threat to small businesses today. And that's something that brings people to the firm. Personally, I've got a couple of other things. One is I just really strive to create an environment where people enjoy coming to work, where there's a positive culture, where they feel like they could contribute, where their feedback is welcome, where they know it's a stable job and position to feel like there's fewer and fewer of those types of jobs and businesses out there today that try to do that. And of course, my family is always a motivating factor. I've got a big family and it's a lot to provide for.

Tim Fitzpatrick
I love it. One of the things that we talked about in the pre interview that you mentioned was you were a finance major. How did you end up starting an IT company?

Jonathan Addington
There's a couple of sides to that. The first is when I was going into school, most of the universities were about four years behind of the technology. When you graduated, you're going to be about eight years behind. I was really already good with the technology, honestly. I had already had a full time position in an IT department, so I didn't really need to go to school for it. The next thing that I was interested in was business. I thought, well, I know technology, not to have too much pride here, but I wasn't going to get much more out of it going to school. So how about I go study this other thing that I know less about? I always figured that I'd be able to use technology in finance or vice versa. So I studied finance.

Tim Fitzpatrick
When you got out, when did you graduate? Because you graduated right around the 2008 time frame, I think, if I remember correctly.

Jonathan Addington
Right at the beginning of 2009, Tim.

Tim Fitzpatrick
Tough time to go into finance, right?

Jonathan Addington
That was an awful time to have a bachelor's degree in finance. There weren't jobs anywhere. I ended up pushing carts at the Home Depot, which wasn't a bad job. I liked being outside, but it wasn't going to pay any bills.

Tim Fitzpatrick
So that's when you decided to start your company.

Jonathan Addington
Yeah. I started doing this on the side and professionally. I was doing it for other small businesses in the area. And one of them, the owner of the business that had been around, I don't know, 40 years or so, he just kept pushing me to start my own business. I'm like, I don't know how to start a business. I don't know how to start a business. And finally, I caved in. I said, all right, I don't have anything to lose here. I'm out of college. I don't have any money. I'm pushing carts. The worst case is I go bankrupt faster than I'm going to. Just pushing carts. And it worked out.

Tim Fitzpatrick
Yeah. So you made the leap, and here you are. I love it.

The Importance of Charging What You’re Worth

Tim Fitzpatrick
One of the things we also talked about in the pre interview that you mentioned that I want to bring up because I think a lot of us struggle with this at times is you said to me, early on you under charged because you didn't really understand the value that you were providing people. How did you discover this and how did you overcome it?

Jonathan Addington
I didn't under charge by a little. I under charged by a lot easily at one third to one quarter of the market rate. I think my first mistake, if I can start there besides to Sherp, was thinking, how much would I make if I was doing this professionally? And that's a whole lot different than what you charge as a business. And I started having customers telling me that I wasn't charging them enough, which was a little bit of a wake up call. And then the second thing is I started networking with other small business owners in IT. They all told me I wasn't charging enough. So of course, the first time you do that rate hike, it's a little bit scary. The second time, it was a larger rate hike, and I had more trepidation. But man, did I make a lot more money faster. I didn't have any complaints. In general, my clients just appreciated what I was doing enough that they were happy to pay it.

Tim Fitzpatrick
Yeah, you started to do it. It's so easy to under charge, especially when we're just starting out. A lot of us, we don't have that confidence. We just want to get those first clients under our belt. And it's really easy to lose sight of that. I also think a lot of people, like you mentioned, you look at, well, what would I be making if I was doing this somewhere else? If I charge X, how much am I going to make an hour? And what we really don't think about is, especially when we look at hourly rate, most people don't look at their effective hourly rate. We're not billing eight hours a day, five days a week. I think if most of us are lucky, we're actually billing 25 %, 30 % of the time. And if you don't take that into account, your effective hourly rate is a hell of a lot lower than you think. So pricing is such an important thing to think about.

Jonathan Addington
I don't think that I understood the effect it was going to have on my business for the following years. I don't have a lot of regrets in life. I tell people I don't have a rear windshield, I don't have a rear windshield mirror. I just have my front windshield. But I think that had I properly priced earlier on, it really would have jump started the business. Both personally, my finances would have been a lot better off at the beginning, but also just having the resources, not only is cash king, I've heard it described as just being oxygen for a business. And I just think, how much faster could I have built up muscle to do the things that really motivate me? Going out there and protecting small businesses and providing an environment. I could have done it years earlier if I had understood the importance of pricing and what the real market rate was.

Tim Fitzpatrick
There's nothing wrong with making money. If we're going to stay in business and we're going to serve clients at the highest level, we have to be profitable. And so there's absolutely nothing wrong with making money. We're just going to be able to do a better job. And as you pointed out, you're going to be able to grow faster. I mean, if you want to grow, it takes money to grow. And so if you don't have it, it makes it hard to invest in things like marketing sales, which are really going to help drive and scale the business. So thank you for sharing that. 

The Benefits of Niching

Tim Fitzpatrick

Now, you also recently... CyberSecure RIA is a fairly new venture for you, a branch off. How long ago did you start that?

Jonathan Addington
That was officially launched last summer.

Tim Fitzpatrick
With CyberSecure RIA, you've really niched and focused specifically on cybersecurity for RIAs, for people that don't know what RIAs are, registered investment advisors, correct?

Jonathan Addington
Correct.

Tim Fitzpatrick
How did this come about for you?

Jonathan Addington
Yeah. So one, if you're an RIA watching this, don't think that we just started yesterday.

Tim Fitzpatrick
Yeah, right. Yes, that's right.

Jonathan Addington
Yeah. As we had gotten further and further into IT and cybersecurity, and as the business grew, we're working more with compliance, we started working a lot more with financial firms, and some of them were BDs, some of them were RIAs. If you're in the industry, you know what that means. If not, you don't care. And especially around security and compliance. And one day I woke up and there were two things. One, I was already aware that we were doing more and more with finance and in particular with registered investment advisors, RIAs, who have to meet certain standards based either on what the SEC puts out or the state they're registered in. And then second, my local market was going to be very difficult to grow in and in particular at the speed that I wanted to grow. And so I had another friend who had a very successful MSP and was able to sell it. And we were just talking and he said, Have you thought about niching? I'm like, Kind of. What do I niche in? Well, what are you best at? RIAs? Oh, that makes sense then, doesn't it? And one of the amazing things about going for an industry such as RIAs is they have to register. And the ones that have to register with the SEC in particular, you can go to the SEC and download the entire list of RIAs. So it very quickly gave me a view into what that marketing universe looked like, where they were geographically, how large they were, how they're by employees, their assets under management. It was a wealth of information beyond... Man, if you could buy this list, Tim, for marketing, you would pay a ton of money for it. It was a great start.

Tim Fitzpatrick
It's there. There's a couple of things I want to pull out here. You set up CyberSecure RIA separately as a different brand. Why did you do that?

Jonathan Addington
I wanted to communicate to RIAs that we were there specifically for them, and I wanted to get it all in the name.

Tim Fitzpatrick
Yeah.

Jonathan Addington
Even most investment firms, they have it in the name. They'll change their name a little bit depending on the clientele that they're targeting. And I don't know that you notice that if you're outside the industry, but when you're working with it, you do. So I was looking to message them in the same way that they're messaging their prospects and their clients. And JM Addington Technology Solutions, it's got a good reputation here in Knoxville, Knox County and the state of the surrounding area. But outside of that geographic area, it's not super well known. I really thought that I was going to muddy the message if I went out there with that same brand that had reviews and collateral on LinkedIn and all this stuff that looked like it was a wider industry target, even though we had already been narrowing into this financial segment.

Tim Fitzpatrick
Yeah, I love it. And it makes perfect sense. You're niching, you want to have a brand that's super niche. The message needs to be very niche. And one of the things that I learned early on was specificity sells. The more specific that message can be, the more effective it's going to be. So it makes perfect sense as to why you set up a separate brand to really go after the RIA market, even though what you're doing in the RIA market is the same as what you've been doing for years now. So I love the fact that you did that. I want to pull that out because I think there's a lot that people can learn from that. The other thing that you mentioned was that there's a list out there that's public for these RIAs. When we look at niching, that is one of the really important things to look at is this niche that you're thinking about, how easy are they to get in front of? How easy are they to find? If they're going to be really difficult to find, man, it's probably not going to be the greatest niche. That's one of the things that we look at. You already have been working with RIAs, so you knew that they have the need. You knew that they had the money to pay for it. They're easy to find. You're starting to check off some really key boxes here on what's to be a good niche, what's going to be a good target market. I love that. I think there's a lot that people can learn from that.

Jonathan Addington
Yeah. Well, I want to back up a second here. It sounds like I just decided to go after RIAs, downloaded the list, and was off to the races. But I took some time to do some market research in there first. The list was great. Let's look at the geography, let's look at the size of RIAs. Are they in a geography that we can serve? Are they in a size that meets our business model? Are there enough out there that if I market to them, it's going to be able to be a successful niche for us? Are there other firms that are working specifically with our RIAs? And then what's their regulatory environment? And all of those things lined up really well. The number of RIAs that were out there was good. The size was good. The geography was good. New regulations coming down from the SEC meant that environmentally that they were going to have a different regulatory environment. Of course, the cyber security landscape was already getting worse. And there weren't other firms that were serving them specifically. Not a lot of other firms. A couple of really big box ones that aren't known for maybe their customization and customer service. And so we were going to be able to come in and provide a unique offering, do a good universe of prospects.

Tim Fitzpatrick
Do you remember from the initial research how many RIAs there are?

Jonathan Addington
Yes, I do. Very well. There's about 15,000 federally registered with the Security and Exchange Commission, the SEC, and that means they're managing at least $100 million in client money. So they're investing it and trying to grow their client's money and that stuff. And there are roughly 5,000 in between 10 and 99 employees. So that's our market qualification. And then there's about 25,000 that are state registered. And so those tend to be smaller, often family office, family wealth management type firms.

Tim Fitzpatrick
Yeah. So the market is big enough. There's plenty of them there. You don't need all that many to have a very successful business.

Having a Marketing Plan is a Must

Tim Fitzpatrick
Let's talk about marketing a little bit because it sounds like you're leading a lot of the marketing efforts. Can you break down what you're doing from a marketing perspective? How do you approach it?

Jonathan Addington
I feel like I'm always building new things out. So it's never just one thing. It's what am I going to build out next? And after you've built that thing out, usually it's easier to maintain. And I hate maintaining things. It's much easier for me to pass that off to someone else to delegate it. Our first thing was obviously to... I was going to say put up a website, but it wasn't. It was to develop some messaging, to take some of the things we already had and then make sure that we were able to craft it more specifically for registered investment advisors. Next was to stand up the website. After that, I wrote an eBook on this regulation that the SEC was putting out for RIAs. I wrote and recorded a webinar around it. After that, we began doing direct mail, monthly newsletters, news around cyber security, industry news, just general business topics, sometimes introductions to other companies that are in the industry but are non competing. It's really aimed to be something that just another business owner would want. And then monthly tech tips, postcards that had some information on it relative to cybersecurity. Started getting together an email list. I promise I didn't just blast everybody, but as they were coming in from webinars or downloading book or whatever, they also had the opportunity to sign up for weekly cyber security tips, which also helps them because it counts as ongoing education for what they need, and they're great. I continually get good feedback off of it. Then we started calling them to invite them to the webinars. Makes it a lot easier to get out that information when you're able to mail them about it, call them about it, email them about it. And that's what we've gotten in place since last summer. Some of our next steps include how do we reach out on LinkedIn more effectively? How do we use very targeted advertising on social media and Google ad words? How do you know, again, that the whole universe is about 40,000 and my target's about 5,000. Linkedin tells me I need to have a minimum audience of 50,000 to have an effective campaign. It's literally like 90 % wasted. As many people to see it as LinkedIn thinks I need to see it. And then you start up some SEO and some of that.

Tim Fitzpatrick
So the webinar you're doing, are you doing that on a regular basis? Is it prerecorded? How are you doing that now?

Jonathan Addington
Yeah, we do it two, sometimes three times a month. We do that live. I don't plan on doing it that often all the time, Tim, to get going. I really wanted to see what was a good day, what was a good time. There's research out there that says Tuesday mornings are best or Thursday afternoons or whatever. But I also wanted to be sensitive to the fact that we were going for a niche market that might not match those days. There's even things to consider, all right, what time do the markets open? Do I need to make sure that I've got the webinar before that? Does it need to be later than that? And just playing with that.

Tim Fitzpatrick
And you're promoting that through your email list and direct mail, primarily at this point?

Jonathan Addington
Yeah, and calls to the advisors to give them a more personalized invitation.

Tim Fitzpatrick
Got it. Wow. You're doing a fair amount of work to get people to these webinars.

Jonathan Addington
Tell me about it.

Tim Fitzpatrick
How have they been working for you so far?

Jonathan Addington
It's been mixed. I had some difficulty with the first person I hired to make these calls, and they had a great personality and all that, but they had a hard time getting through and getting the right message across. And honestly, that was really difficult because we've got a great message, we've got great content, and I'm just trying to let people know about that. So that was very difficult. I think I had much better results through the newsletter, honestly, which surprised me.

Tim Fitzpatrick
And the newsletter, is that email or is that print?

Jonathan Addington
No, that's print. We have 2,500 of them that go out every month.

Tim Fitzpatrick
Got it. So these contacts, they're getting a fair amount of direct mail from you. Either direct mail cards that you're sending out or at the very least, they're getting your monthly print newsletter.

Jonathan Addington
Yeah. I mean, they're all getting the postcards, they're all getting the newsletter. The ones that are signed up for the tech tips are getting that weekly. I try to call on all of them at least quarterly. So it's anywhere from two to seven touches a month is really the goal.

Tim Fitzpatrick
I love it. The reality is, Jonathan, you had a plan and you've put this plan in place and you're working the plan. So many people just don't even have a plan. It's scattershot. The reality is, man, there is no perfect plan. The plan you start with is not going to be the plan that you end with. But you put a plan in place, you're working it, and as you take action, you learn from it, and you're making correct... But the bottom line is, what I was trying to communicate is you put a plan together, you're working that plan. It's not perfect, but you're learning as you go and you're making tweaks and course corrections to that, which I think so many people can learn from because there's a lot of people that just don't have a plan. It's very haphazard. It's scattershot. They're throwing stuff up against the wall hoping it sticks. And that's just not an effective way to market. It's just never going to work consistently. So I love the fact that you put this plan together to launch CyberSecure RIA and you just continue to work it. Some things are working great, some things aren't, but you just continue to learn. One of the things I always talk about with marketing is learn, measure, and just repeat. You do it all over again.

Jonathan Addington
Measure is an important word there. We measure, I know how much we spend, I know what the ROI is. I usually know more about our prospects when they come to us than they have any idea. I know, and I don't mean in a creepy way, but I know everything I've ever sent them, direct mail, postcards, email, whatever. There's information I know from the SEC about them specifically and how they work. A lot of times I know how they found us more than they know how they found us. That's just key, though, that having the plan is knowing how do you tweak it? So, for example, we had a different direct mail campaign that we were working in the fall. I won't go into the details, but it was expensive. And what I found was I was able to cut the cost per touch in half with a more effective campaign and was able to drop all of that work completely. But without measuring it and knowing what was causing people to convert, I would have had no idea and would still be spending X dollars more a month. I was glad to be able to change it up.

Tim Fitzpatrick
Without the right metrics, you don't have the data you need to make good decisions. So, so important. I want to touch on one more thing before we wrap things up. One of the things you touched on when we initially spoke was you're doing great work and up to this point, you haven't had a fully managed client that's had a ransomware incident. What types of things are you doing to stay on top of your game?

Jonathan Addington
The correct answer here is that I study the frameworks put out by the National Institute for Standards and Technology, and then I follow industry news and all of that, and I do, all right. But that's really basic level stuff, honestly. You shouldn't be in this industry and not know what those security frameworks are and not pay attention to industry news and not network with your peers. One of the most important things that I do is I follow white hat and maybe black hat hackers on Twitter and the new social network Mastodon, and I see what they're talking about. And let me tell you what, they know what's hitting and post about it much, much, much earlier than any news site does. I remember when the tools from the NSA were released, and this was on Good Friday. And you don't have to know what that is other than to know they were NSA hacking tools. This is bad. And I was just scrolling through Twitter and saw that they were released. I was like, Holy crap, this is bad. It doesn't matter that it's 7 PM on a Friday. We got to get after this right now. And so we did. And I don't even know when it hit the news, but it was because I was following these other security people and hackers, honestly, that were talking about it. And they were talking about how cool it is from a hacker perspective. I'm like, this is not cool. And it really lets me stay not just one step ahead, but

Tim Fitzpatrick
I love the fact you're talking about staying on top of the latest trends by identifying the right and the best people to follow. And by following those people, it's helping you stay ahead of the game compared to a lot of your peers, which is absolutely phenomenal advice. Now, did you know that they were great to follow in the beginning, or did you just start to follow some of these people to see what was going on? And you've refined that list of people over time.

Jonathan Addington
It's some of both. I told you that I found this stuff interesting since before I went to school. I started getting paid doing tech support in seventh grade, Tim. And I was hacking at computers well before even then. In middle school, I learned how to defeat my district's security on their computers, and I could print to any classroom in any building across the district, and that's more than that's done in high school. I already loved the stuff and already followed a lot of it and followed a lot of the sources directly starting in middle school. So I just loved it. So it was a real natural transition to keep watching them. And then over time to realize I'm really far ahead compared to my peers. And you were talking about pricing before. I didn't realize how far ahead I was until I started hiring people that had worked at other companies like mine. And you're like, you're doing what? We're doing this, that, and the other. Isn't that what everybody does? And I'm like, No, nobody does that except the top security companies. I'm like, Oh, well, they should be. You know they should be, but they're not. And just a lot of those things that we were doing were coming from following people that, again, were on the other side or real deep into the defense because I loved it.

In Conclusion

Tim Fitzpatrick
So knowing what you know now, is there anything you do differently?

Jonathan Addington
It's about going back to basics. As a company, we're really good at what we do. Personally, I'm really good at what I do operationally, and I'm not so far above as president or CEO or whatever, then I'm not still real good at the security. But having understood how important sales were to be able to accomplish my own personal mission. It's not just sales for the sake of sales, but if you don't have money, you can't grow, you can't expand, you don't have money to do operations better. I wish I'd understood that. I wish I'd understood the importance of marketing and being able to figure out market size and what are the things you need to do there and pricing. Those three things make such a difference to a business and being able to grow and having that oxygen that we call cash. I think if I had understood that, I'd be in an entirely different position today. And back to my mission is we'd be protecting more small businesses. I would have more people employed under this safe haven, and it would help provide for my family and honestly, we'd be in a different spot than where we are.

Tim Fitzpatrick
Jonathan, this has been a great interview, man. I really appreciate you taking the time and sharing your experience. Where can people learn more about you?

Jonathan Addington
Yeah. So if you're an RIA, CyberSecureRIA.com, download the eBook there, sign up for the webinar. You Google my name, you're going to end up at jmaddington.com, which is another great website, especially if you're not an RAA. You can also find me on LinkedIn. Just search Jonathan addington. There's only two of us in the United States. I'm the IT one. Same thing on Facebook. Feel free to find me there and you can follow me personally. And if you're a endurance athlete, you can find me on Facebook.

Tim Fitzpatrick
Cool. I love it. Thank you so much. I appreciate the time. We will make sure that that information is in the show notes. For those watching, listening, I appreciate you. We've been talking all about growth, accelerating revenue. I hope you've got some great tips from this conversation. If you want to find out which roadblocks are slowing down your growth, you can do that over at revenueroadblockscorecard.com. You can also always connect with us over at rialtomarketing.com. Thanks for tuning in. I appreciate you. Until next. Take care.