Master Your Finances Kurt Baker with Mathias Hemberger – Transcript

Written by on January 22, 2025

0:00:00.5 Kurt Baker: How can business unlock profitability and stay competitive in today’s fast changing market? Joining us is Mathias Hemberger, a seasoned leader with global expertise for managing iconic brands at Unilever and driving transformation at Firmenich. Mathias has excelled across industries and continents. Now with ERA group, he helps midsize organizations improve profitability through world-class cost expertise. Today, Mathias shares insights on leveraging resources, optimizing vendor management, and driving sustainable growth. So that’s very interesting. Mathias, I know we’ve talked offline about this a little bit, so tell us a little bit about your background and then what brought you to the point where you want to help do this for midsize companies. So how did you develop your expertise initially a little bit? Give us a little bit of background there.

0:00:58.2 Mathias Hemberger: Yeah. Hi, Kurt. Thanks for having me here first of all, and I don’t know if it’s too late to say Happy New Year, but anyway, Happy New Year.

0:01:05.6 Kurt Baker: Sure. You can say it anytime. Somewhere it’s New Year, Chinese New Year is coming up.

0:01:10.7 Mathias Hemberger: Probably, probably.

0:01:10.8 Kurt Baker: Just either way you could do it. Good, right?

0:01:12.0 Mathias Hemberger: So no, well, what brought me to the point where I am, I mean, I had an international career and I spent actually most of my career in major multinational organizations, starting as you said, with Unilever, which is a behemoth with, I don’t know, hundreds of thousands of employees around the world. And then when I started with Firmenich, that actually was, I would say kind of a midsize company. With about 2000 people around the world, but now they grew over the last 26 years that I spent with them, and I, at some point a few years ago, they went through further mergers and came to a point where they made me an offer to basically retire, which I felt way too young for. So I looked around what I can do with, in this third stage, if you like, of my career, and I guess anyway, the days where you work for whatever, 30 years and then you reach your early 60s or late 50s and then you say, well, that’s enough. I think these days are kind of over anyway. So I wanted to keep active and I came across this organization, ERA Group, which is a franchise based organization. So it kind of offered me the opportunity to make a jump from employed salaried corporate life to a more entrepreneurial stage, which I honestly had never really seriously considered.

0:02:44.2 Kurt Baker: Yeah, it’s interesting, because I mean, I’ve dealt with a lot of people that have done corporate to entrepreneurship. So tell us a little bit about that thought process. Because you worked in corporate America for 30 plus years, that’s a long time and that’s a certain way of doing things, let’s just say. Entrepreneurship is kind of a little different. So was it something that you said, oh, they made me the offer, let me go do entrepreneurship? Or was it something that was kind of simmering in the background and you go, well, maybe this is the time to do it? How did you kind of get… It’s a very different way of living, I guess is all I’m saying.

0:03:17.5 Mathias Hemberger: Absolutely.

0:03:17.9 Kurt Baker: And what kind of made you decide, yeah, let me take this on, sounds interesting?

0:03:20.5 Mathias Hemberger: I mean, there is a benefit in a regular paycheck. I will not deny that.

0:03:26.1 Kurt Baker: I would agree.

0:03:26.7 Mathias Hemberger: But on the other hand, I mean, having this pressure to constantly having to justify what you’re doing to senior management, to your uppers, and every quarter having to look at how are things going and then explain why they’re going maybe well or not so well, you never know, it gets tiring after a while, I would say. And in that respect, the opportunity to become my own boss and kind of create my own pressure for myself as much as I like and comfortable with, but then also to say, well, it’s a beautiful day today and actually my dog is looking at me longingly and wants to go out and I say, well, I’ll just do that then, that also has its benefits and is a very desirable kind of way of life, I would say. So that played into the decision. I saw in this with ERA Group, the opportunity to still make a decent living and kind of be the master of my own fate in a sense. If I put more work in, there is better output. If I decide to take it slow for a while, I can do that. Okay, then I have a little bit of an impact on my income, but that’s fine as well.

0:04:42.5 Kurt Baker: So did you go seeking out a franchise? Because when people go entrepreneurship, you can really do it two ways. One, you can create your own thing so to speak, or you can go kind of a franchise or licensing or something where somebody else already has kind of a structure in place and can kind of help you get up and going. What were the reasons why you thought first going franchise instead of just creating something brand spanking new out of nothing? Which frankly is hard, very hard.

0:05:10.0 Mathias Hemberger: You are answering my question.

0:05:11.0 Kurt Baker: And then the next part, you decide franchise, but now you have to decide which one. There’s thousands and thousands of options out there. So what was your thought process through this stage of the analysis, so to speak?

0:05:24.1 Mathias Hemberger: Well, first of all, the thought was really that I wanted to have a model that I can leverage basically to completely reinvent the wheel I felt was a little tedious. There are obviously, I mean, in my situation to become a consultant after a successful corporate career is quite obvious I would say. But there are thousands out there who just do their thing and talk about strategy or leadership or, I don’t know, business development, things like that. But I felt you need to have a certain angle, you need to have a certain hook that kind of differentiates you from all these. And in that respect, a proven model that a franchise organization like ERA Group offers is a good way to manage that risk, let’s say, of making that step.

0:06:21.3 Mathias Hemberger: You are not stepping completely in the unknown, but you’re leveraging an organization, you’re leveraging resources that have shown that they can work. And what I liked about the model, and that’s the other consideration that came to my mind is, if you do, I mean, another thing that I wanted maybe to explore was something like coaching, executive coaching. I mean, as I said, I have 30 years of experience, led big teams and I felt, you know, kind of paying forward and sharing my wisdom with other people felt like a very enticing proposition. But typically in a coaching context, you basically at the end of the day get paid by the hour. You don’t get paid for the value that you create, but you get paid for your time, which I felt is making it kind of hard to really leverage and scale up basically the value that I could bring to an organization. And in our model at ERA Group, we get paid on the value that we create. We get paid, it’s an organization that helps companies to save money at the end of the day. And the more we save, the more we get paid. And that I felt was a much more constructive…

0:07:43.5 Kurt Baker: So how did you decide on this particular franchise? Because I think I see part of it is that you like the model because people are compensated based on the value add, so to speak, as a business. And that’s usually the better business model if you can do it that way. Somehow you have to be able to leverage something. And that’s your expertise on how to leverage a value. And then you can come in and add value. But there’s others too. So why did you think this one was kind of the one that, hey, this one makes sense for me based on my background, based on the opportunity I see, based on whatever metrics you happen to use. I was wondering like, what things did you think about first and say, yeah, this is a good fit for me and for I think where business is going in general?

0:08:24.0 Mathias Hemberger: Yeah, you’re raising a good point about leveraging your past expertise and that I felt I can do very well in this context because I, for most of my career at Firmenich, I was handling global accounts, I was kind of interacting with clients on a c-suite level. And that’s exactly what we are doing here. So it is a business to business interaction on a senior level, on a strategic level. And I felt in that respect, you know, I can leverage very well what I have learned over 30 years. I can leverage also certain industry knowledge that I have. And some of my first clients came from my old industry where I spoke the language. I had some connections, and that obviously helped very well. And we may speak later on about the power of networks a little bit more. So that was a very, very good entry point here that I said, just use some of the connections that I have.

0:09:25.1 Kurt Baker: Well, you bring up, whether you did that intentionally or not, I just wanna point out that this is often a conversation that business owners in generals and entrepreneurs in general have is like, okay, do I go wide and be a generalist or do I go narrow and become more of a niche person where I become really, really, really good at a certain industry in how to solve a particular problem or problems for that particular group of people, or whatever. I mean, you can go based on, you know, a process thing, or you can go based on an industry expertise, right? It’s something that has to be common among, you know, your clients, so to speak. And over and over and over again, we talk about how you do better by adding more value, by getting really focused on a particular area. And in your case, you have an industry where you have a background, and now you can apply the expertise you’re learning from the franchise people to your background. Kind of like, tell me a little bit about how you plan on going. It sounds like you’ve hit a good niche is what it sounds like to me. Like you’ve hit a good spot that makes a lot of sense. So how did that come to be? Was it easier to, like you said, you could talk their language. That was one thing you said. Right?

0:10:27.6 Mathias Hemberger: Well, that helped me to get into that whole consulting game by sticking to, first of all, speaking to people that I kind of know or talking about industries that I know. On the other hand, obviously you need to learn and you need to expand, and you need to, you’re never too old to broaden your horizon. And so over time now, in the last few years since I’m doing that, I kind of branched out into other businesses, into other industries as well. The common thread still is you talk business to business, you talk about the needs of an organization and you have an understanding what drives these business owners? What drives these entrepreneurs? What are they… They all have similar concerns. They all have similar worries in the context of the current economy and, you know, staffing and how do I pay for my people and where do I kind of, can I find the money that I can actually put it back into the business? And these are all common things that I also knew from my past. So the industry experience as such helped in the beginning to talk to people in an industry that I was familiar with, to gain confidence and to build a certain momentum. But obviously at some point you also need to broaden and spread out. I wouldn’t want to put myself, pigeonhole myself into just, I’m just working in the fragrance industry as such.

0:11:48.6 Kurt Baker: All right. Well, that was great. Right before the break we talked a little bit about like how you niched in to get basically your feet wet, so to speak, ’cause you were very familiar with those particular industries. And so what it sounds like to me is like the basic process of what you’re doing at ERA is, can be systematized among different industries. So you’ve got a process here, right? I’m assuming, and that can overlay many kind of businesses in a B2B kind of way. So you wanna talk a little bit about, we haven’t even talked about what ERA does or what it is. So if you want to tell us a little bit about what drew you to the franchise as far as the business model itself goes, and how you are adding some value to your clientele, to these other businesses out there. What are they seeing from you, so to speak, and why would they say, hey, this is a great idea?

0:12:45.1 Mathias Hemberger: Yeah, no, that’s a good question. I think the unique, well, the uniqueness and the specific value that an organization like ERA Group brings to a client is that, you know, we have people in our network that are experts in their respective cost field. We have people who spend their whole career in insurance. We have people who spend their whole career in IT, in transportation, in manufacturing supplies. And we have fairly broad range of expertise. And this experience, normally if you have a midsize company with whatever, 100 or 200 people and you know your core business, obviously inside out, if you’re a whatever, if you’re a big bakery, you know how to make bread, you know how to buy your flour, but you may not exactly know how to best buy your IT stuff or how…

0:13:36.6 Kurt Baker: Maybe back up and explain a little bit about what you’re doing for the business. I don’t think we touched on that quite yet. So what is ERA actually, what is the business model? And… ’cause I hadn’t, until I met you a while back, I had never heard of this particular business model. And then how do you engage with business owners? Because I’ll comment on it as you talk, but just go ahead and tell me what the basic business model is and how those conversations typically go.

0:14:01.8 Mathias Hemberger: Well, the model, the basic model is that we look, we come into a company and we look at all the non-salary spend. So we don’t look at people as such. We don’t tell you you have too much people, but we look at all the goods and services that a company buys, and we try to identify opportunities where we think this company actually could make some savings by either having a serious discussion with their incumbent suppliers or to look at alternatives often. I mean, if you have a longstanding relationship with a supplier, there’s a value in that. Yes. But sometimes that also breeds a certain complacency. And so we challenge that situation, and by challenging the situation, we generate often quite substantial savings. And we also identify other areas where maybe they spend money on things they really don’t need to spend any money on.

0:14:53.2 Mathias Hemberger: That they’re completely, I mean, we had a situation, a company which was in the insurance… Well, it was a manufacturing company but in the insurance space, they spent money on on a certain type of business liability insurance. We dug into that, we realized they are actually part of a, it was a subsidiary of a larger firm, and that risk was already covered by the mothership, if you… So, and we, through our analysis, because you can scrap that all together and save a few hundred thousand dollars by not paying for this insurance at all. So these are the kind of things we bring to an organization. And as I said, our guys have in depth experience through years and years and years of working in a specific field and then in projects in that field every week. They know exactly where the markets are going. And again, if you’re a bakery, you don’t do that every day, in your insurance…

0:15:50.1 Kurt Baker: Well, yeah, I’m thinking as a small business owner, I’m like, well, but I have, you know, I have Suzzy who does all my buying, and that’s literally her full-time job to get me the best deal in all the stuff that I’m purchasing. Then do you mean to tell me like, she’s not doing her job? Do I need to fire Suzzy? I mean, this is kind of the way of business. Well, I already hired people to do this. Why am I gonna bring in somebody outside to do something that I already have somebody supposedly monitoring all this stuff? So how does that interact, so to speak? Because Suzzy is not gonna be very happy about this situation.

0:16:20.7 Mathias Hemberger: Suzzy will… Maybe not quite…

0:16:23.8 Kurt Baker: Based on my scenario at least, based on the way I’m setting it up, but how does it operate? Because that would be a reaction that I can see a small business owner having.

0:16:32.5 Mathias Hemberger: Yeah. Now what we are doing is we are, as I said, we are looking typically at the spend that’s outside of your core competence. Again, sticking with this bakery example…

0:16:45.1 Kurt Baker: There you go. Okay.

0:16:45.2 Mathias Hemberger: Suzzy will know how to buy flour and bakery ingredients, whatever, I’m sure, and she does an excellent job in doing that. And typically she will be busy enough doing just that. That will fill her day. And if you then come and say, by the way, we need to look into our, whatever, uniforms that our people on the shop floor are wearing, she will, yeah, I can try when I have some time to do that. But she will not have the time to really do it, and she’s never done that, or she’s done it last time 10 years ago, so she doesn’t really even know who to talk to. We know that. So we compliment the expertise that you have in your own organization. And that’s why we are focusing on the midsize, let’s say, market because if you have a really large organization, they have people who know all the different aspects because they have the resources, they have the staff to look into all the different aspects. If you have a midsize business, you don’t have that kind of manpower in your organization.

0:17:46.0 Kurt Baker: Okay. Alright. Well, that makes sense. I mean, I just needed to, ’cause that would definitely be a conversation that business owners… ’cause I mean, when you bring this up to somebody and have these initial conversations, what kind of responses do you typically get from them? And how do you kind of walk somebody through this whole thing? Because they’re like, well, you know, it’s something like, well, everything’s fine the way it is. We make money already. I mean, a lot of business owners are gonna be like, eh, it sounds like work to me. They don’t like extra work.

0:18:12.9 Mathias Hemberger: That is true.

0:18:13.4 Kurt Baker: Because they have certain things they do, they spend their day on they like, they know how they make money and they’re like, I just like to focus on what I do well and just do lots of it as much as I can.

0:18:20.7 Mathias Hemberger: Which is a smart thing to do. And that’s why involving us, I mean, I’m not saying we don’t need any of your time, but we need a few hours in the course of a project. And if at the end of these few hours that you as a business owner, or as a CFO or Finance VP invest into working with us, if at the end of these few hours you have $50,000 or $100,000 or $200,000 savings, that’s probably a pretty decent return compared to some other ways how you could spend your time. So we do all the heavy lifting, we spend the long hours, you just basically as the business owner get called in for a kickoff meeting. And then after a few weeks we come back with some results where we say, this is where you could save money. Okay, that’s another one hour meeting. And then you have to think about what you want to do and we help with the implementation. So the time that you invest as the business is relatively limited. Yeah. And also by the way, one other side benefit, because we ask obviously certain questions, you may realize, oh, this is an area where I may have to get myself a little bit better organized, which then has a positive knock on effect also beyond our pure engagement as such.

0:19:36.1 Kurt Baker: Now, are there particular areas that you find a lot of the value? And I know I’m just thinking about my own business. When I go in and I do a wealth management analysis, the place we find the most errors, which people never think about is as far as the outside world, is we find more errors in insurance, like what you just talked about than anywhere else in their plan, because it seems like the agents don’t stay in touch with them and the owner doesn’t really understand what they have. They just know they got a renewal every year and maybe the premium went up. That’s about all they really think about. But if you actually analyze it, I’m often finding errors in there when I really talk to like everybody. So that’s just my industry, that’s what we see. And I’m not the only one. Other people in my industry have the same issue. Do you see certain things where you find, hey, these are areas that people typically probably aren’t optimizing so well, right?

0:20:29.8 Mathias Hemberger: It really depends on the industry. And I mean, we cover everything from manufacturing through professional services to nonprofits, education, medical. So we don’t really have an industry focus, we have a cost focus, and if you spend money, stick with insurance, I mean, it doesn’t really matter too much whether you’re a manufacturing company or the professional service company, you still have a liability insurance. You still have to insure your staff. So health and benefits, things like that. And to your question, I mean, I don’t really find any specific standout kind of, oh, this is what everybody gets wrong. Not really. I mean, it really depends where… We have people on the client side who know a lot about insurance actually.

0:21:14.5 Kurt Baker: Right. True.

0:21:15.4 Mathias Hemberger: But then they have another blank spot somewhere else and they may not be aware of that, let’s say. And that’s where we, in an engagement, in a discussion, we try to dig in where are your pain points, and then we can focus on that.

0:21:28.2 Kurt Baker: Excellent, excellent. Okay, so once you started the business and you started your first couple of clients, what have you found the best way to bring in new clients or network or bring in new business? And how did you do that? ‘Cause that’s always the hard part, getting that momentum going to get your initial client base so then you can get quote referrals or then you can get something under your belt, so to speak personally, your company could be around forever, but if you haven’t done anything yet, people don’t really know you and what you’re able to do. So how did that progression go and what do you see going forward? It’s like how you find new clients and serve new clients, things like that.

0:22:16.0 Mathias Hemberger: Well, the golden path, as you rightly already point out, is of course referrals. So this is the intended long-term of the goal to come to a position where you basically gain all your business through referrals. My first few clients, well, it was a mix actually, one or two came through referrals or through people that I knew already and they had a senior position in an organisation and I knew them from my previous life and I called them up and said, hey, I’m doing this now. And they were open enough and kind enough to say, well, nothing to lose. So yeah, let’s give it a shot. By the way, nothing to lose I’m saying because, and we haven’t touched on that yet, but we only send the bill if we actually find savings. So there is really, if a client engages with us and we don’t find savings, then he doesn’t have to pay us anything. So that’s where there really is nothing to lose. So they were open enough to give me a shot here and didn’t regret it because we did find really nice savings for the organizations. But there is also the tedious way of cold calling and basically you need to just pick up the phone and talking about changing careers, whatever. That was one of the big, for me personally, obviously things where I had to readjust and reframe my mindset somewhat, because I mean, I had senior roles, I was president of a company, I had senior leadership roles with big teams working for me and making maybe these calls, that I didn’t have to pick up the phone anymore.

0:23:50.4 Kurt Baker: You get to learn a lot about rejection. [laughter]

0:23:51.9 Mathias Hemberger: Yes, absolutely.

0:23:54.1 Kurt Baker: And objections.

0:23:54.8 Mathias Hemberger: And you learn not to take it personal. And I mean, overall in these years now, having made now hundreds of calls, I didn’t have too many really unpleasant experiences. Most people, I mean, worst thing that happens is they may just hang up on you. I didn’t really have anybody say, why are you calling me, whatever?

0:24:11.5 Kurt Baker: Yeah. Very few business owners will act that way, and if they do that, they’re probably having a really bad day for some reason, is usually what’s happening.

0:24:19.1 Mathias Hemberger: Yeah, absolutely. So in that respect, it really isn’t bad, but you have to kind of step out of your comfort zone a little bit again and say, okay, I got to have to make this call now and try to enjoy it while, and see it as a bit of a game and the joy of the hunt, if you like.

0:24:34.7 Kurt Baker: Right, right, right. So when you first made the calls, what were some things that you found you didn’t really expect, and what were things you’re like, yeah, I was kind of expecting that? Any surprises in either direction?

0:24:47.0 Mathias Hemberger: One surprise is how few people are actually picking up their phone. You really have to make probably, I don’t know, 50 calls for one person to actually pick up. So in the beginning I was almost a little shocked when somebody finally did pick up and I was like, ooh, what do I say now ’cause it kind of was, I mean, you try to prepare yourself, but obviously if you made 20 or 30 calls and nobody ever picked up, you kind of get into, oh. And then suddenly somebody really picks up and you’re like, oh, I got to talk to this person now. So that was bit of a…

0:25:17.6 Kurt Baker: You’re going to have a new challenge now ’cause there’s AI operators now that are going to screen all their calls.

0:25:22.1 Mathias Hemberger: Absolutely.

0:25:22.1 Kurt Baker: So they’re going to ask you questions and… [laughter]

0:25:24.6 Mathias Hemberger: Yeah. Well, normally we get, when you have a direct line that’s not… Either nobody’s picking up or you get the person.

0:25:32.0 Kurt Baker: Right.

0:25:33.8 Mathias Hemberger: So yeah, that was a learning. But coming back to your initial question, I mean, still at the end, obviously networking is a much, and having a warm introduction through somebody that you know is still, obviously, is a more successful way. Even if you get a meeting with somebody, it is a difference whether you got that meeting out of a cold call activity or you got it through a referral.

0:26:00.5 Kurt Baker: Right.

0:26:00.6 Mathias Hemberger: ‘Cause somehow you may talk somebody on a quick phone call into, yeah, okay, I’ll give you 10 minutes tomorrow at 10:00, whatever. And then he may listen to you and may say, oh, I had a first meeting. Great.

0:26:12.2 Kurt Baker: Right.

0:26:12.6 Mathias Hemberger: But it’s because you kind of convinced him to talk to you, but that doesn’t mean that he really has a desire or a pain that you could address for him. If it’s through a recommendation, through somebody who knows a little bit about what this company might need and says, well, you guys might be a good fit, there’s a much better chance of really getting something out of that.

0:26:35.9 Kurt Baker: So do you find other ways? I know I see you at chamber events all the time and now you cold call chamber events, referrals. What other ways do you expand your network? I mean, the more people you’re out there meeting and assisting and et cetera, et cetera, it’s just a numbers, as you know, all sales is a numbers game, finding the right match and you better get out and reach hopefully the right clients, so to speak, or people that are potential clients. So what ways do you do that other than… I know the chamber and I know you’re…

0:27:04.4 Mathias Hemberger: And through the chamber there were other contacts, there are other obviously networking groups here in the area which get together. One other way is that… I mean, I’m engaged with on the board of a nonprofit here in Trenton and through that you get some good introductions into the whole nonprofit world.

0:27:24.8 Kurt Baker: Mm-hmm.

0:27:25.3 Mathias Hemberger: And actually, I mean, it sounds not like I’m doing the nonprofit stuff just because of, for business reasons, which really is not the case. I mean, it is a cause I’m quite passionate about and I actually started doing that before I got involved with ERA Group.

0:27:41.8 Kurt Baker: You’re bringing up a great point because a lot of people overlook the joining the board aspect of their life in general. And the other thing you point out is very, very important. Don’t just join a nonprofit because you’re like, I want to join a nonprofit and meet a lot of influencers in the area. That’s not going to work because you want to join a board where you’re passionate about the cause because the other people on the board will also be passionate about the cause. And that’s how you connect. And once you get to know them on a personal level, then business may come up at some point.

0:28:13.6 Mathias Hemberger: Maybe, but it’s not…

0:28:15.6 Kurt Baker: But it’s never about that, only because you’re having a conversation and becoming friends and discussing outside things other than the board. But that is a big way to really get embedded in the community and add value honestly to the community itself, ’cause if you’re on a board helping a nonprofit, you’re leveraging resources in an enormous way because nonprofits tend to run pretty efficiently as far as what they produce, as far as how much money it costs to run one.

0:28:40.2 Mathias Hemberger: Absolutely. And actually it is now probably more the reverse that I’m leveraging my business connections and the companies I know more for the benefit, trying to do at least, to leverage that for the benefit of the nonprofit.

0:28:51.9 Kurt Baker: It works both ways. Exactly. You’re right. It works both ways. And then you can come and bring people in that you, hey, are you interested in this cause? Here, please support us. We’re having an event or we’re doing such and such, right?

0:29:01.2 Mathias Hemberger: Absolutely.

0:29:02.1 Kurt Baker: And we’re trying to do things like that. So what are you doing now? So what’s, now that you’ve got your network, so you’re networking, and once you connect with all the people, so what is the process from there to make sure you continue things going?

0:29:18.1 Mathias Hemberger: Yeah. I mean, once we’re in a company, obviously, I mean, you, first of all, there are two ways. Either the business owner says, I know I have a problem in this or that field. I think my, whatever, freight forwarder is screwing me here.

0:29:34.3 Kurt Baker: Right.

0:29:34.9 Mathias Hemberger: Can you look into that for me? That obviously we’re happy to do. The other way is that we really just start with data. We are a data-driven organization. So we look at their whole spend. We get a big download, all their accounts payable data. And we look at that data from our perspective and we come back with a quite comprehensive analysis where we say, out of your whatever, 20 million that you’re spending, we think these and these and these and these are areas where we can help you. And obviously, at the end of the day, the client decides what he’s comfortable taking on with us. But these are the two typical ways. Either he has a specific pain and we know we can help in there or we do a comprehensive analysis where we highlight opportunities from our perspective, from our angle.

0:30:20.5 Kurt Baker: Okay. So I guess let’s go to the process a little bit, if you don’t mind, ’cause you’re kind of touching on that. So somebody says, hey, I’m interested in this. You’re telling me there’s no downside. I’m not going to lose any money. So you’re only going to, you know, pay you if we find some savings, there’s a net plus to the business owner and a relatively small amount of time for them because that’s the other thing, business owners never have enough time…

0:30:45.7 Mathias Hemberger: Absolutely.

0:30:46.2 Kurt Baker: ‘Cause they have other things you’re trying to get done. Once I say sure, let’s try this, what do I give you so you can do your job, so to speak, and then what should I expect?

0:30:58.6 Mathias Hemberger: It depends. [chuckle] It is a…

0:31:02.6 Kurt Baker: I sound like an attorney. All depends on the circumstances.

0:31:05.4 Mathias Hemberger: It depends. No. No, typically, I mean, there are like four phases. We do an analysis of what you currently spend and we try to understand what you need and what you do. So that’s the first line. We create a baseline. And for that, that’s where I say it depends. If some clients, they just have it all at their fingertips because they have a very good, whatever, data system, EAP system. Other clients, for them, they need to kind of manually go through files and copy stuff and whatever.

0:31:34.5 Kurt Baker: Right.

0:31:34.9 Mathias Hemberger: The other way which we can do is often we get just a letter from the client that authorizes us to interact with their suppliers. And we pull, we get data from the supplier directly, basically. So that’s the first stage, the baseline. Then we go out to market. We talk to the incumbent vendors. We talk to alternatives. And we explore options in which we present back to the client. That’s the second stage, the options report. And as we call it options, we don’t call it recommendations because at the end, it’s the client that has to make the decision. And we say, you can do this or this and this and these are pro and cons. But at the end, it’s the client’s call. We’re not making the decision for the client. He needs to be, she needs to be comfortable with it. And then the third stage is an implementation. Once they have made their decision, we basically guide them through the implementation. If they have a new vendor, we make these introductions. We help to negotiate contracts if necessary and things like that. That’s the third stage. And then in the fourth stage, we monitor, typically now for three years, the actual savings. And based on these actual savings, we send our, on a monthly or quarterly basis, we send our invoice where we say, okay, you used to spend 100, now you spent 80, here’s 20 savings. Here’s our share.

0:32:54.8 Kurt Baker: Excellent, excellent. Okay, now that you’ve gotten their savings so that’s the four steps I get. So you basically discover who the vendors are and where they’re spending their money. Then you talk to the existing vendors as well as potential alternate vendors.

0:33:21.9 Mathias Hemberger: Yeah.

0:33:23.5 Kurt Baker: And then the implementation and then the savings part. The one that I just thought of while you were talking about this, I’m like, okay, well, I’ve been using, you know, XYZ supply for the last 30 years, and how does this conversation go? I’m thinking if I’m XYZ supply and you say ABC supplier is gonna cut by 10% or whatever the number is, I may go, all right, fine. You know, I mean, if I can, obviously if I can’t I won’t do it. But I would think, this is a guess, I don’t know your industry, that your existing supplier, if there’s a good relationship, they may just cut the price and say, hey, we’re just gonna, I know whenever I call my cable bill or my phone bill or whatever, they’re like, yeah, we’ll just whack it down, or my garbage collection. They just knock it down. So what’s kind of your experience? Does leverage end up, they don’t necessarily have to change vendors, or do they often change vendors, or is there a blender, or is it depends?

0:34:11.3 Mathias Hemberger: Yeah. If I grossly generalize, yes. I mean, normally even the longstanding incumbent typically comes down with certain savings and then typically, and again, it’s a generalization, there is usually some outsider who’s more hungry maybe to gain the business than the incumbent who may be a little bit, as I said, complacent.

0:34:33.1 Kurt Baker: Okay.

0:34:33.5 Mathias Hemberger: Who’s more aggressive and brings even bigger savings. But that’s then where, and we are not trying to take any sides here, as I said.

0:34:40.9 Kurt Baker: Right. Understood.

0:34:41.4 Mathias Hemberger: We leave the decision to the client. And typically client may say, okay, I get whatever, 10%, 12% from my current vendor. There’s another guy who offers me 18% savings, but actually I do value the relationship. I don’t need the last 5%. It’s too much hustle to change all the, whatever, interactions and partners. I know these guys are gonna stick with them and they give me 12%. So that’s good enough. That’s a very typical outcome. Probably more than half of the projects, I would say the incumbent supplier keeps the business, I would say. Now, what you were touching on is obviously something we don’t like necessarily is that the incumbent tries to kind of go around the process and just picks up the phone and calls the business owner and says, come on, we’ve been golfing last weekend.

[laughter]

0:35:36.4 Mathias Hemberger: And make these guys go away. Here’s 5%. And that’s great. And they basically try to undermine somewhere the process. And that’s something we normally, in our agreements, say from the very get go, that should not happen, if somebody comes to you as client while we are on the project, send them to us, we’ll handle the conversation.

0:35:58.6 Kurt Baker: Okay. Second part of that is, let’s say I go, okay, I really, ABC’s got this great deduction, 18%. I’m all in for this cost savings. And six months later I go, oh man, these guys are a nightmare.

[laughter]

0:36:13.3 Kurt Baker: You know, are they kind of stuck a little bit, or I mean, you have to really do your due diligence or how do you kind of potentially avert that from happening, first of all? And secondly, if it does, I mean, typically we’re signing some kind of contract with some of these places, or…

0:36:27.6 Mathias Hemberger: It depends. I mean, obviously yes, you do your due diligence. We do, before the client makes us a decision at the end, we give them the opportunity to meet the new guys, interview them, have a conversation, try to audit them if needed, whatever. So you try to do some homework beforehand before you make a decision to change. If still it happens that after surprisingly a few months you’re not happy, I mean, normally yes, you may have a contract, not always, but often you do have a contract, but these contracts also have certain clauses to terminate and you just go through that process. And also that means then obviously you don’t have the savings, or maybe less savings than you anticipated. That means we get less money. So we are in this together. We don’t charge our fee independent of what you’re saving.

0:37:16.5 Kurt Baker: So this may have never happened. I’m gonna do a hypothetical, you know, if you had your one that saved you 12%, that’s your existing client, you know, existing relationship, and you go to the one saving you 18%, new one, three months later you go, this isn’t working out. Let’s go back to my original vendor, you think I could still get my deal? [laughter]

0:37:36.1 Mathias Hemberger: If the vendor is smart, yeah. I mean, he still keeps, he gets the business back. Yeah, okay. I mean, the commitment, he may try to renegotiate a little, but…

0:37:45.1 Kurt Baker: Right. Okay.

0:37:45.9 Mathias Hemberger: I would then say, come on, you were ready to give me 12%.

0:37:49.1 Kurt Baker: Right, exactly.

0:37:49.9 Mathias Hemberger: Why are you not ready to give me that anymore?

0:37:51.9 Kurt Baker: Right.

0:37:52.2 Mathias Hemberger: Don’t you love me anymore?

0:37:53.4 Kurt Baker: Don’t you love me anymore? Or I may go find out company C, right?

0:37:56.4 Mathias Hemberger: Yeah, absolutely.

0:37:58.0 Kurt Baker: QRS.

0:37:58.5 Mathias Hemberger: Yeah, yeah. No, it is a dynamic game, but that’s kind of the fun of it as well.

0:38:04.2 Kurt Baker: Okay. So what kind of industries or companies do you think would most benefit from this? ‘Cause you talked about a certain, I know you talked about a lot of different kind of companies, but certain, I don’t know, is it service, is it industrial or is it, I mean, are there any areas where, I guess the more expenses you have, the better I guess, as far as you’re concerned. Not necessarily the business owner, but I guess you need expense heavy businesses, right? Because that’s where you’re gonna find likely the most savings, right?

0:38:31.1 Mathias Hemberger: Yeah. That’s where, I mean, anything around manufacturing usually is quite interesting because, yeah, you do spend all kind of consumable supply items. Things like professional services are a little bit more tricky because they’re often enough 80%, 90% of your costs are people, which as I said, we are not looking at, we are looking at benefits and healthcare and things like that.

0:38:56.8 Kurt Baker: Right.

0:38:57.1 Mathias Hemberger: But even payroll processing, but we don’t look at salary levels. We don’t benchmark. So manufacturing is great. You were asking who would benefit. I mean, that’s an interesting point because I think there are quite a few industries or even areas like non-profits who would benefit a lot, but for some reason are not necessarily always keen on or highly motivated to get involved, which is a, or the other area which sometimes drives me a little mad, and I tried in the beginning quite strongly to get into like public school systems.

0:39:36.8 Kurt Baker: Well, you’re dealing with a government agency, which is a whole lot of paperwork, a lot of layers.

0:39:41.1 Mathias Hemberger: Yeah, that’s one thing. There’s paperwork and layers. But there also seems to be not too much motivation I feel to even rock the boat, if you like.

0:39:50.9 Kurt Baker: Because the person running the school doesn’t write the check. The business owner writes the check. [laughter]

0:39:55.3 Mathias Hemberger: You said that, and I think you’re right.

0:39:57.5 Kurt Baker: Oh, I know for a fact. As soon as you start signing the bottom of a check, it becomes much more real, or even if you’re just authorizing the ACH or whatever it is, it’s like, oh, that’s a real thing going out, right?

0:40:06.8 Mathias Hemberger: I mean, being a taxpayer in this country, I feel like, oh, man.

0:40:11.2 Kurt Baker: But it’s somebody else’s money whether you like it or not, it’s like, you just don’t feel the same way about it as far as when the money goes out the door.

0:40:16.1 Mathias Hemberger: And you do not, I mean, you see… Because their budgets are public, you do see that they’re struggling. And then you say, we could so much help here.

0:40:23.9 Kurt Baker: Yeah. So how do you approach like a school, or did you give up on the school system?

0:40:28.6 Mathias Hemberger: I kind of gave up. I tried it for a while. But again, it was, these guys are, first of all, very well guarded. Unlike private businesses, they all still have somebody sitting in there at their phone and shielding them a little bit, so it’s not even easy to get through to speak to the decision maker. But yeah, I mean, you try just to highlight to them, listen, I looked at your, because it’s public information, I looked at your budget. I know you have issues here and there and there and there. We could help you. And I even sometimes have like case studies and examples where we did help in comparable situations. Somehow still they are not necessarily open to talk.

0:41:09.9 Kurt Baker: Yeah, they need to be motivated, right?

0:41:12.0 Mathias Hemberger: Yeah. And they’re not incentivized, I guess. I don’t think that these guys have a bonus system or whatever where they would be rewarded personally. And that still is a strong motivation.

0:41:23.2 Kurt Baker: Yeah, there’s no stock. There’s no options. There’s none of that. And unfortunately, that’s just the way the system is because it is a governmental agency. And you hope they guard our money closely, but unfortunately, that’s the exception is what I’ve found. It’s not really the rule because, yeah, ’cause for them it’s like I have something that’s reliable, dependable, it works. And that extra 12% or 18% to them is like, well, it’s in the budget, so it’s fine. And they don’t really have to be concerned about the exact…

0:41:51.4 Mathias Hemberger: Exactly. Next year we just ask for more money.

0:41:54.1 Kurt Baker: Yes, I’ve noticed that when I get my quarterly bill. [laughter]

0:42:00.5 Mathias Hemberger: Yeah. Absolutely.

0:42:00.6 Kurt Baker: So what would you recommend, I guess, if somebody’s thinking about going into business on their own, leaving corporate America, part A, and then part B is, if somebody is in business and is looking to possibly save some money.

0:42:12.1 Mathias Hemberger: Okay. On your first question, what would I recommend? First of all, I’m going to say the most stressful thing that I experienced in this transition is that obviously in the first, whatever, 12 months, you make little to no money.

0:42:26.6 Kurt Baker: Right.

0:42:27.0 Mathias Hemberger: So you need to make sure that somehow, and you’re a financial advisor, so I’m… Don’t have to tell that.

0:42:31.9 Kurt Baker: Yeah, I discuss this all the time.

0:42:33.9 Mathias Hemberger: But you need to make sure that your cash flow somehow is covered and that your outgoings are covered. Otherwise this can be very, very stressful and demotivating. And again, to be fair, I had colleagues, and I have even in other businesses colleagues in similar situations with a franchise or completely independent, tried to do their thing, and then at some point realized that doesn’t work and had to change plans. So that for me was the main thing. And then, you need to be open-minded, you need to be flexible, you need to get off your high horse in a way. And yeah, don’t be afraid to get your hands dirty again after having had white glove service for 20 years.

0:43:18.1 Kurt Baker: Nobody’s going to bring your coffee at 3:00 in the afternoon for you? [laughter]

0:43:20.1 Mathias Hemberger: Absolutely. And you’re going to [0:43:21.5] ____. So that’s the, you know, don’t be too precious to get your hands dirty.

0:43:30.3 Kurt Baker: Right.

0:43:31.0 Mathias Hemberger: Yeah. Pick up that phone and make that call. What was your second question again? The second part of the question?

0:43:35.9 Kurt Baker: Business owners, like out there just in general? Who should maybe like consider something like this just on the surface?

0:43:43.6 Mathias Hemberger: Yeah, I mean, what we’re looking for are people who are maybe humble enough to recognize that they know their business, but they just, that doesn’t mean there is not, there’re not aspects in their business where outside help actually could be useful and add value. So our main competition really is not any other consulting company. It’s the people inside that think we know it all and we can do it all ourselves.

0:44:08.6 Kurt Baker: Right.

0:44:09.3 Mathias Hemberger: So, and nine out of ten times there are areas where we could help.

0:44:14.4 Kurt Baker: Okay.

0:44:15.2 Mathias Hemberger: And they need to be, they should be open-minded enough to recognize that. And as I said, maybe a bit humble and say, yeah, I think this is something I don’t know about. And if you could help me, I’m happy to share whatever you find for me.

0:44:29.5 Kurt Baker: Okay. Excellent. Thank you very much, Mathias. You’ve been listening to Master Your Finances. Have a wonderful day.


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