Technically Speaking!

00:00 Kurt Baker: You’re listening to a podcast of Master Your Finances, with me, Kurt Baker, a certified financial planner professional. Sunday mornings at 9 AM on 1077thebronc.com.

 

00:08 Announcer: The financial views and opinions expressed by the host and guest on this program do not necessary reflect the viewpoints of 107.7 The Bronc, Rider University, or Certified Wealth Management & Investment. The material discussed is not designed to provide listeners with individualized financial, legal or tax advice.

 

00:25 Announcer: Planning your financial future does not have to be overwhelming. 107.7 The Bronc presents Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management & Investment. For the next 60 minutes, Kurt and his expert team of financial guests will help to decipher financial terms, navigate market trends, interpret federal and state regulations, and more. So you can make smart decisions with your money to increase your personal wealth. Missed an episode? Go to 1077thebronc.com in Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Master Your Finances is underwritten by Certified Wealth Management & Investment, focusing on personal financial and small business planning. For more information about all of Certified Wealth Management & Investment’s services online, it’s cwmi.us. Now here’s Kurt Baker with this week’s edition of Master Your Finances.

 

01:19 Kurt Baker: Hi, good morning and welcome back to another edition of Master Your Finances, presented by Certified Wealth Management & Investment. I am Kurt Baker, a certified financial planner professional hosting your show today and my office is located here at Princeton, New Jersey. I could be reached through our website which is www.cwmi.us or you can call me directly at 609-716-4700. This week we’re very please to have with us Darek Hahn, President and CEO of Dynamic Strategies, and he has spent his career as an operator with leadership responsibilities for IT production, purchasing inventory control facilities, project teams, and administration.

 

01:56 Kurt Baker: Along his past, through various internally focused roles, Darek leveraged his organizational understanding, shifted to becoming sales and marketing leader. In 2016, Darek and a team of investors purchased Dynamic Strategies, an IT managed service provider or MSP. The company had less than a 3% growth over the 19 years it had been in business. And the first full year under Darek’s leadership, the company was able to grow by 26% while at the same time stabilized the company due to a large client who left the company prior to the acquisition. Darek’s vision for Dynamic Strategies is twofold, first focus on streamlining the operations to make an efficient and growth-minded organization. Second, grow not only through organic sales, but also strategic acquisitions. As part of the vision, the team has developed a different way to deliver IT services to its clients, which we’ll discuss that here today on the show. And more importantly as a side note, Darek, many years ago, got me back into master swimming, so he’s also an exceptional swimmer.

 

[laughter]

 

03:00 Kurt Baker: He got me convinced to do it, and I love it. I appreciate very much you talking to me tonight, getting me back involved with swimming again. I feel much better now.

 

03:06 Darek Hahn: And now you’re better than I am at it. [laughter] Well you do it more than I do. [laughter]

 

03:12 Kurt Baker: All right, well you’re busy, right? You’re running a business but that’s really interesting. You’re the CEO and so forth, do you wanna tell us a little bit about the background of the business itself and how you came to this, your running the business and so forth?

 

03:23 Darek Hahn: Sure. Our company was founded by three engineers in 1998. They all worked for a large enterprise company, European-based. They formed the company thinking they could win the services contract. They lost it two times to big global companies, and on the third time the second company which is IBM got kicked off of campus and they gave the contract to us without even an RFP. We held that contract from 2003 to 2016. In 2011, the company was bought by another larger global company and they had their own provider and so over a four year period, there was a transition to losing that contract, which is a significant portion of the business. The three previous owners didn’t have a growth mind, they were really a lifestyle kind of group. That’s all they really cared about so when they would lose a little piece of the contract, they’d go out and find a client to fulfill that piece of revenue. But they weren’t really growing the company. As you said, 3% growth over 18, 19 years.

 

04:28 Darek Hahn: In 2014-15, a group of investors decided they wanted to buy an MSP, managed service provider, and were looking around and found Dynamic Strategies as a good opportunity because it had this enterprise level infrastructure, but didn’t have really the growth in the sales side. Through a time period, they went through and investigated, started talking to the owners. The owners had lost this contract. They knew that they probably weren’t gonna be able to grow a company ’cause they weren’t sales minded. In 2016, they accepted an offer and in that time period, the beginning of 2016, I was Director of Project Services originally, and then I was Director of Sales and Marketing for Dynamic Strategies. They approached me and a couple other people in the organization to see if we’d like to be involved in running their organization.

 

05:15 Darek Hahn: Their mindset was really around mergers and acquisitions, and they wanted us to grow the company through the organic approach, where the board and myself as part of the board would start looking at acquisition opportunities. Over this past year, we took over the company, September 2016 and we’ve really focused on restructuring some of the way they did financing of finances. They were really kind of haphazard because it was a lifestyle company. They didn’t really have to know profitability of each client, things like that. We’ve gone through and restructured all that. We’re kind of at the end of that right now. We have looked at some acquisition opportunities, and we’re actually… We have two that are sitting on the table. We’re talking to some investors about getting involved to help those go through. And it’s been an interesting journey. [laughter]

 

06:04 Kurt Baker: I could imagine, so you’re really… Now you’re really running. So you get to make a lot of the decisions, you get to see… ‘Cause you were there, you could see what the positives are, maybe what the not-so-positive things are. You’re trying to fix those pieces, right?

 

06:16 Darek Hahn: Correct.

 

06:16 Kurt Baker: And I guess investors like that, right? They like that, when you come in and…

 

06:20 Darek Hahn: Yeah, we’re talking with that investment bank right now. We’ve gone through and re-did our business plan. So we had a business plan before we took over. We found a lot of things when we took over that weren’t what we thought they were. There was a lot of waste. Example, we have a data center contract, and we have one client in that data center. Actually we have 5 or 6 clients in that data center, one significant one. That contract said that we could adjust pricing depending on how much space they took in it. It hadn’t been adjusted in two or three years. So we were actually losing $3000 a month on the data center cost because we hadn’t adjusted the pricing. So we went through and adjusted the pricing and now we’re profitable on that, and we’ve actually moved somebody else in, and now we have significant profit on that. There’s a lot of that structure that wasn’t there because it just wasn’t important for them to look at the finances, the way we need to look at them, because we wanna create value for our investors and our plan is to exit in five years. So, we wanna build something that has some real worth.

 

07:18 Kurt Baker: And that’s a key you pointed out, is in order for somebody else to acquire you at some point, you’ve gotta have your financials together, you’ve gotta be able to track and explain, how are you making your money and why is this a good plan? Because if you can’t understand it, people don’t really understand what they’re buying. Doing all those pieces that sometimes long-term owners… I know a lot of small businesses are guilty of that. It’s a very common issue, is that they say, “Well, I don’t really need to worry about audit the financials, or this or that. You know, I don’t need to worry about that stuff. I know I’m making money. I’m not that concerned about it.” When in fact, if they did go through the process, they might learn some things about themselves that they didn’t realize and they can actually tweak it up a little bit without changing a whole lot. Like you just pointed out, you found something.

 

07:54 Darek Hahn: Well, I think it’s very important that you have good investors who, like our board is very active in our company, and we talk a lot. And it’s, how do you structure the financials so that you create value based on the financials, not based on your point of view? So a good example is the previous ownership took salaries and they wanted to show, because it was a lifestyle company, and there’s nothing wrong with that, I don’t begrudge them for doing a lifestyle company. But they took salaries and tried to show as little profit as possible for tax purposes.

 

08:28 Kurt Baker: Right. Sure.

 

08:29 Darek Hahn: Fine. The problem is, when you go to sell the company, you look like you have no profit.

 

08:33 Kurt Baker: Right.

 

08:34 Darek Hahn: And so you have to finagle the numbers and say, “Well, we’re taking these big salaries so we don’t have it. And now you gotta count that as profit.” And investors start to back away ’cause it doesn’t look like you’re running a real corporation.

 

08:42 Kurt Baker: Right.

 

08:42 Darek Hahn: You’re running a lifestyle company right.

 

08:44 Kurt Baker: Right, no, excellent, yeah, no. Great story. I mean, I appreciate it. So today we wanna talk a little bit about some of the things that are happening right? So, you’ve got this company, managed service provider, that’s what you said, so, that’s a big area nowadays, right? There’s a lot of outsourcing going on and a lot of things that we need to know. So you do, I guess, a couple types of things, you do for… Personal is IT securities, I guess security, right? Start with security?

 

09:09 Darek Hahn: Yeah, we don’t do…

 

09:10 Kurt Baker: How do you go through that? [laughter] Where do we start, right? As a… Because to me that’s a big field that we’re talking about.

 

09:18 Darek Hahn: It’s one of the problems in IT today is that they’re not… IT has so many different components. So, managed service providers are typically infrastructure providers. So we do the networking, the routing, the firewalls, the switches, the servers, if you have them onsite, or Cloud servers, email, those kind of things. You have application IT providers who just do applications and they might do four or five different types of applications. They might do… Specialize in accounting packages, etcetera. Then you have developers who do developing and that gets into a whole world where it could be developing websites. It could be developing custom applications. It could be… They’re just so… It’s so broad, so we like to think of ourselves as the foundation. So when you build an IT infrastructure, you need to have the foundations solid or you end up with all the stuff you build on top of that collapsing.

 

10:03 Kurt Baker: Right.

 

10:04 Darek Hahn: I have a great example that we can talk about that.

 

10:07 Kurt Baker: Absolutely! There’s a lot to talk about. So, what we’ll do is we’ll come back after the break and we’ll get into some of the details of how you understand more about the services you have in your company and why it’s important to have a good foundation. We’ll be back in just a few minutes.

 

[music]

 

10:23 Kurt Baker: You’re listening to a podcast of Master Your Finances with me, Kurt Baker, a certified financial planner professional. Sunday mornings at 9 AM on 1077thebronc.com.

 

10:30 Announcer: We are talking finances, so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com in Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Now back to Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management & Investment. Exclusively on 107.7 The Bronc and 1077thebronc.com.

 

10:56 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I’m Kurt Baker here with Darek Hahn, the President and CEO of Dynamic Strategies and we were talking about how he and some investors have acquired the company, then honed in on the business side of this thing. And now the goal is to do a little more growth in its first year, full year under… Leading the company, had a 26% growth, which is up from the 3% they had over the 19 years prior to that. So you’ve got your finances in order, you got your business plan in order. All this is really just stuff that a lot of us as small business owners should really be doing anyway, because you learn a lot about your company when you do these things.

 

11:32 Kurt Baker: Just a note to everybody out there. Doing this process, having a system in place is really important. Being on account for how you make money, and why you make money, because you never know, someday you may want to sell it. Even if it’s selling it to another family member, that if they need any type of financer from outside, a bank is not gonna believe you. “Hey, look, I make money.” [chuckle] You have to really back it up and show it over a period of time. That’s really… You’ve honed in and done this, which is really the right way, so to speak. But a lot of small business owners don’t spend a lot of time on it and they really should. They should do that. Which, now it’s helping.

 

12:07 Darek Hahn: Yeah… Go ahead.

 

12:08 Kurt Baker: No, that’s fine, that’s fine. So we wanna talk a little bit about security. So some of these, we’ll talk about this, I guess, a couple types of security, like the basics. We’re gonna go to the basics first. So we all have our personal stuff that we have, but we also have business so it’s maybe some similarities and differences, do you wanna talk to that a little bit and what you guys do?

 

12:24 Darek Hahn: Yeah, I think the struggle for personal is that you don’t typically have an expert to help you. You wing it. I joke about my mom all the time. My mom’s 83 years old and she struggles with her security. I got a phone call from her a couple months ago, “Microsoft called me and wanted me to give them this information, and get on my computer… ”

 

12:42 Kurt Baker: That doesn’t sound good. [chuckle]

 

12:44 Darek Hahn: And I said, “Oh, mom, what did you do?” She said, “Well, I let him on my computer.” I’m like, “Oh no.” [chuckle] I said, “Did you give him a credit card?” And she said, “No, I just… When they really pushed me for my credit card, I told him I had somebody at the door and I hung up.” And I said, “Did you turn the computer off?” She said, “Yes.” And I said, “Okay, call your local IT guy.” ’cause I’m on the East Coast, she’s on the West Coast. I always think, you gotta be smart. Microsoft’s never gonna call you on the phone to tell you that they’ve got to fix something on your computer ’cause they, in all honesty, don’t care about you. You’re a small little fish in a big, big, big, big pond for them.

 

13:15 Kurt Baker: Lucky if they give you a link to go to settings…

 

[chuckle]

 

13:17 Darek Hahn: Yeah. No doubt. [laughter] So it’s really being smart. One of the things I always tell people that’s so simple is… And a lot of people, especially in the older generation don’t know that if you hover over a link and look at the bottom of your screen, you’ll see the URL, they call it, the web address. And if it’s Microsoft and when you look at that link and it says, “Bob’s IT Tech.” [chuckle] It’s the wrong link. So you should become aware of what are you linking to and pay attention that people try to spoof things. It’s amazing how they’re doing it today.

 

13:52 Darek Hahn: I’ll give you an example. One of our clients had a… An AP clerk got an email that said, from the CFO of the company saying, “I’m in a conference, I wanna start working with this company, please transfer $200,000 to this account, I need this done today so that I can get this done.” It came from the CFO, everything seemed legit to the AP person, but she didn’t have a signing authority. So she gave it to her accounting manager who also didn’t have signing authority, who gave it to the VP of Finance, who luckily knew that the CFO wasn’t at a conference and said, “What is thiS?” And they found that they had spoofed one letter in the email address.

 

14:26 Kurt Baker: Yeah, I’ve heard…

 

14:29 Darek Hahn: I mean, had they not had the accounting practices in place they would have given the $200,000.

 

14:33 Kurt Baker: It’s the checks and balances.

 

14:34 Darek Hahn: Checks and balances. And that goes back to the finance stuff that all of this is built on a foundation and you can’t just think of it… I always say it’s a holistic approach. You have to look at all the pieces. It’s educating your end users and that’s where I think we as corporations can help our employees by educating them. We do some end user training where we do some spoofing. We have a program that will send emails to 50% of the population in the company, and it just checks if they click on the link. And then we come back to the company and say, “You had 27% of your people,” or some companies, “75% of your people who clicked on this link that was a spoof.” And it takes them to a webpage that says, “Hey, you shouldn’t click on that link. Here’s a video to watch why.” And it gives an explanation and goes through the whole process. So I think companies can help the personnel because it’s hard for personnel people to get the training.

 

15:25 Darek Hahn: And companies, it’s such a benefit. We have this one company who has 1300 people, almost a billion dollar company, and they have, when I talked earlier about foundation, that you have to build that foundation, if you don’t do the simple block and tackling kind of things, all the money you spend on security doesn’t matter. So they have spent tons of money on security, but they give their end users administrator rights to their computers.

 

15:50 Kurt Baker: Oh my… 1300 people? Oh wow. [chuckle] That’s a lot.

 

15:51 Darek Hahn: Yeah. Well, whoever has a laptop. So it might not be 1300 people. [chuckle] It is a significant amount, plus they have a couple holes that are really block and tackling holes. They have that hole, their end users are not being trained, so on top of giving them administrative rights, which allows them to do a lot of things on their local machine, it gives them access to the network. And if they’re not trained on top of that, now on top of no training, you also have no… You have full control to do things in the network.

 

16:17 Kurt Baker: You’re touching on something that I keep hearing is that it’s not… Technology is getting very, very, very good. The problem is people are still people, so they can still fool us. So I think, companies in the past were like, “Well, I’ve put enough anti-virus software on my computers and do all this other stuff, and I’m gonna be good.” But they’re actually coming with a way to tricking you into thinking something’s legit that’s not legit. And that’s where I’m hearing that where a lot of this intrusion starts, is somebody that had a legitimate process got fooled by somebody. And I’ve had a couple of those emails from work and I’m like, “That looks… Wow, that’s pretty darn good.” You know what I mean?

 

16:50 Darek Hahn: I think the number is somewhere in the 65% range, that 65% of hacks start with an end user.

 

16:58 Kurt Baker: Wow, that’s a lot.

 

17:00 Darek Hahn: And that’s why we always say, it’s amazing to me that companies don’t spend any money on training. So we’ve actually… Our training is fairly cheap. It’s… I can’t remember the number off the top of my head but for 100 users, it’d be like $750 a month.

 

17:12 Kurt Baker: Right. Like breaching is a lot more expensive.

 

17:13 Darek Hahn: Yeah. [chuckle]

 

17:14 Kurt Baker: A hack in your system, that’s gonna cost you a lot.

 

17:16 Darek Hahn: Ask somebody like Equifax or Merck, they really got hacked. I did a paper, I don’t know, it was a couple of years ago, in the Sony hack that happened.

 

17:30 Kurt Baker: Oh, yeah. All the videos, all the movies and all that stuff?

 

17:32 Darek Hahn: Well, yeah, and they were in there… I think they turned out they were in the environment for a year or two going around and doing things without anybody knowing it. It was so bad that Sony had to rebuild their whole network. I think the number was something like $50 million to rebuild their whole network or something to that effect. I don’t remember all the numbers.

 

17:54 Kurt Baker: Wow.

 

17:55 Darek Hahn: Yeah. So it’s significant.

 

17:55 KB: ‘Cause I remember when they were first hacked, and then stuff… Even once they knew they were hacked, stuff was still coming out.

 

18:00 Kurt Baker: Oh yeah.

 

18:00 Kurt Baker: They couldn’t just like, “Oh, we know. Let’s just shut it off.” It’s not that easy once they’re in there.

 

18:06 Darek Hahn: ‘Cause it’s interesting… That’s a great study for somebody… These guys knew what they were doing ’cause they didn’t give up the ghost right away. They spent a lot of time looking at things, probably collecting a lot of information, copying off their network onto their own. And then when they got caught, they already had all this information. It’s not like they could just shut down the network and…

 

18:27 Kurt Baker: Right. ‘Cause you just got a duplicate of your whole company somewhere else, it’s like you sold the company. You didn’t sell the company but somebody else has all your data. Oh my gosh!

 

18:34 Darek Hahn: It’s scary, yeah. It is scary today. And I think back to the end user thing, it’s so much about just stopping and thinking. We get so busy, we’re rushing and rushing and trying to get work done, and somebody sends you an email and you go click on the link because they said to, and you don’t stop and go, “Why would they send that to me?” That to me is a big thing is to just pause before you do anything. I love… One of my friends talks about the pause button. In life, we need a pause button and those are the times you need to pause when you’re just rushing around and you see something, and there’s some little thing in your head that says, “This isn’t right, but I’m in a hurry so I just go do it.” And boom!

 

19:10 Kurt Baker: That’s the… ‘Cause we’re all busy. You’re at your desk, you’re probably doing one or two things at once, you click it, you check something quick and you gotta stop yourself. If you’re not sure, maybe flag it and come back in a few minutes when you can actually pay attention to what you’re doing. [chuckle] Just going forward and doing that. So then you have the businesses. We had the personal and the business, so what’s the difference… Obviously, they did an enterprise thing. And so where do you start? I’m a business owner and maybe I’m a growing business or maybe I’m already an established business. So are there some differences in what we do? Maybe kind of fix what you have now and maybe do it right the first time?

 

19:45 Darek Hahn: So I’ll say one of the things we do differently than most other providers, we come in and we do an evaluation, which a lot of providers do. They come in and evaluate your network and they say, “This is all the things we gotta do to fix it.” And that’s pretty common if there’s issues. So we do what we call a risk mitigation plan when we take on a new client. So say you came to me and said, “I’d like you to look at my IT.” We come in, we look at the IT, we look at the whole environment, we do some tests, we document everything and we say, “Here are your risk issues, one, two, three, four, five.” And if you’re a small business, there’s only so much you can spend money on. We understand that, you’re not an enterprise, using you as an example versus Sony. Sony’s gonna spend a lot more money on their solutions. What are the things you can do to minimize risk? Are your accounting controls in place? Do you have cyber insurance? Do you have… Are you training your end userS? And there’s some very cheap ways to do that. So we start with building a plan based on that, and then what we also do is have a conversation about your business. We say, “Where are you planning to go over the next year?” “We wanna acquire two new companies and we wanna grow. We’re gonna go from a $1 million company to a $5 million company.”

 

20:50 Darek Hahn: Okay. Let’s talk about what that looks like from a technology standpoint and how can technology help you and how could it really hinder you. And so we actually put a plan for every one of our clients together. We call it an IT roadmap and it says, “Based on your business discussion, here are the things we think we need to do over this next two or three years. As you grow, we’re gonna add these pieces in,” so you already know you can budget for it, plan for it, and you need to be forward-looking. And that’s one of the things I think happens today is most people aren’t IT so they put it off to the side and say, “We’ll get to that when it’s time.” And then they go to the cloud, which is not a bad thing, but you need to know what you’re doing when you go to the cloud, ’cause there are some things that can be impacted, meaning I know one company that had a cloud service they were using and all their employees had access to it, and when they terminated the people, they never even thought about disconnecting them.

 

21:40 Kurt Baker: Oh yeah, might be good idea, yeah.

 

[laughter]

 

21:42 Darek Hahn: They had about 15 or 20 people who still had access to their cloud service, who were no longer employees. Those are the kind of things you need to be planning for and thinking about. And a lot of people don’t think about them or they go, “We need to disconnect them but I’m busy so I’ll do it later.” And then it never happens.

 

21:57 Kurt Baker: So it sounds to me like a lot of this is in your… ‘Cause most companies are supposed to be doing business plans anyway, periodically you’re supposed to be updating them. So this is a piece that really they should be adding into that process because we’ve become so reliant on technology. We hear about driverless cars and all this other stuff. So this is our baseline, so to speak. So understanding how that affects your overall plan because it does now, because we do rely on it so much and if it does go down, it can have a huge negative effect. But if it’s going right, it can also have a huge positive effect.

 

22:26 Darek Hahn: I’ve got a good example of that. We do a lot of work with the biotech industry, biotech startups, we have five or six companies that we’re working with and we have one company that’s two people, we love ’em, ’cause we get to be part of growing that company. More and more of the venture firms are saying, “What’s your IT plan?” Because they know that if you have a bunch of IP that’s really important to your company, you better be protecting that, or we’re not gonna fund you.

 

22:53 Kurt Baker: Well, there you go. If the venture capitalists are concerned about it, we should be concerned about it, and we’ll talk a little more about IT planning and why it’s so important when we come back from the break.

 

[music]

 

23:02 Kurt Baker: You’re listening to a podcast of Master Your Finances with me, Kurt Baker, a certified financial planner professional. Sunday mornings at 9:00 AM on 1077thebronc.com.

 

23:10 Announcer: We are talking finances so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Now back to Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management & Investment. Exclusively on 1077 The Bronc, and 1077thebronc.com.

 

23:37 Kurt Baker: Welcome back, you’re listening to Master Your Finances. I’m Kurt Baker here with Darek Hahn, the President and CEO of Dynamic Strategies and we’re talking about the importance of IT planning and the foundation, which is really what Darek’s company specializes in, called managed service provider and making sure you have the right baseline in place. Because as we’re growing more reliant on technology this becomes more and more important and we all hear about breaches, like Equifax, things like that. So it’s really, really key. Sony brought up, so it can have a significant impact on a large or a small business. So it is really key. And you talked more about doing evaluations, doing the mitigation plan, test, give them feedback, doing accounting controls. You mentioned cyber insurance. You wanna touch on that just a little bit? What are referring to as far as cyber insurance goes?

 

24:18 Darek Hahn: So it’s an interesting new insurance product that’s come out in the last… I don’t know. It’s probably been around for, I’m guessing 10 years, but really become more important in the last five years or so when all these breaches are happening and people are trying to cover themselves. ‘Cause some of the ransomware, you can lock up somebody’s whole network for months or days, or you need to have some tools in place to protect that. And there’s some very simple things you can do. But on top of that, if it has a negative impact on your organization, you wanna have some insurance in place to cover you. So that if you had to… If everything was locked down and they completely locked you out and they want more money than you’re willing to pay, can you go to your insurance provider and say, “Either insurance, pay that money or insurance provider, buy me a whole new network.” [chuckle] So that’s one of them. And it’s a pretty wide, somewhat wild west as far as cyber insurance goes. We’ve got a couple relationships with a couple of companies, and it’s amazing the difference. And so you really have to… If you have your IT roadmap in place, your rates are completely different than somebody who just goes, “I just want insurance, I don’t really care.”

 

25:21 Kurt Baker: Yeah, I think it’s important and sometimes people think of insurance being, “Oh, it’s just this cost expense.” But when you talk about, especially commercial insurance, the insurer doesn’t wanna pay out either. So they’re gonna ask questions about, do you have things safe? I think about warehouses, do you have the yellow tape, do you keep the forklift away from the people, the employees walking through the warehouse, are you doing safety things? And so I would suspect the one that’s offering the lower cost insurance is gonna say, “Hey, do you have these basic protocols in place? Are you really protecting us? We don’t really wanna write you a big check,” and you don’t really want them to do it either, ’cause you don’t want the interruption in your business. So it’s kind of a win win if you kinda work together.

 

25:55 Darek Hahn: And what we see a lot is the insurance company says, “Hey Mr. CFO,” ’cause they’re typically responsible for buying the insurance, “Here’s a form, fill this out and tell me what you have for your IT environment.” And the CFO writes down a bunch of stuff and they’re not really sure, but they just kinda guess. And then when they have an issue, they pull out that form and say, “You’re not really doing this.”

 

26:17 Kurt Baker: Yeah, they’re gonna call you on it.

 

26:19 Darek Hahn: “Guess what? We’re not paying you any money.”

 

26:21 Kurt Baker: Yeah, never fib to an insurance company, ’cause when you have a claim come around, they’re gonna go back and read what you wrote, and what you said, and if it… When in doubt, ask them, “What do you mean by that? What do you want us to be doing?”

 

26:30 Darek Hahn: Correct. And it is painful.

 

26:32 Kurt Baker: Clarify it upfront.

 

26:34 Darek Hahn: Yeah, it is painful. That’s why we’re trying to do this as… and offer more leadership from an IT perspective, ’cause our view is larger companies, 500 employees plus, usually have IT staff, and they have some number of people who can fill out those things who know their environment, etcetera. When it gets down below 500 people, you may not have the staff that understand or know all that. You might have an IT person, but maybe they don’t understand the business significance of what they’re filling out. Is to do this plan so that when something like that comes across the executive’s desk, they can say, “Okay, I can look at the plan and look at the insurance request and say, ‘Okay, everything on the insurance request we’re doing in this plan, or we’re planning to do.’ And I can note that we’re moving forward and moving in this direction as we grow,” blah, blah, blah. And that has an impact on the insurance relationship. And you don’t end up with somebody not wanting to pay you because you said you were gonna do something and you didn’t do it.

 

27:26 Kurt Baker: Correct. I agree with that 100%. And you touched a little bit on the ransomware, which is what we hear about, is that as big of a risk as we all think it is, ’cause it makes the news, all of a sudden, I think Georgia, didn’t they have like a…

 

27:36 Darek Hahn: Atlanta.

 

27:37 Kurt Baker: Atlanta had a big breach, I don’t know what the result of that was, but they wanted…

 

27:41 Darek Hahn: I don’t think it’s resolved yet. [laughter]

 

27:43 Kurt Baker: It obviously disrupts the entity, but is it becoming a bigger and bigger problem? Are we just hearing about it more? Are people able to mitigate it better?

 

27:51 Darek Hahn: I think a lot more people are hearing about it. So they’re pausing. We do some things, like we do endpoint backup, we call it. So if you have a laptop, we wanna back up the data on that laptop. Because if you get hit with ransomware on that laptop and it locks your laptop, as long as the data is backed up, I’m just giving you a laptop and you don’t pay the ransomware, we re-image that machine and get rid of the garbage. If you don’t have that, now you gotta pay it because all the data has now been locked on that machine, which a lot of small businesses, the owner says, “This is my laptop. The world is living on my laptop.”

 

28:25 Kurt Baker: That sounds a little dangerous.

 

28:25 Darek Hahn: That’s a bad, bad thing. We have a law firm, that one primary lawyer, they call it the briefcase, that’s his laptop, and all the data for the company is on that laptop. So we actually said, “If we’re gonna take you on, whether that partner knows it or not, we’re putting this endpoint backup on it, so we can back that data up, ’cause we’re not gonna be held accountable for that thing getting lost in an airport, getting ransomware, etcetera.”

 

28:51 Kurt Baker: Right. It’s true, you just lose it too. The old-fashioned way.

 

28:52 Darek Hahn: Somebody just picks it up. [laughter] You’re not paying attention, and somebody picks it up from you at the seat at the airport.

 

28:56 Kurt Baker: They do crash too, occasionally [laughter]

 

29:00 Darek Hahn: Yes. Oh yeah, that little problem.

 

29:01 Kurt Baker: It does still seem to happen. Alright. What else should we do it as far as planning for our IT? What other things should we be doing?

 

29:11 Darek Hahn: I think it’s really being forward-looking. The environment’s changing. If you don’t have a plan on where you’re going, you’re reacting to it. So one of the things I talk about is the difference between a value add versus a cost center. So a cost center is typically, we have companies that’ll say, “You know what? We’re gonna use this piece of equipment up until it dies.” I’ll be honest. Manufacturing tends to do that in all different ways, not just in IT, but even in equipment, they’ll use it until it’s dying and then they’ll buy a new one. They don’t tend to wanna spend a lot of money on upgrading coming up. So I think you have to understand if that’s your business model, then understand it, and that’s okay, and understand the impact of that. So if your computers, you’re gonna wait for five, six, seven years to replace them, there’s gonna be an impact.

 

29:52 Darek Hahn: And one of the things we talk about is it’s also an impact on productivity ’cause if you have the seven-year-old computer, I can guarantee you it’s probably running slow, it probably doesn’t like all new applications because they go with the newest environment. So you have to know that I’m making my company somewhat less productive especially for heavy computer users. Now, if you’re on a production line than I understand that, maybe they’re touching the computer once, but they’re spending a lot of time moving things down the line, then that makes sense, don’t spend the money.

 

30:22 Darek Hahn: But if you’ve got users that are accounting users and you’re putting them on seven-year-old computers, you’re cutting their productivity, and you just need to understand that. One of the things we try to talk about is how can IT be a value add, because there’s so many tools out there that can help you run your business better, faster, quicker, get there before the competition, etcetera. So it’s looking at your business and saying, “Okay. Where do we wanna be in five years? Now, how can we use IT to help us get there? Maybe get there in four years instead of five years.” And those are the conversations that should be being had internally and from an executive level that really isn’t about what technology, it’s what can technology do. ‘Cause we get stuck on, “Oh, I like Microsoft 365 or I like Salesforce.com or I like this,” but what does that mean for your business? Talk about what you need for your business first before you select the application.

 

31:07 Kurt Baker: Talk about what you wanna build and figure out what tools to use, right? Well, I hear a couple things, the cloud versus the local servers. I know that’s been going on for years and years and years. So what are you seeing? Is the trend still people going to the cloud or does still make sense for people? ‘Cause to me it sounds like it’s a lot… To me, it’s easier. The more you put on the cloud… There are pros and cons to each method. You wanna talk to that a little bit as far as from an IT perspective?

 

31:34 Darek Hahn: From an IT perspective, it’s more how do you manage it? I would never disagree with somebody who wanted to move to the cloud. Now, there’s some reasons why some companies may want just to keep it in-house where it’s something, they’ve got IP or something they really want to protect and they’re not trusting somebody like a Microsoft or a Google or whoever to protect it. I will argue in that case that they probably spend a lot more money, those Microsoft and the Google, than you can spend on security. You probably… But on the other side of that, they’re also a bigger target than you are. So that’s a trade-off. My view is they have more money. They’re probably gonna do it better than you’re gonna do it. ‘Cause they’re doing it for a lot of clients, right? And they don’t wanna get breached, ’cause if they get breached, a lot of clients are gonna run away from them. So the cloud’s a good solution. I’ll give you some examples of why it’s really a positive is if you’ve ever worked with somebody that has a… So we have companies that have an ERP system. Do you know what an ERP system is?

 

32:34 Kurt Baker: ERP?

 

32:34 Darek Hahn: ERP, Enterprise Resource Planning tool. So basically it runs your business. It’s the production line, it all runs on the same software which goes through accounting, which goes to everywhere. CRM can be into that, that’s the Client Relationship Management, all of it tied together so you’d get data. I just forgot where I was going with that. [chuckle] But if you have that in-house, it was basically in-house… Oh, in-house and you have all the infrastructure and all the servers for it, moving that out-of-house can be difficult and time-consuming and very distracting from your business, right?

 

33:13 Kurt Baker: Right, right, right.

 

33:14 Darek Hahn: So, how do you plan that and what’s the best way to go? So if you have that in-house you have to put all the protection controls in place. If you’re a small business and you can move now before you become a big business, much better. And use those tools you can, but you have to manage that piece. The tools are… You just don’t put them in the cloud and say, “Oh, I don’t have to deal with anything.”

 

33:34 Kurt Baker: No, no, no, you still have to plan. [chuckle]

 

33:37 Darek Hahn: You still have to plan. So I’ll give you an example. My previous company I worked for, we had an ERP system called NetSuite that we used. It’s a cloud-based solution out of California. We built everything in the cloud, now if I had done that in-house, three years, two years down the road I would have had to upgrade it. And I can guarantee you that if I’d done it in-house, I would have found other things to do with that money, because I’d rather run my business, right? So rather than upgrade, I would do other marketing events and things like that, and that thing wouldn’t get upgraded. And then it would be six years down the road and it had never been upgraded, right?

 

34:12 Darek Hahn: We use the cloud version, they upgrade it every six months. We don’t have a choice. It solves that problem even though it’s painful for us every six months. I don’t wanna end up at that six-year mark and having to spend hundreds of thousands to dollars to upgrade versus every six months go through a little bit of pain. So it’s a little more forward-looking, the cloud, that’s the big benefit of the cloud is you get upgraded. If you do Microsoft 365 and you buy the software with it, you get upgraded when they do it.

 

34:35 Kurt Baker: Right. Subscription now, so you don’t have to worry about it. I know, I’m a big believer in that ’cause, I know initially I had all servers, years ago now, but now that you’re converted it’s nice, because even things like two step authentication, all these other added on things that, and then when I’m like, when one vendor updates, I’m like, “Why aren’t you updating to this? Why don’t you have this service?” “Oh, we’re gonna have it in a month or two.” If they would do it all in-house, that’d be a lot of work. There’s a lot of… As a small business owner and not having a large IT department, to me, it just makes a lot more sense. I’d rather pay an incremental monthly charge, and know that somebody back there is doing… ‘Cause now I’m getting the advantage of all the different people in my industry, we’re coming together. So if you’re using cutting edge technology that everybody’s kinda using, but then as you pointed out, you still have to put it all together and manage it.

 

35:19 Kurt Baker: So when we come back, we’ll talk a little bit about the future of IT and some of the cool things that are going on out there. We’ve read about the news a little bit of it, and then what that really means to our businesses in the future. Be right back.

 

[music]

 

35:29 Kurt Baker: You’re listening to a podcast of Master Your Finances with me, Kurt Baker, a certified financial planner professional. Sunday mornings at 9:00 AM on 1077thebronc.com.

 

35:39 Announcer: We are talking finances, so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Now, back to Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management & Investment. Exclusively on 1077 The Bronc and 1077thebronc.com.

 

36:02 Kurt Baker: Welcome back. You’re listening to Master Your Finances. I’m Kurt Baker, certified financial planner professional, here with Darek Hahn, the President and CEO of Dynamic Strategies. And we’ve been talking a lot about some of the things you should be doing as far as IT goes for small as well as larger businesses. And I think, unfortunately, a lot of us are guilty of not focusing on this enough, because it’s not, we don’t feel that impact immediately. It’s kinda like, “Oh, we gotta deal with it. I’ll deal with it when I have to deal with it.” And unfortunately if you wait too long, it may come and make you deal with it if you’re not careful. [laughter]

 

36:34 Kurt Baker: I like when making it part of your business planning. Plan out what you’re doing, document everything. You just never know when you might wanna sell your business. I think that’s something a lot of, especially small business owners don’t think about. And adding that IT component into it, as far as how you’re gonna upgrade your services and what you’re gonna do, where you’re gonna be, what your capabilities are gonna be, and keeping things in protection.

 

36:52 Kurt Baker: And I do like the incremental charge where it’s kind of a subscription thing where you kinda pass it off and somebody else is kind of worrying about it, because you get the advantage of somebody having a much larger scale. They see more than you do on a micro scale. I only see what I see in my office and maybe nothing. I may have no issues then one day, boom, something pops up. You’re like, “What the heck is this?” But somebody who’s got expertise would be like, “Yeah, we’ve seen that twice last week.” You know? [chuckle]

 

37:14 Darek Hahn: What’s really scary is that most companies, and I’ll admit that my previous companies where I was not… IT was my responsibility, but I wasn’t an IT company. We’d have an IT guy or gal, who was the IT person. And they had everything in their head and how many times that person left and they would hand us the password list and you would find out that it’s outdated. Half of the passwords aren’t the same anymore, because they just were busy. And the hard part is that those people tend to be, I call, playing “Whack-A-Mole IT.” They’re running around, putting out fires. They’re not thinking long-term. They’re not thinking about documenting things, they’re thinking about making everybody happy. And that’s a really good quality, and you need those people, but they shouldn’t be your IT leader.

 

37:58 Kurt Baker: Definitely. My wife worked at a large company once. And I know that their IT person was running around, had a lot of knowledge in their head and they’re very smart people, the problem is they’re not, as you said, documenting so they could share it. Even when the person was gone for a week.

 

38:09 Darek Hahn: Yup.

 

38:10 Kurt Baker: Okay, well, how do we do this now?

 

38:12 Kurt Baker: Everything stops.

 

38:12 Kurt Baker: Right? When they’re here everything’s fine. But you have to have succession planning, so to speak. [chuckle]

 

38:17 Darek Hahn: We have this ongoing joke, and we may do it at some point, is doing a marketing campaign of “What are you gonna do? 101 ways to lose your IT guy.”

 

38:23 Kurt Baker: Oh, no.

 

38:24 Darek Hahn: ‘Cause the reality is, somebody, God forbid, gets hit by bus, or just gets angry and leaves, and they take all that knowledge with them. How are you dealing with that? That’s part of the risk mitigation plan we actually put in place. If we say, “You have one IT person, and all the knowledge is in their brain and there’s nothing documented,” you’re gonna spend a fortune fixing that problem if that person leaves. So for whatever reason, we actually had a company whose IT person passed away and had all that knowledge in their head. And we had to go in and spend a ton of time recreating, fixing passwords, cracking passwords, they call it.

 

39:00 Kurt Baker: Right, right.

 

39:00 Darek Hahn: Because we couldn’t get into stuff. So you really have to be thinking about that when you have… Especially when you’re a company, it’s a 50, 100-person company, it’s hard to spend a ton of money on IT. You’re better off… We say this all the time. If you hire us, you get 25, 30 people who are all IT experts in different things, or you can hire one person who will be at your beck and call, which is important to some people, but they’ll only have the knowledge that they can hold in their brain. And that’s minimal compared to what you can get when you have a lot of people.

 

39:31 Kurt Baker: Yeah. It’s always changing, too. It’s a complicated thing. And speaking of changes, a lot of things coming up, right?

 

39:36 Darek Hahn: Yes.

 

39:37 Kurt Baker: Do you wanna talk about some of the things that are happening in the future, so to speak?

 

39:41 Darek Hahn: In the world?

 

39:42 Kurt Baker: I know Bitcoin’s one I’ve heard about, right?

 

39:44 Darek Hahn: Yeah.

 

39:44 Kurt Baker: But the underlying technology is actually pretty cool.

 

39:46 Darek Hahn: Yeah.

 

39:47 Kurt Baker: The blockchain technology. Do you wanna speak a little bit to that?

 

39:49 Darek Hahn: Sure.

 

39:50 Kurt Baker: What that means?

 

39:51 Darek Hahn: And simplify the heck out of it.

 

39:52 Kurt Baker: Simplify for everybody out there. Sure.

 

39:55 Darek Hahn: The Bitcoin revolution or whatever you wanna call it, some people have made some money and some people have lost some money. ‘Cause there’s nothing really solid and in place.

 

40:06 Kurt Baker: No intrinsic value, as we say. Zero intrinsic value. [laughter]

 

40:09 Darek Hahn: My brother and one of his friends would really argue with me on this because they’re both really engaged in Bitcoin. But what’s really interesting under Bitcoin, ’cause you really have to study and understand it. And that’s one of the struggles we have with it, because currency is easy. I hand you a dollar, you hand it back to me, it’s tangible. I can figure that out.

 

40:28 Darek Hahn: How it’s backed up, how it’s managed by the government, whatever, I don’t really care, ’cause I’m selling you… This bottle of water is worth a dollar. You give me a dollar, I give you a bottle of water. Right? When you start to get into Bitcoin, it gets really kinda, “Well, how do I know that 1/10 of a Bitcoin is worth whatever it’s worth?” The backing behind it, you don’t have the comfort level. In time, it probably will change and we’ll probably get closer to it. There’s just a lot of things that have to be worked out. But as you said, the underlying technology of blockchain under it, if you’ve watched any IBM commercials, they’re really hawking the whole blockchain.

 

41:03 Darek Hahn: And in simple, simple terms, if you think of every computer on your network. Say you have a small office of 5, 10 computers. I’m not an expert in this, so if I butcher it, I apologize if anybody else is an expert on it. But in simple terms, each one of those computers takes a copy of that blockchain and has it on their computer. It’s only read-only. It doesn’t change, it can never change. It just adds new things to it. All those computers have to agree before it’s considered approved, or easier way to say it. If you were doing the idea, I always use the idea of a banana. If a banana is grown in somewhere in South America in a farm, if you can tag the seed that planted that or tag the tree where that banana came from, and then you tag the actual banana and there’s 10 in a bunch, they each get their own number.

 

41:57 Darek Hahn: They move through the chain, meaning they go from the farmer who takes it off the tree, puts it on a truck. Now the person who owns the truck can track that, then it goes to the shipping company that now ships it, and maybe there’s a reseller in, say, the US, and then there’s the grocery store. Each one of those pieces it’s tracked individually, that one banana, so that when you get back to, if that banana’s bad and somebody gets sick, you can trace it all the way back to where everywhere it went throughout the chain and there’s no… We don’t have to have systems that are all in place. There’s ways that you can do it where… If you do it in the cloud, you can move that banana without having to have a company have the same system you have, which is one of the problems, because we’re all independent companies, we all don’t wanna… I don’t wanna buy a system that the banana producer tells me I have to buy.

 

42:46 Kurt Baker: Right. Right. Right.

 

42:47 Darek Hahn: So, being able to track, if you think about it and go take that to a drug and a pill, and if you can label that pill, every individual pill that comes out of a producer, even back to the raw ingredients that go in that pill, you track that all the way through its life cycle for things like issues, where years ago, you and I remember Tylenol, you know when the issue with Tylenol happened. Some of the younger generation may not know about.

 

43:09 Kurt Baker: Johnson & Johnson did not have a good day.

 

43:11 Darek Hahn: No. No.

 

[laughter]

 

43:11 Darek Hahn: It killed that… But they… If you think about it, if they had blockchain in place, they could have taken that back to where it happened very quickly because they would’ve had the notif… As it went through the line. So blockchain, I think, is gonna be interesting. I don’t know how it’s going to impact in the long run the small business. The bigger companies can afford to do something. The small businesses are probably gonna have to join the bigger businesses. If you wanna do business with somebody like a Walmart or a Target, you’re gonna probably have to do something and they’re gonna tell you what you have to do. Being aware of what it is and just having a general concept, I think, is most important, ’cause experts are gonna be the ones that really do any kind of programming or planning.

 

43:50 Kurt Baker: Okay. So, anything else you wanna talk about before we wrap up today? It’s been really quite a journey.

 

43:54 Darek Hahn: I think the other thing is Internet of Things that is really impacting people that you don’t even realize it’s impacting you. So, great example, if anybody knows about ring.com or SimplySecure, a lot of these companies that are using Wi-fi to do your security. So you’re now on the network, your cameras, your everything. So one, you have security issues.

 

44:16 Kurt Baker: That makes me little nervous. [laughter] The camera in my living room is now on the Internet.

 

44:21 Darek Hahn: Well, it’s interesting ’cause if you think about, there’s… One of my friends and I talk about value, it’s about value. So yes, you wanna be secure. So that whoever is creating that value has to make sure it’s secure, ’cause now I’m not gonna have value if it’s not secure. So simple, right? But there’s some value added, if I have a refrigerator that has a filter replacement, and if I set up an ongoing program that says every six months I need a new filter and they ship it to me without me even knowing and it shows at my door, it’s like, “Oh, it’s time to replace my filter.” A value add for me ’cause I don’t have to go look it up and figure it out, and find out what it is, because my computer is connected… Because my refrigerator is connected to the internet. That’s the Internet of Things. Now, the provider of that refrigerator says every six months and you have to sign up for it and say, “Yes, I’d like you to do that every six months,” they just ship a new filter. It’s a benefit for them because now they’re selling filters. It’s a value to me ’cause I don’t have to think about it.

 

45:12 Kurt Baker: Right.

 

45:12 Darek Hahn: So this Internet of Things is really going to be a huge impact on our lives and allowing us hopefully to get ourselves out of the computers, as we talked about earlier, and go out and enjoy the sun or the snow, whatever you like.

 

45:25 Kurt Baker: Yeah, exactly. We want the computers to work for us, not us to work for the computers. [laughter]

 

45:29 Darek Hahn: Correct.

 

45:30 Kurt Baker: But it’s been fascinating. So yeah, basically, it’s important to have your IT structure in place, right, checked, make sure that everything is up to speed, so to speak. And you gotta make some decisions about how you’re gonna do that, whether you do it in-house, which is kinda difficult because you have to keep up with the expertise or to outsource it. I think more and more companies are choosing at least to some degree, to outsource it to make sure they’re getting the most current expertise, staying up to date, making sure that your IT planning is also integrated into your general business planning. So you’re mapping out several years in advance exactly what you need to be doing for the IT as far as the upgrading and maintaining, as far as your other growth of your company. So all has to fit together. And I thought that was interesting, there’s now cyber insurance that kinda helps you as well. And lot of new technology like blockchain and Internet of Things. There’s a lot of cool things happening in the future, and we all have to kinda keep up with it, and that’s why we appreciate people like Darek helping us keep up with this stuff.

 

46:24 Kurt Baker: So thanks, Darek, again, for coming on, and, just a couple of quick announcements, Attitudes in Reverse, their original therapy dog, also known as an AIR dog, has been nominated for the American Humane Hero award. If you’d like to support us, the winner will be selected by online voting. You can go and vote every day at voteformiki.org. Attitudes in Reverse also has a 7th Annual Miki and Friends 5K Walk and Run for AIR coming up on May 19th, and you can go and learn more about that at attitudesinreverse.org or sign up at walkforair.org.

 

46:54 Kurt Baker: I can be reached directly at 609-716-4700 or at www.cwmi.us. Our Facebook page is facebook.com/masteryourfinances. You can also listen to this podcast as well as all of our podcasts at masteryourfinances.us and remember, together we can master your finances so you can enjoy financial peace of mind.

 

47:15 Announcer: The financial views and opinions expressed by the host and guest on this program do not necessarily reflect the viewpoints of 107.7 The Bronc, Rider University or Certified Wealth Management & Investment. The material discussed is not designed to provide listeners with individualized financial, legal, or tax advice.

 

47:32 Announcer: You’ve been listening to Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management & Investment. Exclusively on 107.7 The Bronc, and 1077thebronc.com. Tune in every Sunday morning at 9:00 to learn everything you need to know about personal and small business financial planning, including investing, estate planning, insurance, employee benefits, 401k, 403b plans, retirement planning and more. Missed an episode? Go to 1077thebroc.com and Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Master Your Finances is underwritten by Certified Wealth Management & Investment, focusing on personal, financial, and small business planning. For more information about all of Certified Wealth Management & Investment’s services online, it’s cwmi.us. Be sure to listen every Sunday at 9:00 to Master Your Finances exclusively on 107.7 The Bronc and 1077thebronc.com.

 

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48:27 Kurt Baker: You’re listening to a podcast of Master Your Finances with me, Kurt Baker, a certified financial planner professional. Sunday mornings at 9:00 AM on 1077thebronc.com.