 Aloha and welcome to Business in Hawai'i with Reg Baker. We broadcast live every Thursday at 2 o'clock from 2 to 2.30 from the Think Tech Studios in downtown Halalulu in the Pioneer Plaza in beautiful Halalulu, Hawai'i, especially this time of the year when the mainland is suffering from some very cold weather. This is a show that focuses on success stories of businesses in Hawai'i. We've all heard the challenges. We know that there's some issues, but there are companies that have gotten around these challenges and have made it successful. Today we have a company that's known as an acronym PAU or POW. It helps companies level the playing field a little bit. They're able to save some companies some costs. They're able to make things more efficient and to maybe allow the owners to focus a little bit more on the businesses that they are actually trying to manage. PAU, we have the co-founder Fred Parr who is here today and then we have one of the key office managers, implementation manager and operations guru for PAU, Nick Leong. They're going to be here today to tell us a little bit about what PAU is and how they can help businesses in Hawai'i. Welcome to the show today. Thanks for having us. Fred, since you're the senior guy to my left, can you start out a little bit and just kind of tell us a little bit about yourself and where you're from and how you got to where you're at today? Sure. I was originally born in Japan many years ago and I grew up most of my life in Tokyo going to American school there and I finished my high school in California and went to university there. Whereabouts in California? In Newport Beach area. Oh nice. And then college was in Long Beach, Cal State Long Beach and from there I joined the banking industry and I was out in Wall Street a little bit. In New York? Yes. So that was a good time. Good markets right before the crash. That's a good time to be there. So then my career changed over. Because of my language I could speak Japanese. I was sent over to Japan. Who sent you to Japan? Well I went originally with which is now Bank of America right now but it was called Security Pacific and back then gets into a little long story but there's a Glass-Steagall Act which broke apart and then we were able to do securities business with the banks. As they say the Chinese wall fell. Yes absolutely. So I was there for about four years then I moved on to Hong Kong and I was starting trading equities Asian equities along with Japanese equities and then I moved back with another firm called Solomon Smith Barney. Oh yeah. I ran their desk for several years. Do you know Kenny Wong by any chance? I do know of them. Yes. But I was mostly on the institutional side. Okay. And then I moved back to Japan once again with another investment bank. I was head on it which was the ABN Amber which is a Dutch outfit and I ran their equities and futures and options. So most of my background is in banking. Well banking, securities, risk management, you know. And then I met my wife actually when I was going to Long Beach and she's originally born and raised in Hawaii. A windward girl, kind of early girl. So that's how my roots got embedded in Hawaii. And after banking about four years ago I left investment banking. I came back to Hawaii and that's how I got into Pacific Advantage with my other partners. Very good. That's a very interesting history and background. You know a lot of a lot of international travel. It's very fun. Nick, how about yourself? Born and raised here in Hawaii. I went to school up on a whole. And then a whole guy. Yeah. Yeah. Sorry. And then I went to California to go to college. I went to Santa Clara University up by San Jose. A little chilly. Yeah. Yeah. And you know I ended up missing the food and the people and going to the beach. So I decided to come home, spend some time with the family. And I went into the family business which is actually in parking management. So I did that for a few years and then decided that I wanted to give being an entrepreneur a shot. So me and my girlfriend opened up a small retail store. We ran that for a few years. Decided it was way more work than we were willing to put into it. Retail is tough. Yeah. Retail is the hours. Our nuts and yeah it was a lot of work. Great learning experience though. Then I decided to, at the same time I was working at Apple as a side job and that kind of got me into the tech world. And then from there I slowly drifted into what kind of what we're going to talk about today, the PEO companies. And I met Frank and Fred, had a great opportunity to sit down with them. And here I am today. Very good. Now I can't help but asking, but if I ever have any problems with my iPhone you can help me with this. I'll give you a discount on my rate. Very good. Well very diversified backgrounds which is really good because both of you bring something to the table that can help a variety of different businesses out there. Retail and I know one of the other co-founders is Frank, Frank Felix. He's got construction connections. That's great. And so there's a lot that's out there that you guys bring to the table that can really help businesses make things work here and why. Now tell me a little bit about PAU. What is PAU? Well PAU is the acronym for Pacific Advantage Unlimited and we're in the PEO business. So PEO is also an acronym for professional employee organization. So what we do is we help, well we give added value and we help, you know, smaller companies which is Hawaii's consists of mainly of small companies. So we're able to give them payroll services. Also I provide them with medical workers comp and other insurances which is necessary for our business to thrive and also to be compliant. Now the definition of a small business is what? Less than 100 employees? Less. As of this year it's 50 employees and with ACA or Obamacare it is going to be from 2017 100 employees. So that's a large company. Well for Hawaii. Yeah I think what is about 97% of all the businesses in Hawaii are considered to be small businesses and so that's the majority of businesses. Yeah and so alright so whether it be 50 or 100 if there's a company that's got less than that number they come to you and you can help them do what? You know basically a small company can come to us and get support for HR needs so if they need help hiring people or let's say a small business doesn't know how to how to create a company handbook we can assist them with things like that on the HR side as well as you know a big part is to keep them compliant you know with with all the changes in medical it's easy to you know to not understand it fully and we can help everyone stay compliant and as well with payroll and your insurances. Well just labor loss I mean the compliance area and the labor laws with wages and that's what I think it'd be a big challenge for folks. You know but I guess just as importantly as maintaining compliance and helping take some of that work off the owner's plate there's also potentially some opportunity for doing things that may be a more competitive price you know I mean you you actually put these employees on your payroll and then there can take advantage of maybe some of the group benefits that you've got is that how that works? Yeah yeah you know the way that these PEO companies work is generally we're co-employers with the the client company and we hire their employees under our our tax numbers and we go to carriers and to like health health carriers and insurance carriers as a big group and because we have greater numbers you know it's economy of scales and we can sometimes get better pricing for different clients. Right I mean there's no guarantees but if the company went and they had 25 employees as opposed to you going with say four or five hundred employees you have a little bit more leverage you might be able to get some better more competitive pricing than they could with only 25 as opposed to 500. Sure yeah yeah and that's gonna work in a lot of different areas I mean does that include like I guess workers comp and that kind of area too? Yes workers comp as I mentioned before medical we could pass on the large what we call block business the discount that we obtained from that from health carriers workers comp carriers and pass that on to the clients so it saves the bottom line once again some company that has only five or 25 people will get probably a less competitive rate than what we will get at a large group. Right right you know especially if it's a new company who doesn't really have a lot of history you know it's hard for them to you know go in and get some very competitive pricing for some of these you know employee benefits when there's no history that they can look at you know they got to almost take like a worst-case scenario and price it accordingly. That's correct. Now what else you know I guess PEU and I'm not going to distinguish between the two but PAU and PEO basically you do PEO services and that's where the employee actually goes on to your federal ID numbers and your process as a group but they don't lose their individuality I mean there's the company still have their employees they're still working for them they get their W-2s based on you know the the hours that they work for that company and and there's employee handbooks that can be created and so the the owners of the company and the managers of the company don't really lose control of the employees all it is it's simply a processing a back office function right. Absolutely you know they'll still maintain you know they'll still maintain the scheduling they'll you know hire and manage their employees where there are more for support and and to help advise so you know maybe whereas before if you're the owner you have to make the decision all on your own hey what are we you know what's the best way to handle this situation you know now you can tap into us and we have people who specialize their whole careers in HR or payroll and they can be you know give you a career worth of knowledge to help you make the decision but the decision is still yours to make as the owner. Right I mean you still have responsibility for that employee yeah and you need to have all the proper procedures in place you know job descriptions and management oversight and that sort of thing the employer doesn't lose that that still has to be maintained by the employer. So we like Nick just mentioned we had put added value on the HR aspect team specialized in that but also on the payroll side where a regular accountant and a firm could relinquish the payrolls aspect of it taxes 940 941s so there's a lot of moving parts that if that person were to take care of it at a small company there's a lot of things to you know applications and reportings that they would have to do which we will be able to take care of that off the plate and then they could concentrate on their business like sending out invoices or things of that sort. Generating revenue yeah exactly you know and it's you know in that piece that compliance piece of the timely filing and the timely payment I mean that's critical because sometimes you make one little mistake and you're late it can be expensive. Sure yeah you know I mean I've seen some of the the late fees it can climb pretty quickly in there calculated sometimes on a daily basis you know so it's something you really have to be paying attention to and be comfortable with in order to stay on top of it. You know there's other services I guess there's a way for them to call in if they have like labor issues or questions or that there do you have a group that you work with that can help answer some of those questions. Yeah sure we you know we partner with with a couple different vendors one you know for Vantaju HR they're great on HR support they help us you know they specialize in that labor issues and any type of HR issues you know they'd be the first people that we talked to and we really get them we really get a lot of support from them. Well let's hold that thought for just a second no no no it's alright and we're gonna come back and take quick break and come back in about one minute and maybe we can talk a little bit about that some more but this is business in Hawaii with Reg Baker I'm here today talking to two of the key players over the company called PAU Powell which is a PEO here in Hawaii we're gonna take a short break and we'll be right back. Aloha my name is John Wahee and I used to be a part of all the things that you might be angry at. I served in government here and may have made decisions that affects you so I want to invite you in I want to invite you in to talk story with me and some very special guests every other Monday here at Talk Story with John Wahee come on in join us express your opinion learn more about your state and then do something about it Aloha. Aloha and welcome to business in why would Reg Baker we just finished our quick break and we're gonna get right back into discussing a little bit about some of the other services that PAU offers to their customers and one that is very important is going to be some of the HR consulting piece that when somebody has an HR issue they actually have a number that they can call and you can or your affiliate company can help them through the process and that company is Vantageo. Correct yeah Vantageo HR yeah like like you said you know they they they're really the experts for us they help you know guide us through through different issues and they have a 24-hour hotline and you know their presence a presence here in Hawaii an office here and California New York so you know they span a wide gamut of different areas so they have a lot of knowledge for us to top into and our clients to top into. Right and I know a couple of the principles over there you know Lorraine of Bufuco and then also Kara and Kara is on the local board of directors for SHRM and Lorraine I know has been a frequent speaker at the National SHRM conferences which I'm not sure what SHRM I think is a society of human resource managers sounds right and so they're they're very connected they're into that part of the industry that that focuses on HR issues and laws and compliance and that sort of thing and so it's a great resource to have available and there's a 24-hour hotline so we need to test it some day and see if they answer. But what else did there's other affiliates that you work with too? Yes also mind you that the handbook is a very big thing for small businesses because every business should have some kind of a handbook it could be catered or made out to that specific company whichever field they're in if they may be in a restaurant business or construction or whatnot so that's a I wanted to add that in there. Well that's an important part because I think the employee handbook we could actually have a whole show on that because you know one of the first if you do have a labor issue one of the first things that come up is you know what are the rules what what what are written what's been communicated what is the employee supposed to do is it consistent with the handbook is it consistent with the job description having all that in place is very important should any issue come up and having somebody help a company walk through that make sure that they're in compliance and they have all that there I think is invaluable now how much does that cost if somebody needed to have that as part of you know PAU? Well it's a standard cause it's included in our fees but if it needs to be really catered and written up for them then Vantaggio HR will take care of that and then there'll be an agreement but but basically the basic document itself is free yes yes you know and so that comes with doing business with PAU and we've done our homework with Vantaggio and so the handbook that comes with PAU that you're mentioning is you know compliant with all the state and labor law you know requirements for Hawaii and they've been in Hawaii for a number of years so I'm sure they're pretty familiar with what's going on that that's a great benefit and additional you know value-added service that PAU offers you know and then there's also some other opportunities that they can take advantage of yes on the bookkeeping accounting side we part we have another partner Bernice is the owner Bernice Parsons the name of the company is Vered Account they're very accounting like I said in the bookkeeping side they're adverse and then they could take care of the needs of you know small things from entries journal entries things of that sort on the accounting side you know I I've been doing CPA stuff and bookkeeping in Hawaii for a long time and I've had an opportunity to work with a lot of different services and I've had the opportunity to work with Verd account and other bookkeeping accounting services and you know I've been pretty impressed with what Verd account does you know they're quick they're they've got some pretty talented people they get things done on a timely basis now the client has to provide the information on a timely basis to in order for them to process and assuming that that's done I mean I've seen them crank out some good financial statements you know within a few days after the end of the month so that's a great service so you know it sounds almost like you guys are becoming like a one-stop shop for a small business to outsource a lot of their back office you know the administrative pieces the ones that maybe they don't have a lot of comfort with that they have to do because they are in business but they can actually contract that out and they have the payroll and the HR and the bookkeeping all of that done through you guys yeah that's that's exactly right you know and coming pulling from my own experience when you know me and my girlfriend and I had that little retail store you know we were the best resources we had you know we those before I knew what a PEO company was and you know we didn't even know what questions to ask you know and you don't know what you don't know exactly you know and then you can you can Google stuff and and but I mean your time is so precious when you're trying to run a business you know and to have someone to bounce ideas or to keep you in compliance I think is as well worth it especially when you're you know a one or two-man operation or a five-man operation your time is really precious to your operation well and what's interesting is that you know sometimes a two-man operation you know if you're one of the two people there you can always find time to do something and it may not be the best use of your time but when you start adding employees complexity start increasing pretty quick because not only do you have customers to deal with and all the compliance issues and getting the work done but then you also have to manage the employees and that starts complicating things even more so it's my opinion is it's best to get this set up right right out of the gates you know and this can help you grow in a controlled sort of way you don't have to make anything up as you go along I mean I don't know about you but I've had clients that try to do it they give it a good shot they may get about 80% of it done but the rest of it you know they're just making things up and they're trying to process it and they end up that maybe it wasn't quite exactly the way it should have been yeah yeah exactly like you said you don't know what you don't know right you don't know the questions to ask and and there's a lot of stuff I mean enough for us to keep us busy studying all the labor laws and the payroll laws and everything to so you know it companies can can let us worry about that stuff and they can focus on what makes some money oh yeah well that's that's where they need to be focusing you can't make a lot of money becoming an expert on payroll if you're not selling the service you know but you can make a lot of money focusing on selling product to customers you know and that's that's what I always try to encourage my my clients to do now just to kind of give the audience a little bit of an explanation on how this would work let's just say that there's a company out there that they've been kind of struggling with trying to deal with all this stuff businesses is fairly good they're they've got some good sales growth coming in but they're just not able to take care of the customers the way they like and they need to try to find some time to free themselves up to focus on this so they come to you and they go you know I've got I need some help and I need to get some of this back office stuff off my table off my desk how do you go about going through that process you know from from soup to nuts real quick how did how did they do they have to fill out an application they got to give you some information you begin the onboarding process I mean how does that work yeah generally I mean what we sit down with them and and you know discuss kind of what our services are and if they're interested we come up with with a quote for them you know and assuming we get the green light on that we go through what's called an implementation phase and that'll include everything from you know what we'll get a contract to them once they sign it we have paperwork for the employees to fill out to hire them on to our federal tax numbers like you said and then well so we'll go out we'll meet the clients you know at their convenience and their employees have them fill out some paperwork and then that's that's pretty much all the onboarding that needs to take place and then from there we might sit down with the client for a meeting or two just to make sure that we have all of their their payroll nuances understood and we're prepared to process their payroll and then from there it's it's like just kind of handing everything over to us and letting us be be the experts and helping you you know we'll cut the checks and mail them out to your employees for payroll can you do direct deposit to we can do direct deposit yeah easy and but they're not completely cut out of the process they still need to have a communication link with you to I mean for example some people are gonna be on hourly you know work weeks so how do they communicate that to you there's actually we have a web page where they can go and click on each employee will set up their own web portal for them and they can go in there and enter in the the hours for payroll each week or or bi-weekly or semi-monthly however they pay and so they'll just go down the list it's almost like an Excel spreadsheet how long how many hours and then we'll take care of the taxes make sure that that all adds up and everything you do the filing and and do all that if anybody calls with a nasty question you can answer that too yeah we can be the experts for their employees who they may have a question on their taxes how come I got charges amount and we can answer those up for you super now we're gonna wrap up here in just a minute or so but you know I heard these stories about some PEOs having these really nasty contracts that once you get into them you can't get out of them and there's big issues with it I mean yours is pretty straightforward right yes we signed we both mutually agree we have a contract that signed and then as long as there's 30 days notice if we if you're not unhappy with anything you could terminate to contract see that to me that's a important selling point because if there's a 30-day clause for you to transition out that means you must be pretty confident that you're gonna be doing a good job if you try to lock somebody in for a year that's telling me that that's a warning flag that's something you got to be careful with this well I think you know we're we're really trying to develop true partnerships and that means we have to hold up our another bargain too so hopefully you know there's no reason for for them to for a client to be unhappy with our services exactly we owe them that when you know when they sign the contract with us after all you know service we're service oriented we've always modelled our company on that we've been in business for eight years now and that's our core servicing our clients the small and midsize companies very good I want to keep I wish we had more time to talk but we're kind of out of time you've got about 10 15 seconds each is there any final words you want to do we're looking forward to the new year we got a lot of things that we want to implement I think Pacific advantage will reach out to small and midsize and the community of Hawaii and we'll keep growing and we'll help companies in Hawaii super Nick I just want to say hi to my family and and to my fiance oh fiance so girlfriend to fiance just recently all right congratulations all right well what's the day I want to say Merry Christmas well it's fast but happy holidays and my daughter Jackie and my son Carson all right very good well happy new year everybody this is Reg Baker a host of business in Hawaii we broadcast live every Thursday at 2 o'clock from 2 to 2 30 and we highlight businesses in Hawaii that are successful and we try to share some of the insight on how they made that happen until next week aloha and happy new year