Latest / The Mobilization Mindset / Episode 166 | A Budget Your Construction Business Can Run On with Danielle Hayden

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Episode 166 | A Budget Your Construction Business Can Run On with Danielle Hayden · The Mobilization Mindset

• 0:00
  SPEAKER_02: A tax accountant's very different than a strategic finance partner.
• 0:03
  SPEAKER_00: They give you such bad advice because their only job is tax.
• 0:07
  SPEAKER_02: And lean in lean sorry to interrupt, but Danielle, lean into that a little bit because I see this all the time.
• 0:12
  SPEAKER_00: Your tax accountant, I want to be clear, as a trained CPA, your tax accountant, they were trained to file your tax return.
• 0:21
  SPEAKER_00: Period.
• 0:21
  SPEAKER_00: Now I have three different teams.
• 0:23
  SPEAKER_00: I have a bookkeeping team, I have my CFO team at Envision CFO, and then I have my tax team at KSA Tech Partner.
• 0:30
  SPEAKER_00: We are three different teams because those are three different skill sets.
• 0:44
  SPEAKER_02: You can catch these episodes on our YouTube channel, or you can go to mobilizationfunding.com to find this episode or all of our episodes that we've ever done.
• 0:53
  SPEAKER_02: It's a great resource for all of our viewers.
• 0:56
  SPEAKER_02: Let's kick it off.
• 0:58
  SPEAKER_02: Danielle Hayden, hailing from Cleveland, Ohio.
• 1:02
  SPEAKER_02: I'm so glad you're here today.
• 1:03
  SPEAKER_02: Danielle is a CPA, owner, and CEO of Kickstart Accounting.
• 1:09
  SPEAKER_02: She's the host of CEO Numbers Network Podcasts.
• 1:14
  SPEAKER_02: You have a lot of experience podcasting too.
• 1:16
  SPEAKER_02: I'm relatively new to it, only been doing it a few months with Scott, but I am so pumped to have someone who's been around podcasts and also talks about finance and accounting and et cetera here on the here on the show with me.
• 1:28
  SPEAKER_02: So, Danielle, welcome.
• 1:30
  SPEAKER_00: Thank you very much for having me.
• 1:32
  SPEAKER_00: We're we're a rarity.
• 1:33
  SPEAKER_00: Um, a lot of people who love uh money and finance and uh accounting uh don't often also love to speak on podcasts, but this is my favorite place to be.
• 1:43
  SPEAKER_00: So excited to be here.
• 1:45
  SPEAKER_02: Good.
• 1:45
  SPEAKER_02: Well, I know uh some of the reasons why we do on the mobilization mindset have a podcast, and I'm sure with you and your podcast, you just want to educate your client base.
• 1:53
  SPEAKER_02: You want to educate the the industry out there on the key things that you look at, the key things to be successful within business outside of the core work.
• 2:01
  SPEAKER_02: But I want to kind of start with um, Daniel, tell me a little bit about how you ended up being a CEO.
• 2:09
  SPEAKER_02: Where did that, you know, what did that roadmap kind of quickly look like?
• 2:13
  SPEAKER_02: And then tell me a little bit about the company.
• 2:16
  SPEAKER_00: Yeah.
• 2:17
  SPEAKER_00: Um, so I had a uh roller coaster ride into entrepreneurship.
• 2:22
  SPEAKER_00: I actually always wanted to own a business.
• 2:25
  SPEAKER_00: I actually thought I would own a salon on Spa.
• 2:28
  SPEAKER_00: Um I did uh cosmetology in in high school.
• 2:32
  SPEAKER_00: And so I was on the road to open up my uh salon Empire.
• 2:37
  SPEAKER_00: Um, what I found when I was uh working as a stylist is that I had a knack for using the numbers to reach my goals.
• 2:44
  SPEAKER_00: And then I started teaching the other girls in the salon and and the owner how to do the same thing.
• 2:51
  SPEAKER_00: Um, went into the corporate world and I was doing the same thing again.
• 2:55
  SPEAKER_00: I was educating the private equity firm, the management team, CEOs.
• 3:00
  SPEAKER_00: Um, how do we use our numbers as a tool to hit our goals?
• 3:04
  SPEAKER_00: To use them to make business decisions to grow the company.
• 3:08
  SPEAKER_00: Um, and now that's exactly what we do for thousands of business owners at Kickstarter Accounting.
• 3:13
  SPEAKER_00: Um, we start with bookkeeping.
• 3:15
  SPEAKER_00: I know bookkeeping is not like the sexy stuff, but it's actually the most important piece of the foundation.
• 3:20
  SPEAKER_00: Um, and then uh CFO work, planning for the future, uh talking strategy, and then uh tax strategy.
• 3:27
  SPEAKER_00: And we do all of that um with the goal that we can use money, we can use financials as a tool to hit our goals, uh, to build a business uh and to optimize our tax strategy.
• 3:42
  SPEAKER_02: Yeah.
• 3:43
  SPEAKER_02: So that's so interesting.
• 3:44
  SPEAKER_02: I love that story about uh you being, you know, learning how to be a salon artist or, you know, someone who works in a salon.
• 3:52
  SPEAKER_02: And then you're like, wait a second, I, you know, maybe I want to be a salon owner, maybe I want to be an owner of another business.
• 3:58
  SPEAKER_02: I don't know, but numbers tell a story, right?
• 4:01
  SPEAKER_02: Talk to me about what you mean by using the numbers to reach your goals.
• 4:06
  SPEAKER_02: Like, how did that, how did that initially come to your head?
• 4:09
  SPEAKER_02: And how now do you use that now in your own business?
• 4:12
  SPEAKER_02: And how has it evolved?
• 4:13
  SPEAKER_00: Yeah.
• 4:14
  SPEAKER_00: Yeah.
• 4:14
  SPEAKER_00: So it's it's evolved um quite a bit.
• 4:17
  SPEAKER_00: So I start, I uh in corporate, I worked as a CFO, so chief financial officer.
• 4:22
  SPEAKER_00: And my goal was to help the board look at what just happened, why did it happen, and what are we gonna do about it?
• 4:30
  SPEAKER_00: And then take that and build the strategy for the future.
• 4:33
  SPEAKER_00: Let's plan the budget and the strategy in order to hit the the budget.
• 4:38
  SPEAKER_00: I came into entrepreneurship and I'm I'm over here.
• 4:42
  SPEAKER_00: I'm trying to talk strategy and build budgets.
• 4:44
  SPEAKER_00: Um, I'm in for the big stuff.
• 4:46
  SPEAKER_00: And then I started talking with people and they don't even know their numbers.
• 4:50
  SPEAKER_00: Like they have not a clue what just happened in their business.
• 4:54
  SPEAKER_00: And I said, All right, we got to pivot.
• 4:57
  SPEAKER_00: Uh, we start with bookkeeping first because I have to know where you have just been.
• 5:01
  SPEAKER_00: And you as a business owner need to be able to look at your numbers.
• 5:05
  SPEAKER_00: One, they have to be accurate.
• 5:07
  SPEAKER_00: You cannot be the one doing your bookkeeping, and they have to be delivered to your inbox at a timely rate so that you can do something about it.
• 5:15
  SPEAKER_00: So the first thing that we do is to help people understand what do the numbers say?
• 5:21
  SPEAKER_00: Why, like what happened, why did it happen?
• 5:24
  SPEAKER_00: And then the most important question is what am I, the CEO, going to do about it?
• 5:29
  SPEAKER_00: And then that connects to the strategy.
• 5:31
  SPEAKER_00: So now we can look at um, you know, in CFO, um, and I think so many business owners, we want to build a budget, right?
• 5:39
  SPEAKER_00: We we want to we wanna set a goal, we want to build the budget, we wanna bring our business to to fruition.
• 5:46
  SPEAKER_00: Um, and in our CFO services, that's exactly what we do.
• 5:49
  SPEAKER_00: We pause and we look at, all right, what's our 10-year North Star?
• 5:53
  SPEAKER_00: Let's let's set the real personal and business goal long term.
• 5:56
  SPEAKER_00: What's a three-year plan?
• 5:58
  SPEAKER_00: Okay, now we have a three-year plan.
• 6:00
  SPEAKER_00: Let's let's look at the one-year budget.
• 6:02
  SPEAKER_00: Uh, once we understand from a SWOT analysis, we can then like what what really is the strengths and weaknesses of this business and how can we build a budget around it?
• 6:14
  SPEAKER_00: And the budget, it's not just a document that you slide in a yeah, a lot of people do that.
• 6:21
  SPEAKER_00: Yeah, it becomes a real live, but like a real live decision-making tool, and we use it for ultimate accountability.
• 6:30
  SPEAKER_00: The last part of your question was how do I use it in my business?
• 6:33
  SPEAKER_00: The reason that we use all of these strategies with thousands of clients over the last 11 years is because it works.
• 6:41
  SPEAKER_00: It worked for private equity, it worked for when I was in corporate, and it works for my business.
• 6:48
  SPEAKER_00: We have seen it work in practice, and we use everything that has been proven to help a small business owner grow.
• 6:57
  SPEAKER_00: And that's a why we do every single step that we do.
• 7:00
  SPEAKER_02: Yeah, it's so interesting you said that.
• 7:01
  SPEAKER_02: I well, I liked one of the lines that you said, or it's actually a long line.
• 7:05
  SPEAKER_02: It said, uh, what happens?
• 7:08
  SPEAKER_02: Why did it happen?
• 7:09
  SPEAKER_02: And what the heck are we going to do about it?
• 7:11
  SPEAKER_02: Right.
• 7:11
  SPEAKER_02: I think there's a lot of business owners out there that aren't having those conversations.
• 7:15
  SPEAKER_02: And one of the reasons, and I kind of want you to dig into this a little bit, is you go back to bookkeeping.
• 7:21
  SPEAKER_02: I mean, there's a continuum, there's a there's a hierarchy of sort of financial roles and financial purposes, whether that be a bookkeeper, controller, CFO, and you kind of got into that.
• 7:32
  SPEAKER_02: But it all starts with data accuracy, right?
• 7:35
  SPEAKER_02: Yeah, your data is not accurate.
• 7:37
  SPEAKER_02: Whatever the CEO is building with regard to a go forward three year, six-year, five year or five-year model, it's just not going to be based on truth.
• 7:46
  SPEAKER_02: So, talk to me a little bit about the importance of the foundation and some strategies some of the our listeners can take and and and um frameworks that they can hold their folks accountable to in order to ensure that source data is accurate.
• 8:03
  SPEAKER_00: Yeah, I love that you called it source data.
• 8:05
  SPEAKER_00: So um, you know, it's it's really interesting when I nerd out every once in a while, Danielle.
• 8:10
  SPEAKER_02: I I I'm not an I'm not a CPA, but uh, you know, I'm pretty darn, I can be pretty close to it though.
• 8:15
  SPEAKER_00: Yeah, I can tell.
• 8:16
  SPEAKER_00: Um, all right.
• 8:18
  SPEAKER_00: So, like I said, bookkeeping, it's not the sexy stuff, but we need we need four people on our money team.
• 8:23
  SPEAKER_00: Okay.
• 8:23
  SPEAKER_00: Um, the bookkeeper, they are the person that I want you to imagine you go and you dump that thousand-piece puzzle all over your coffee table.
• 8:32
  SPEAKER_00: I actually hate puzzles.
• 8:33
  SPEAKER_02: Such a good analogy, though.
• 8:35
  SPEAKER_02: Such a good analogy.
• 8:37
  SPEAKER_00: All of your spending, all of your income, it is just a big giant mess all over that table.
• 8:43
  SPEAKER_00: Your bookkeeper, they are the puzzle pieces.
• 8:46
  SPEAKER_00: And a great bookkeeper is strategically organizing every single one of those transactions.
• 8:51
  SPEAKER_00: So we have a proven framework that we use at our firm where we strategically categorize every single transaction that comes into the business.
• 8:59
  SPEAKER_00: So our clients, they receive what we call the snapshot.
• 9:03
  SPEAKER_00: It's an easy-to-read document that we have created to help them understand their numbers.
• 9:07
  SPEAKER_00: And that is the completed puzzle.
• 9:11
  SPEAKER_00: And so your bookkeeper is the puzzle creator.
• 9:15
  SPEAKER_00: And you, as a CEO, you're taking the completed puzzle.
• 9:19
  SPEAKER_00: Person number two is your CPA.
• 9:21
  SPEAKER_00: Your CPA, they're not there to give you business strategy.
• 9:25
  SPEAKER_00: They're not there to be your bookkeeper.
• 9:26
  SPEAKER_00: Their job is to provide you with tax strategy and to file your tax return.
• 9:32
  SPEAKER_02: No, I have seen And lean in lean, sorry to interrupt, but Danielle, lean into that a little bit because I see this all the time.
• 9:39
  SPEAKER_02: We talk to business owners all the time and they say, Well, I have a CPA.
• 9:42
  SPEAKER_02: Well, I'm like, okay, well, do they work for you for you?
• 9:45
  SPEAKER_02: No, they work at my, you know, uh the CPA firm.
• 9:48
  SPEAKER_02: Well, a tax accountant is very different than a strategic, you know, finance partner, right?
• 9:54
  SPEAKER_02: And lean into that a little bit if you can.
• 9:56
  SPEAKER_00: They give you such bad advice because their only job is tax.
• 10:00
  SPEAKER_01: Yeah.
• 10:01
  SPEAKER_00: Your tax accountant, I want to be clear, uh, as a trained CPA, your tax accountant, they were trained to file your tax return.
• 10:09
  SPEAKER_00: Period.
• 10:10
  SPEAKER_00: That's it.
• 10:11
  SPEAKER_00: If you are leaning on them for business strategy, for bookkeeping, for CFO support, you are relying on somebody who has been taught tax.
• 10:22
  SPEAKER_00: Now I have three different teams.
• 10:24
  SPEAKER_00: I have a bookkeeping team, I have my CFO team at Envision CFO, and then I have my tax team at KSA Tax Partners.
• 10:30
  SPEAKER_00: We are three different teams because those are three different skill sets.
• 10:34
  SPEAKER_00: So your tax person, the only thing that they should be doing is your tax strategy.
• 10:38
  SPEAKER_00: I have a thousand different variations of the same story.
• 10:41
  SPEAKER_00: We had a client who came to us, it was like early February, and we were taking over as our bookkeeper, their tax account, um, and their CFO.
• 10:50
  SPEAKER_00: And what happened is in quarter four, her CPA said, You're about to pay all this money in taxes on your net income.
• 10:58
  SPEAKER_00: You have too much profit.
• 11:00
  SPEAKER_00: Go spend the money.
• 11:02
  SPEAKER_00: She listened to her because that was her CPA and she holds him at high value.
• 11:06
  SPEAKER_00: And so she went and spent all his money.
• 11:08
  SPEAKER_00: She bonused out her team, she took a bonus.
• 11:10
  SPEAKER_00: Uh, she spent all this money in prepaying for conferences.
• 11:13
  SPEAKER_00: What he did not take into consideration is where she was going.
• 11:18
  SPEAKER_02: Okay.
• 11:19
  SPEAKER_00: True.
• 11:19
  SPEAKER_00: He did not ask one question about what are your plans for next year.
• 11:23
  SPEAKER_01: Yeah.
• 11:24
  SPEAKER_00: When she went to go open up her second location, it was due in in March.
• 11:29
  SPEAKER_00: So she had to have all of the money to be able to open up, fund the inventory for her second location.
• 11:36
  SPEAKER_01: Yeah.
• 11:37
  SPEAKER_00: The money was gone.
• 11:38
  SPEAKER_00: She spent it.
• 11:39
  SPEAKER_00: And then she still had a tax bill.
• 11:41
  SPEAKER_00: Oh, oh, and January and February, slowest months of the year.
• 11:45
  SPEAKER_02: Yeah.
• 11:46
  SPEAKER_02: And that's so interesting.
• 11:47
  SPEAKER_02: And I kind of want to lean into one thing that you just said.
• 11:50
  SPEAKER_02: So, um, what Danielle's talking to our viewers and listeners out there, what Daniel's talking about is uh planning from an operating expense standpoint going forward, but also from a capital expense, right?
• 12:01
  SPEAKER_02: And you need cash in order to go buy equipment or buy inventory.
• 12:05
  SPEAKER_02: Those are uses of cash.
• 12:07
  SPEAKER_02: And if you don't have that budget that Danielle has been talking about earlier on going forward and nobody's doing that for you, you have absolutely no plan or understanding of what uh amount and source and where where those sources of cash are going to come from.
• 12:22
  SPEAKER_02: And that it that's kind of what you're talking about, right, Danielle?
• 12:25
  SPEAKER_00: That is exactly what I'm talking about.
• 12:27
  SPEAKER_00: Yeah.
• 12:27
  SPEAKER_00: And so that's why we need person number three.
• 12:29
  SPEAKER_00: It's our CFO.
• 12:31
  SPEAKER_00: And, you know, look, I I know everyone can have an internal CFO.
• 12:35
  SPEAKER_00: That's why we offer fractional CFO support.
• 12:38
  SPEAKER_00: Unless you're doing, you know, five to$10 million a year in revenue, you probably don't need an in-house CFO.
• 12:44
  SPEAKER_00: A fractional CFO is going to be just fine from about a half million dollars in sales up to about three, three to four million dollars in sales.
• 12:52
  SPEAKER_00: Fractional CFO support is a great level of support as you're growing your business.
• 12:59
  SPEAKER_00: That CFO, they're the person who holding the long-term strategy, doing the 10-year plan, the three-year vision, a one-year budget.
• 13:08
  SPEAKER_00: And then they're working with your bookkeeper, working with your tax accountant to make sure that you're not going and spending money on a tax strategy, what that you're planning the full cash picture as you are driving your business into your goals.
• 13:23
  SPEAKER_02: Yeah.
• 13:23
  SPEAKER_02: No, that's such a good point.
• 13:24
  SPEAKER_02: And we we see the sort of CPA moonlighting at CFO uh, you know, a lot in our business.
• 13:31
  SPEAKER_02: And it's interesting, you just said something I'm not gonna say I disagree with because I'm not I'm not fully informed on what you meant to be.
• 13:39
  SPEAKER_02: But and this is this comment I think is gonna work in your favor, actually.
• 13:43
  SPEAKER_02: You said you said the comment um you probab you may, depending on your circumstance, you may not need a CFO until you're like five million dollars in revenue.
• 13:55
  SPEAKER_02: I have always kind of thought, um, and and it's business by business case, but I've always thought until you get to be a 40, 50, 60 million dollar company, I think if you find the right, like like the right bookkeeping, the right you know, CFO outsourcing firm, uh, that could provide just as much, if not more, value to that sort of company versus having a full-time CFO.
• 14:20
  SPEAKER_02: So that's my opinion.
• 14:21
  SPEAKER_02: I could be wrong.
• 14:22
  SPEAKER_02: You're much more knowledgeable about this than I am.
• 14:25
  SPEAKER_02: But outside of size, Danielle, what are the key sort of things that you'll hear from prospects where you're like, you need a you need a full-time CFO, or no, we're we're a perfect solution for you.
• 14:40
  SPEAKER_00: Um, it's usually actually the business owners who want the CFO to do more of the admin tasks as well.
• 14:47
  SPEAKER_00: Goodbye.
• 14:47
  SPEAKER_00: That the that that the CFO is going to do more than just the CFO role.
• 14:51
  SPEAKER_00: Okay.
• 14:52
  SPEAKER_00: So for a business who um maybe has uh operations or the CFO is also uh has a strong skill set in maybe marketing or inventory management, whatever it might be, that they're they're not just sitting and doing finance strategy all day for 40 hours.
• 15:08
  SPEAKER_00: They they have um more depth to their role, or they're doing other admin tasks for your business, is usually when we see people who need somebody internally.
• 15:19
  SPEAKER_00: Um I I think I think every business owner needs a CFO.
• 15:25
  SPEAKER_00: So I I think once you've hit about a half million dollars in size size, you need a CFO.
• 15:30
  SPEAKER_00: Now, if we're gonna stop non-revenue, here's the mindset that I want everyone to hear.
• 15:36
  SPEAKER_00: Bookkeeping is looking backwards.
• 15:38
  SPEAKER_00: It's what just happened.
• 15:40
  SPEAKER_00: And what we find is that people move through a three-stage framework.
• 15:45
  SPEAKER_00: When you start your business and and you grow your business, most people have come in to into business for their craft.
• 15:53
  SPEAKER_00: You're really good at doing what you do.
• 15:54
  SPEAKER_00: You're not good at bookkeeping, you're not good at tax strategy, you don't know how to set a budget, and that's perfectly fine.
• 15:59
  SPEAKER_00: We call this the business side of running a business.
• 16:02
  SPEAKER_00: So you're in what we call the foundation stage.
• 16:06
  SPEAKER_00: You need help getting your bookkeeping in order, having clean, accurate numbers, and you do them deliver to you on time every single month.
• 16:15
  SPEAKER_00: And I want to be clear, unless you are trained in bookkeeping, you should not be the one doing bookkeeping.
• 16:21
  SPEAKER_00: You should be the one analyzing the numbers.
• 16:23
  SPEAKER_00: So you're building the foundation of learning what is an income statement.
• 16:28
  SPEAKER_00: How do I use an income statement to make business decisions?
• 16:31
  SPEAKER_00: What does my balance sheet tell me?
• 16:32
  SPEAKER_00: How do the trends in balance sheet uh give me information to make a decision in business?
• 16:38
  SPEAKER_00: As you're doing that, you are moving from foundational to empowered.
• 16:43
  SPEAKER_01: Yeah.
• 16:43
  SPEAKER_00: And we watch this transition in our clients, and it's the coolest thing, Drew.
• 16:46
  SPEAKER_00: Like we're literally watching them.
• 16:48
  SPEAKER_02: A light bulb goes on.
• 16:49
  SPEAKER_00: Oh, but it's totally.
• 16:51
  SPEAKER_02: And we, and Danielle, we're gonna get there on kind of how to how to link all those financial statements and uh real quick, but I always make the joke, and you made a really uh great point.
• 17:00
  SPEAKER_02: Um, you know, we at mobilization funding work primarily with commercial construction companies, right?
• 17:06
  SPEAKER_02: And we understand cash flow, we understand the finance side of the business, right?
• 17:10
  SPEAKER_02: And I always make the joke, and and you said, you know, you have a lot of these business owners who go out there and start a trade or or uh selling a product they know a ton about and are passionate about it, but they may not necessarily know the business side or the or the financial back office side.
• 17:25
  SPEAKER_02: And I always say this, Danielle, it's okay.
• 17:28
  SPEAKER_02: It's impossible.
• 17:30
  SPEAKER_02: It's impossible to be great at everything.
• 17:33
  SPEAKER_02: And here's just a funny example I said on another podcast, but I know the business side really well.
• 17:40
  SPEAKER_02: I know the number side very well.
• 17:42
  SPEAKER_02: And I happen to work in construction.
• 17:45
  SPEAKER_02: But let me tell you what, if you put me on a site and put me in a dozer and said, go do something, that whole construction site will become very expensive overnight.
• 17:55
  SPEAKER_02: There would be a huge problem.
• 17:57
  SPEAKER_02: But that's okay because I'm not the one doing the work.
• 18:00
  SPEAKER_02: And it's the same goes for our business owners.
• 18:02
  SPEAKER_02: You guys know how to actually do the work, you know how to lay concrete, et cetera, et cetera.
• 18:07
  SPEAKER_02: You're not expected to know everything that needs to happen to build a financial infrastructure on the back end to help you decision.
• 18:15
  SPEAKER_02: That's why you need help from people like Danielle.
• 18:18
  SPEAKER_00: Yeah.
• 18:18
  SPEAKER_00: So I find that we're often um one of the we all need outside services.
• 18:24
  SPEAKER_01: Yeah.
• 18:25
  SPEAKER_00: I have outside services in my business.
• 18:26
  SPEAKER_00: 11 years later, still have outside services.
• 18:29
  SPEAKER_00: There's there's times where you cannot be the expert in everything and you shouldn't be.
• 18:34
  SPEAKER_00: And when you are not the expert, you can't go hire an employee.
• 18:38
  SPEAKER_00: So this is kind of what we back to your point about fractional versus uh full-time employee.
• 18:42
  SPEAKER_00: If you are not an expert, you should not be hiring an employee where they are are waiting for you to give them corrections, to give them feedback, to have the SOP.
• 18:52
  SPEAKER_00: You really need an outside service where they are the experts.
• 18:55
  SPEAKER_02: Standard operating procedure for those of that that don't that don't know SOP.
• 18:59
  unknown: Thank you.
• 19:01
  SPEAKER_00: Um so you really want to have those those experts in in your business.
• 19:05
  SPEAKER_00: And then they're gonna help you move into the empowered stage.
• 19:09
  SPEAKER_00: So moving from foundations to empowered.
• 19:11
  SPEAKER_00: And then once you start feeling empowered and using those numbers to make business decisions, you can then sit in your seat as visionary.
• 19:18
  SPEAKER_00: Um, and for anybody who's resisting the thought of, you know, I don't know how to do the business side of running a business.
• 19:23
  SPEAKER_00: I'm not really a CEO.
• 19:24
  SPEAKER_00: I know how to do this, I'm not the CEO of this business.
• 19:28
  SPEAKER_00: You started a business and your name is on that file, right?
• 19:33
  SPEAKER_00: You are the CEO of the business, and it's your responsibility to hold the vision.
• 19:39
  SPEAKER_00: You are responsible for the finances, you are responsible for knowing your numbers.
• 19:43
  SPEAKER_00: And I don't care if you are good at it or not, I don't care if you want to or not, putting your head in the sand is not a strategy that the IRS accepts.
• 19:50
  SPEAKER_02: And I, I could, and I'm pretty brutal on our on our podcast when we talk to business owners about some of this stuff.
• 19:56
  SPEAKER_02: I say if you do not at least have a team or know or even care, if you're putting your head in the sand, kind of like what you're saying, then you're just playing business, you're not running a business.
• 20:06
  SPEAKER_02: I mean, that's just a fact.
• 20:07
  SPEAKER_02: You're just playing, you're playing the role of a business owner, but you're not really running a business.
• 20:11
  SPEAKER_02: And and I know that's direct and I know that's brutal, but the opportunity cost of not understanding your numbers and not outlining a and not having the ability because you don't have that knowledge or infrastructure or data to make a plan going forward is just flying by, it's shooting from the hip.
• 20:31
  SPEAKER_02: And it is uh because guess what?
• 20:32
  SPEAKER_02: Your competitor is probably not shooting from the hip.
• 20:36
  SPEAKER_02: Uh but anyway.
• 20:39
  SPEAKER_02: Um, all right, so I want to talk a little bit about you got into income statement, balance sheet, statement of cash flow, a little bit of that type stuff, right?
• 20:46
  SPEAKER_02: Um CEO,$30 million construction company.
• 20:54
  SPEAKER_02: Giving you a hypothetical here.
• 20:56
  SPEAKER_02: You're you're their CFO, and you're you're you're advising them, okay, here are the five, six, seven, eight KPIs that you got you need to track on a weekly or on a monthly basis.
• 21:09
  SPEAKER_02: Talk to me about some of those key performance indicators.
• 21:12
  SPEAKER_02: You as a consultant and an advisor to this person, as a customer, out of the gate would be saying, all right, we've got to, we've got to get these basic KPIs sort of in place so that it can be it, we can report it on a regular cadence, and they've got to be right.
• 21:28
  SPEAKER_00: Um, I'm gonna give you bookkeeping KPIs and then CFO KPIs.
• 21:33
  SPEAKER_01: All right.
• 21:33
  SPEAKER_00: So for our bookkeeping clients, um, we send every single one of our clients uh what we call the snapshot report.
• 21:40
  SPEAKER_00: And the snapshot report is looking at revenue, uh, revenue for this month, year to date, and then rolling 12.
• 21:47
  SPEAKER_00: And then we're comparing this month's revenue to the average revenue each month.
• 21:52
  SPEAKER_00: Um we are comparing trends.
• 21:55
  SPEAKER_00: So we start in revenue.
• 21:56
  SPEAKER_00: Next we go to cost of goods sold, doing the same trends.
• 21:59
  SPEAKER_00: What was our cost of Sold this month, how did it compare to last year?
• 22:03
  SPEAKER_00: Um, year to date, how does that compare to last year?
• 22:06
  SPEAKER_00: And what's my rolling 12?
• 22:08
  SPEAKER_00: Looking at the trends, what happened, why did it happen?
• 22:12
  SPEAKER_00: Uh, next we're going to our operating expenses.
• 22:14
  SPEAKER_00: Uh, same thing.
• 22:15
  SPEAKER_00: We look at this month compared to last year, year to date compared to last year, and then our rolling 12.
• 22:21
  SPEAKER_00: In your operating expenses, it's really easy to go line by line by line by line in the income statement.
• 22:27
  SPEAKER_00: I don't want you to do that.
• 22:28
  SPEAKER_00: I want you to look at your top five operating expenses and ask yourself one question.
• 22:32
  SPEAKER_00: Does my spending align with my goals?
• 22:34
  SPEAKER_00: Like where am I taking this business?
• 22:36
  SPEAKER_00: And is my spending aligned with where I want this business to go?
• 22:40
  SPEAKER_00: Um, then we're gonna do the same thing for net income this month, year to date, rolling 12.
• 22:46
  SPEAKER_00: What's the trends in my profit and what's causing me to earn money and lose money?
• 22:52
  SPEAKER_00: We're gonna do the same thing for cash.
• 22:53
  SPEAKER_00: We're gonna look at what is my cash balance today and what has been my cash trends over the last 12 months.
• 22:59
  SPEAKER_00: I can keep on going through the balance sheet as well.
• 23:01
  SPEAKER_02: No, but that's really good because you talk about revenue than COGS, which you ultimately get to gross margin, and you will eventually get to see all right, have I had have I had margin compression or have I had margin expansion, right?
• 23:14
  SPEAKER_02: Which then changes your break-even based on your operating expenses, right?
• 23:18
  SPEAKER_02: And then if you've had margin compression, okay, tell me tell me what has happened between one period and another.
• 23:24
  SPEAKER_02: Oh, well, I changed vendors.
• 23:26
  SPEAKER_02: That vendor's a little bit more expensive.
• 23:28
  SPEAKER_02: Okay, well, what did you get in return for that margin compression?
• 23:31
  SPEAKER_02: Well, they deliver materials 10 days earlier.
• 23:33
  SPEAKER_02: Like that, I'm just giving you an example of how it's the numbers, guys, tell a story, and there's trade-offs to every business decision, and it usually can be reflected in the income statement.
• 23:47
  SPEAKER_00: Almost always.
• 23:47
  SPEAKER_00: If it's not on the income statement, it's on the balance sheet.
• 23:49
  SPEAKER_02: So on the balance sheet.
• 23:50
  SPEAKER_02: Yeah.
• 23:51
  SPEAKER_00: Everything, your whole year numbers and tell the story.
• 23:53
  SPEAKER_00: A lot of times business owners hide money on the balance sheet.
• 23:56
  SPEAKER_00: So on the balance sheet, we have inventory, uh, accounts receivable, uh, and our our debt.
• 24:02
  SPEAKER_00: Money hides there.
• 24:04
  SPEAKER_00: Did you purchase inventory and it's uh sitting on the on the balance sheet?
• 24:07
  SPEAKER_00: That's a huge cash impact, but the but the actual worth of the inventory is sitting on your balance sheet.
• 24:13
  SPEAKER_00: Do you have vendors who owe or customers who owe you money?
• 24:17
  SPEAKER_00: That's going to sit on the balance sheet as as as money coming that's flowing to you.
• 24:23
  SPEAKER_00: Um, a lot of business owners have debt, especially in this industry.
• 24:27
  SPEAKER_00: They have debt and it takes a lot of cash to service the interest portion of that debt.
• 24:33
  SPEAKER_00: I'm not saying that's a bad thing.
• 24:34
  SPEAKER_00: To get debt is a gift to businesses.
• 24:37
  SPEAKER_00: But when we say, hey, you keep telling me that I'm profitable, but where's all my cash?
• 24:41
  SPEAKER_00: I promise you it's hiding inventory receivable.
• 24:46
  SPEAKER_02: Well, well, think of it.
• 24:46
  SPEAKER_02: Let's go, let's go back to that example of that client you talked to who had that CPA that said pay pay a bunch of taxes.
• 24:53
  SPEAKER_02: If you took a balance sheet from one period to the balance sheet three months later, let's say, they spent a ton on inventory, which is an asset.
• 25:02
  SPEAKER_02: They probably spent some on equipment, which is an asset.
• 25:05
  SPEAKER_02: They spent some in taxes, which in the form of distributions, right?
• 25:09
  SPEAKER_02: And that that is a use of cash, and you can still be incredibly profitable and have no cash.
• 25:15
  SPEAKER_02: Cash does not equal profit.
• 25:16
  SPEAKER_02: I mean, profit does not equal cash, and that's essentially cash.
• 25:20
  SPEAKER_02: Yeah.
• 25:20
  SPEAKER_00: Exactly.
• 25:21
  SPEAKER_00: Exactly.
• 25:22
  SPEAKER_00: So those are the KPIs that I want to look at for a bookkeeping client.
• 25:25
  SPEAKER_00: So I I know I gave you a lot there, but I wanted to walk you through um kind of the version of a snapshot that we send to every single one of our bookkeeping clients.
• 25:33
  SPEAKER_00: Every single bookkeeping client received their financials every single month in that format.
• 25:40
  SPEAKER_00: And that way that business owner can say, what happened?
• 25:43
  SPEAKER_00: Why did it happen?
• 25:44
  SPEAKER_00: And what am I gonna do about it?
• 25:46
  SPEAKER_00: So I picked a new vendor, they're twice as expensive, but it's helping me with my inventory.
• 25:50
  SPEAKER_00: Great.
• 25:50
  SPEAKER_00: I there's no action for me.
• 25:51
  SPEAKER_00: I'm gonna, I'm gonna test out this new vendor for 90 days and make sure it's worth the money.
• 25:55
  SPEAKER_00: There's the action.
• 25:56
  SPEAKER_00: For our CFO clients, this is where KPIs have the opportunity to be customized.
• 26:01
  SPEAKER_00: Because as you look to the future, you are sharing your goals where you want to take this business.
• 26:07
  SPEAKER_00: We are completing a complete SWOT analysis, strengths, weaknesses, opportunities, threats.
• 26:12
  SPEAKER_00: And we're setting the one year budget.
• 26:15
  SPEAKER_00: Now, from there, we're gonna look at what actually happened in the business compared to the budget, what we thought would happen in the business.
• 26:22
  SPEAKER_00: And then there's a KPI for each of those, which projects were uh profitable.
• 26:27
  SPEAKER_00: Why was it profitable?
• 26:28
  SPEAKER_00: Which team members are revenue generating?
• 26:31
  SPEAKER_00: Um what months are revenue generating?
• 26:35
  SPEAKER_00: Like what pieces of inventory, what equipment purchases are we having a return of investment on?
• 26:41
  SPEAKER_00: Those KPIs are set based on your SWOT analysis and your budget.
• 26:46
  SPEAKER_02: Yeah, and that makes sense.
• 26:48
  SPEAKER_02: And in in the construction space, um, you hit the nail on the head with, for example, equipment.
• 26:53
  SPEAKER_02: Like, I mean, equipment has to continue to run.
• 26:55
  SPEAKER_02: We see a lot uh with some of our businesses who who go buy equipment because they didn't budget, they anticipated more work than they thought they were gonna get.
• 27:02
  SPEAKER_02: And now you have idle equipment, which becomes more of an expense and the return on that equipment's much less.
• 27:07
  SPEAKER_02: That's just an example of something we see a lot.
• 27:10
  SPEAKER_02: Um All right.
• 27:13
  SPEAKER_02: What about tracking cash flow though?
• 27:18
  SPEAKER_02: Um, you know, what about some KPI?
• 27:20
  SPEAKER_02: Like, do you do you, you know, do you advise on like cash conversion cycles?
• 27:25
  SPEAKER_02: Do you uh do you help your customers rethink their payment terms with their vendors?
• 27:32
  SPEAKER_02: I mean, tell tell me a little bit about that because that that tends to me, for me, and and and running a business tends to be one of the most challenging, but one of the most important things to be tracking.
• 27:43
  SPEAKER_00: Yeah, absolutely.
• 27:44
  SPEAKER_00: So with our CFO level clients, absolutely.
• 27:47
  SPEAKER_00: Um, we are gonna walk through those those exercises.
• 27:51
  SPEAKER_00: And as a business owner, you can create your kind of schedule for evaluation.
• 27:56
  SPEAKER_00: Um, that's why I constantly am asking, and what are you going to do about it?
• 28:01
  SPEAKER_00: So if you see that your cash flow is declining over time, your money team should be able to explain to you what happened and why did it happen.
• 28:10
  SPEAKER_00: And then you get to decide what you're going to do about it.
• 28:12
  SPEAKER_00: If your cash flow is decreasing over time, then maybe we need to shop vendors.
• 28:16
  SPEAKER_00: And then your administration assistant, your operations assistant, they can go help you then shop those vendors to be able to support you.
• 28:24
  SPEAKER_00: But you as the CEO need to be able to take that action from those numbers.
• 28:30
  SPEAKER_02: Danielle, do you do you work with clients mainly in the Midwest?
• 28:34
  SPEAKER_02: Do you work with clients all across the country?
• 28:36
  SPEAKER_02: Sort of what tell me a little bit about your business model and and what you guys are trying to achieve.
• 28:41
  SPEAKER_00: So we've been virtual uh since before.
• 28:43
  SPEAKER_00: Virtual was cool.
• 28:45
  SPEAKER_00: We uh uh 11 years ago, um, we we uh started a practice where we can help everybody in the country.
• 28:52
  SPEAKER_00: So as long as you're in the US, uh we are able to uh work with every client in the US.
• 28:57
  SPEAKER_02: And what kinds of companies do you kind of give me your ideal customer profile in terms of industry, in terms of size, uh, or or is it kind of we want to help everyone?
• 29:08
  SPEAKER_00: So um we really have the tools and the team to be able to help across industries.
• 29:14
  SPEAKER_00: Um, our specialty is helping business owners understand their numbers to be able to make business decisions.
• 29:20
  SPEAKER_00: So if you are looking for tax strategies that you're gonna pay nothing in taxes, you're running your business as a tax write-off, we aren't gonna be the firm for you.
• 29:30
  SPEAKER_00: We're not gonna tolerate personal expenses running through the business.
• 29:33
  SPEAKER_00: We're gonna hold you accountable.
• 29:34
  SPEAKER_00: Like we're kind of a no BS firm.
• 29:37
  SPEAKER_00: Um, but if you want to build a business of value, meaning that you want to do things the right way.
• 29:43
  SPEAKER_00: So when you go to sell your business in five years, 10 years, you have a business that's worth selling.
• 29:48
  SPEAKER_02: Oh when you there, there, there that's a whole nother podcast in terms of getting, yeah, but yeah.
• 29:54
  SPEAKER_02: Sorry, I didn't mean to.
• 29:55
  SPEAKER_00: We can talk a long time to that.
• 29:56
  SPEAKER_00: Yeah, but however, you have to have a business that is profitable, that is well ran, that has clean and clear numbers.
• 30:02
  SPEAKER_00: Um, if you want to build a business that um you have the uh infrastructure to be able to go and get a line of credit or a loan or to buy the vacation home for your family, you need financial statements that are clean and clear, um, and where you're being held accountable to a higher standard.
• 30:21
  SPEAKER_00: And so that's who we're we're working with are the people who want to build a business of value, um, that want to be held accountable, that want to do things um with a level of support uh where we can be there to celebrate the good times with you.
• 30:35
  SPEAKER_00: Uh, when things aren't going well, we're often the first call for our clients to say, hey, the hell happened.
• 30:40
  SPEAKER_00: I need help getting through this.
• 30:42
  SPEAKER_00: Uh, I'm you know, I'm not gonna make payroll on Monday.
• 30:45
  SPEAKER_00: What do I do?
• 30:46
  SPEAKER_00: Um, we're gonna help with those strategies.
• 30:48
  SPEAKER_00: So we're that that team.
• 30:50
  SPEAKER_00: So anybody who's looking for that level of human-to-human support.
• 30:54
  SPEAKER_02: Yeah.
• 30:54
  SPEAKER_02: One last question for you, Danielle.
• 30:56
  SPEAKER_02: Um, I know we're running on time, but you mentioned in the very beginning of the podcast that you also help with the technology stack in terms of financial reporting and and and um and how they integrate the numbers and how do they how do they work more productively?
• 31:09
  SPEAKER_02: Talk to me real quick, and this is not the intent of the whole podcast, but I'm just interested of the evolution of technology integrated into the financial back office over the last few years and and what are the kind of most important things to be focusing on.
• 31:24
  SPEAKER_00: So um I'm gonna say this comment from somebody who does use AI, love AI in pieces of my my business.
• 31:32
  SPEAKER_00: I'm a technology user.
• 31:34
  SPEAKER_00: Um, however, QuickBooks is still the most superior financial accounting software we have in small business.
• 31:44
  SPEAKER_00: Um, we use QuickBooks Online for almost every single one of our clients.
• 31:47
  SPEAKER_00: It's the most affordable outside of Net Suite for this industry.
• 31:52
  SPEAKER_00: Um however, QuickBooks does not yell at you, right?
• 31:57
  SPEAKER_00: Like there's no big red blinking light bulbs when you are doing the accounting wrong.
• 32:03
  SPEAKER_00: Um, and this creates havoc for business owners who you know, they pick out a new POS system.
• 32:08
  SPEAKER_00: They're like, oh, it syncs with QuickBooks.
• 32:10
  SPEAKER_00: I'm gonna turn on this thing, I'm gonna create some rules.
• 32:13
  SPEAKER_00: Oh, look, I just got QuickBooks to do accounting for me.
• 32:17
  SPEAKER_00: Magic.
• 32:18
  SPEAKER_00: There's no red lights.
• 32:20
  SPEAKER_00: Okay.
• 32:20
  SPEAKER_01: Yeah.
• 32:21
  SPEAKER_00: And then you export those financial statements and you throw them into Chat GPT and you say, analyze my financials, act as my CFO, tell me everything I need to know about my business.
• 32:29
  SPEAKER_01: Yeah.
• 32:29
  SPEAKER_00: And ChatGPT wants to please you.
• 32:31
  SPEAKER_00: Even if you set the requirements to not please you, your bookkeeping's wrong.
• 32:35
  SPEAKER_02: I feel like a hero anytime I'm in Chat GPT.
• 32:39
  SPEAKER_00: Like, thank you for making me feel so good.
• 32:42
  SPEAKER_00: Um and and so it's not telling you red flag.
• 32:46
  SPEAKER_00: It's raw.
• 32:47
  SPEAKER_00: It's wrong.
• 32:48
  SPEAKER_00: So in the in our technology stack, we are very careful about what we use to integrate with QuickBooks.
• 32:57
  SPEAKER_00: Um, we are using the tried and true long-term accounting strategies to make sure that everything reconciles, that everything is accurate.
• 33:06
  SPEAKER_00: And then once you have that, um, we are using our tools as human to human, um, using our experience to help our clients see the snapshot.
• 33:16
  SPEAKER_00: Um, we lead with education.
• 33:18
  SPEAKER_00: So every single one of our snapshots has a podcast episode, coaching questions, and tools to be able to, as a business owner, use those numbers.
• 33:26
  SPEAKER_00: Chat GBT cannot replace you as a CEO.
• 33:29
  SPEAKER_00: It cannot do the financial analysis for you.
• 33:32
  SPEAKER_00: There's a tool in the toolbox, but it cannot do it for you.
• 33:34
  SPEAKER_00: Um, so yes, we're using uh technology and tools, um, but we're really encouraging people to say, hey, book a call, have a conversation with us, share, share, share with us what's happening.
• 33:46
  SPEAKER_00: Uh, and let's allow each other to connect human to human um and then use the tools for what they are, a tool.
• 33:53
  SPEAKER_02: There's just nothing, nothing, at least in for the foreseeable future, is going to replace what's been working forever, you know, in terms of accounting, right?
• 34:04
  SPEAKER_02: And nothing is going to replace the operational knowledge uh that needs to be had in order to advise appropriately for the future, right?
• 34:13
  SPEAKER_02: So um, Danielle, how do you know if we have a viewer, listener right now that's like Kickstart is the place Danielle's a 10 out of 10, she's amazing.
• 34:24
  SPEAKER_02: How do they get in touch with you?
• 34:26
  SPEAKER_00: Kickstart at County Inc.
• 34:27
  SPEAKER_00: com.
• 34:28
  SPEAKER_00: Um, you can book a call uh with my team there.
• 34:30
  SPEAKER_00: And uh, you know, even if you're not sharp, like whatever your situation is, uh, we have a really amazing team who uh approaches this with no judgment.
• 34:40
  SPEAKER_00: Um, really kind, respectful team uh who is gonna take this off of your plate and give you uh the support that you need uh so that you can go back to doing what you love.
• 34:50
  SPEAKER_00: Go go be in your zone of genius.
• 34:51
  SPEAKER_00: So kickstartaccountinginc.com, come book a claw.
• 34:54
  SPEAKER_02: Awesome.
• 34:54
  SPEAKER_02: Danielle, you've done this before.
• 34:56
  SPEAKER_02: You're awesome.
• 34:58
  SPEAKER_00: Done this before.
• 34:58
  SPEAKER_02: Yeah, you did this.
• 34:59
  SPEAKER_02: This is not your first rodeo.
• 35:00
  SPEAKER_02: You've done this before.
• 35:01
  SPEAKER_02: It's not.
• 35:01
  SPEAKER_02: You were you were so awesome.
• 35:03
  SPEAKER_02: That's uh Danielle Hayden, owner of Kickstart Accounting Inc.
• 35:08
  SPEAKER_02: I am so happy you were on the call today on this podcast.
• 35:12
  SPEAKER_02: I really appreciate your time.
• 35:13
  SPEAKER_02: I learned a few things.
• 35:14
  SPEAKER_02: The energy was really awesome.
• 35:16
  SPEAKER_02: And uh, this is us signing off.
• 35:17
  SPEAKER_02: Thanks again.