Latest / Marci talks money (and life) / Let’s Talk About Small Business and Money with Thomas Wu
Transcript
- Marci (00:15) Hello, I am MoneyMarci. Welcome. I'm thrilled to welcome today's guest, Thomas Wu. Thomas is a Canadian entrepreneur, marketing professional, and podcast host. He graduated from Boston University with a BA in international relations and co founded Paradigm Communications as a student run marketing company. After returning to Canada, he turned around Flora Seda International Inc. and later became co-founder and president of Koyoti Inc., a brand strategy and marketing agency that supports small businesses. The Koyoti Small Business Podcast is a resource library dedicated to providing information for and spotlighting small businesses. It features interviews with entrepreneurs, marketing experts, and industry leaders as well as discussions on branding, marketing strategies, and business challenges. Thomas often appears as a host and guest, sharing his own journey and offering insights for aspiring and established small business owners. Welcome Thomas. Thomas (01:27) Thank you, thank you. Happy to be here. Marci (01:30) So let me ask, how did you get here? Your degree was in international relations, you ended up in marketing and then you've got a podcast for small businesses. Thomas (01:43) So I come from a long line of small business owners. My grandparents, my aunts, uncles, my parents, all with their respective small businesses. so that's always been in my lifeblood. Going into university, I always knew I wanted to get into marketing. But my sister at the time was doing her MBA and she said her MBA because she did commerce for undergrad, so business degree in undergrad. And she said first year of MBA was her four year of her undergrad degree. And so I didn't want to waste my time and money doing something that I intended to at the time to get my MBA. So I went into international relations. But what happened was I ended up joining the American Marketing Association and ended up becoming the president of the association. And so I went to the dean and I said, I can't lead this group. I have no idea what I'm talking about. And so the dean asked me, What do you need? And I said, Can you sign me into some of the marketing classes? He goes, Which ones do you want? And I said, All of them. So I ended up taking all the four hundred level marketing classes without doing any of the prerequisites. And that's how I started Marci (02:50) And that became your podcast how? Thomas (02:52) The podcast really just through my years, you know, every single despite getting some clients with big companies, every company that I've worked for and worked with have all been small businesses. And one thing that I've learned through that time was that small business owners are too often piecemealed information and constantly being sold to. So it makes it difficult to really know what, if the information that you're getting is actually good information. Marci (03:31) Yeah, that's true. And small businesses are I don't wanna say they're unique because there's so many out there, but they don't operate in the way that larger businesses operate and people don't always don't always realize that. Starting with cash flow. you know, how do you manage dealing with the cash flow that you're not necessarily getting paid as regularly? The flow isn't as even as if you're an employee. Thomas (04:00) For you know, it's kinda like running second household, right? And you have money coming in and money going out. But for small business owners, at the at least from my point of view, is really just to get a handle on what are the actual expenses that you need to that you need to have and to bring down that monthly cost as much as you can. So that, you know, if you have good times when it comes to revenue, that yeah, you're able to go and splurge a little bit. Go and, you know, get an extra microphone or buy a new computer or what have you. But at the same time, that's not going to burden you when there are bad times, when things get tough and you have to tighten your belt. Marci (04:57) Right. And I know you've seen a lot because you've worked with small business owners, about owners that have been successful or owners that have had challenges and that's the end of the business or they've been able to turn it around. do you have some stories maybe you could share with us? Thomas (05:15) Yeah. There was an, you know, quote unquote uncle of mine, somebody that was close to the family that was also a business owner, and he was in his younger years immensely successful to a point where him and a few of his friends went and bought a four star hotel. That kind of successful. But he shared with me they got their success too early. And they were in their late 20s, early 30s when all that success came in, and it seemed like it was never going to end. But cycles, you know, as they do, they trend up, they trend down, and they didn't realize until it was too late and they were spending left, right, and center that they couldn't afford that lifestyle anymore. And quite honestly, if they had been more conservative he would still be well off. He would still be very comfortable. Instead, he's renting now a one bedroom apartment and trying to hang on to his company. Marci (06:26) Okay, do you have some positive ones? Thomas (06:29) So I mean that's an extreme, right? That's an extreme. There are others where another uncle of mine, and you know, quote unquote uncle, he was very conservative. He he always I guess the equivalent of buying from let's see, I guess the American equivalent would be buying from you know maybe Old Navy. But all of his dress shirts came from that type of a store. It didn't matter how successful he became. But his dress shirts were all very, very frugal. He didn't spend, he was comfortable. He started making money, he would invest that money, he bought property, and he invested in stocks, he invested in his company, but all the money that was that was generated, he made sure that most of it went back into the into investments and for the future. And so what ended up happening was when it came down and when it came time for his company, the industry that he was in was sunsetting, it didn't bother him because he had other revenues that was helping him. Marci (07:52) And that's important for small business owners to be aware of that there's gonna be that ebb and flow. Thomas (07:59) Yeah. And also another one of my uncles. I know we had a lot of uncles growing up. but he said to me that the business that you start is very unlikely to be the same business that you're in 20 years later. So if you're not able to pivot and if you are in the same business that you were 20 years later, be careful, watch out. You might be in trouble. Marci (08:30) That is true. That is so true. I I look at people and the businesses they're in and there are some people who they can do the same work for their whole career, but small business owners, you know, the majority of them end up pivoting in one in one way or another, unless they're a small service business, you know, my accounting friends that have their own business, my attorney friends that have their own business, they don't need to pivot. But if you are creating something or doing a different type of service. The market changes, the competition changes and that pivot is just so important. Thomas (09:09) Absolutely. Yeah. I mean, yeah, again, like you're saying, it is different if you're, for example, if you're an accountant or a lawyer, because you'll be lawyering all your life, you'll be accounting you'll be an accountant all your life. But even for those, I mean even for those kinds of businesses, right? Your business when you first start might not be the same exactly the same business that you end up with. What you're doing might not be exactly what you were and what you started out the business to be. You might be a single accountant, doing books for other people, but as your business grows, you might be running a firm. And so the business has thusly changed. And if you're not constantly chasing clients and building client base, then your client base is going to shrink if you keep relying on that same pool of clients. Marci (10:01) Not only that, technology changes the job that I do, you know, even within the accounting work I was doing when I started practicing versus what I do now because of technology. Some things have shifted that the client prepares them, some things are done automatically by the computer. I'm not preparing 1040's by hand with a pencil and a calculator anymore. Haven't done that for decades. And you've got to pivot. Even if you stay in the same career, you've gotta be able to make that adjustments for the world changing around you. Thomas (10:36) Hundred percent. Marci (10:37) Now, you've got all these uncles and you've got all these entrepreneurs in your family. Did you talk about money growing up? Thomas (10:46) I saw money growing up, coming and going. Not just within my household, but like around like I was saying, with all these uncles, with all these aunts and aunts and aunts and uncles and you know, family friends and stuff like that. within our family, we went from we were renting a an apartment like barely scraping by to being able to buy a very old used vehicle to be able to, you know, my parents being able to afford a house, my education, etc. etc. to the point where again we lost the house. we had to sell everything and had to start over again. So I've seen that cycle and I've learned a lot about, the way that I've learned about money is watching it, not just within my family, but within how other people, how other people have used their money. And so that has shaped me for better or for worse, the way that I view money. Yeah. Marci (11:56) Yeah, I can I can imagine. When we talk about talking about money, it's also seeing what happens around you and then of course interpreting it as you will from your knowledge base at that point in time or your knowledge base now as you look back on that and how, how what you witnessed and interpreted back then impacts the decisions as you make them now. Thomas (12:19) Mm-hmm. Absolutely. Marci (12:22) And I wanna kinda go into pricing because I know obviously in marketing you're a service industry, but you also did importing and wholesaling for a while. So pricing in both those areas of industry are very different how you determine pricing. And of course, any small business, how you determine pricing impacts at the end whether you are profitable or you're sitting in a loss because of the parts of pricing people don't necessarily think about when they are determining their price levels. Thomas (12:58) Is there something specific you'd like to ask about? Marci (13:01) Yeah, I'd like your thoughts on how you price things, how you position yourself and I know you're in marketing, so I assume to some extent you help clients figure out their own pricing. Thomas (13:15) So my answer to almost everything is almost always it depends. And so it depends on who you're going for, who you're targeting, what your market is and where you're positioning yourself and if that's the right position for your client base. As an example, if you were if your store if you have a store in the slums of whatever neighborhood is in your city and you want to open up a high end restaurant, you know, you're gonna price yourself out of that neighborhood. And so people aren't gonna come. so but there's different there's different ways to frame it. So if you're going to be a low margin, if you're gonna be a low margin supplier, then you need to be a volume supplier. Because you need to make that make it up make it up somehow, right? If you're even talking about realtors, in Toronto at least, the average is two and a half percent for the selling agent and two and a half percent for the buying agent. Well, some agents are selling and listing their listing properties at five hundred dollars per property. Well, how much service are you getting? Because they're gonna have to make up that difference. Say for example, you have a million dollar property and you're making two and a half percent, versus if you're listing it for five hundred dollars. Well, how do they get to that same amount? They need to list a lot more properties. So same thing is if you are a selling a widget and you're selling it for low margin, well, you better have a lot more, you better be selling a lot more widgets in order to be able to make up the amount of money that you need to pay your rent, to put food on your plate, and put clothes on your back. Now on the flip side, you can position yourself on as a very high end product. And so, yes, as a very high end product, you can sell fewer products, but at the same time, then your brand and your product needs to reflect the value, the perceived value for the product that you are selling. Marci (15:46) Right, right. I I know a lot of people in the service industry it becomes a matter of trying to determine what is your cost because you don't have necessarily the product cost, the get it to market cost, because now what you're selling is yourself, your knowledge. I mean, yes, you need a roof over your head and you need probably a computer, maybe some specialized software depending on the industry. But you know, it becomes a much different thing because now all you're selling, all you're selling as if as if that's not significant is yourself, your knowledge, your experience and the things that come with it. And that becomes sometimes a more difficult thing to try and figure out a good pricing on it. Thomas (16:37) There's a few different ways to look at it. Again, where do you want to position yourself? The other way that you that can be that you can look at pricing, but this is this might be very specific to photographers, because a lot of photographers will start off, you know what, I'm gonna do this for this do this gig for free or do that shoot for free, and then you know, I'll do it for coffee, and then I'll do it for ten bucks, and then I'll do it for a hundred dollars. But then as your client base grows and you have the finite amount of time. All right. Now how much is that time worth for you? There's a lineup of people, you know, that are that want your services. All of a sudden you can go, you know what? I'm charging a thousand dollars for a shoot. I'm charging ten thousand dollars for a shoot. I'm charging a hundred thousand dollars for a shoot. Now at that point, obviously you're a superstar that's doing you know magazine covers for the big fashion magazines or what have you but you know what I'm saying so it depends on how where you are depends on, you know, there if you're looking at a baker that makes cakes, some cakes are what, thirty, forty dollars a cake, some are several hundred dollars, thousands of dollars, right? Again, it becomes yes, there's the amount of ingredients that are going into each cake and with the type of ingredient, the quality of the ingredient that's going into each cake, but at the same time there's the time and the experience and the brand that goes behind that baker. Marci (18:08) And as you get bigger and bigger it's goes to supply and demand. You've got all these people wanting you and you can get those higher prices just because if you say no, the next guy will say yes and I don't have to worry about that. Thomas (18:22) Exactly. Marci (18:23) Now, on your podcast you talk to a lot of different business owners or consultants for businesses and things like that. What kind of interesting areas have you gone into that you didn't think would have been things that would necessarily fit your podcast or that you didn't think a guest would necessarily until you talked to them ahead of time, said, wow, this really would bring value to those small business owners that are listening to my podcast. Thomas (18:53) There's one that really comes to mind. Like I started the podcast again as a resource library for small business owners. And one thing that I wanted to be able to do was also to be able to provide a spotlight for small business owners so that a few more people might be able to hear their story, be inspired and what have you. But what I didn't expect was this one guest that was a recovering alcoholic and also a drug addict. a recovering drug addict. And his story, you know, our the podcast length usually for us is usually about forty-five minutes to an hour. I let him go on for about two and a half hours because it's very interesting and I think that it would be helpful to people who are in that space that you know what, I'm I might have a problem or I'm ready to find help. ~ So I let go on and we had our conversation ended up to be about two and a half hours and that was entirely unexpected. Marci (19:55) Did that show up in the response? Did you hear from people that that that episode really touched them, related to them, inspired them? Thomas (20:06) There are people who reached out and I was very fortunate to be able to connect with them and I appreciate their efforts. But yeah, there ,it was definitely it was definitely an episode that connected with people differently. Marci (20:27) It's important as podcasters to realize that sometimes what we're saying is not what someone's going to come away with and that of course they're not going to necessarily respond to us and say, Hey, that podcast episode with this guest was a turning point for me. But ~ to be able to take that flexibly and say, you know what, this wasn't what I expected. I'm just gonna keep recording and keep going with it and see where it goes. It's amazing the guests that will share themselves with us so that we can share their story to other people. Thomas (21:06) Hundred percent. And that's the nice thing about doing a podcast is because it's mine, I can do what I want with it. As opposed to if say for example I very humbly get invited to do a T V show that is an hour long, in which case then you are you're heavily structured into you know what, you have to have ten minute segments because there's commercials and what have you. I can't let it go. For example, if I wanted to put an ad into my episode, I can find a space where there is a clean break where we can go and where we're going into a different topic. Whereas if I am doing a TV show or a radio show, I'd have to cut that. And so the connection is going to be different. And so I'm very fortunate to have found this medium. And because it's allowed me to have very interesting conversations and I've been able to have those conversations freely. And hopefully it's able to help people because of that. Marci (22:14) I've listened to your podcast and it's cool the amount of different people you come and the things that you talk about that you're able to share with people. So I really appreciate it. I recommend people check it out. Can we have the title here? Thomas (22:31) It's the Koyoti Small Business Podcast. Marci (22:33) It's something to check out. Go look at the library and see what episodes or speakers might be interesting to you and fit with what you're doing as a small business owner or things that you're considering doing in the future. I have a question I'm asking everyone this season. What is wealth to you? Thomas (22:55) Great question. Wealth to me is having the flexibility to do what I need. To be able to afford if I need, for example, to take time off to spend with my family. If I need, for example, to buy a piece of equipment that that I'm going to need for the business or for the house or for you know, what have you, that I'm going to be comfortable being able to do it as opposed to, you know what, I can't this is the one that I really need, but I can't afford it. I'm gonna have to buy and then being or needing to hum and ha about every decision that I'm making about if I'm able to take that day off or that week off or what have you. Marci (23:45) Makes sense. talking to small business owners as you do, do you think there's a financial literacy aspect that either all the successful ones have or that most of them are aware they need to work on and continue? Does that come up in your conversations? Thomas (24:06) Well, I'm in marketing so I don't talk about money very much. but yeah. Marci (24:09) Well, marketing is sales is it's all comes down to money. they wanna market so they can make more money. Thomas (24:16) In terms of financial literacy, I think most companies that I've come across are at a point where they realize that they need more coming in than that they are spending. All right. But that's about the extent for many small business owners. Most small business owners don't get into business because they're good with numbers. They get into it because they're good at plumbing. They're good at fixing cars. They're good at mowing the lawn, they're great at singing, they're good at, you know, what have you. And they're not doing it necessarily because they have that financial literacy to back it up. And so that education is different for, the education journey is different for each person. Some people are stuck there. Some people you start figuring out what are COGS, right? Cost of Goods Sold, et cetera. What's margin? What's you know earnings after taxes, EBIT or whatever that's see, I'm still learning. I don't have all the terms. But eventually you start learning some of these things and you start understanding which numbers are important to your business. And I think that that journey needs to happen but for each person it's going to happen different. Marci (25:47) Just for reference because I like to explain terms you may not be familiar with, EBIT is Earnings Before Interest and Taxes, and it basically refers to the operational income expense of a business rather than the extraneous items like interest and taxes. Makes sense and of course yes you go into a business to be the plumber, the singer, the whatever and either you figure out how to manage the financial aspects of your business or you find a way to hire the right person or people to help you manage that financial aspect of your business or you hope it works out until you do one of those other two things. Thomas (26:33) Right. I mean how many we've seen we've we watched the news and there how many singers, actors, athletes, they hire people to manage their business and they get scammed completely, right? ~ And it happens because you don't go into business being the financial expert. Marci (26:51) Right. You have to know what your expertise is and then you have to hire trusted people and you have to make sure that you understand enough to know when you're being scammed or taken advantage of. Thomas (27:04) Hundred percent. Marci (27:05) Well, Thomas, do you have anything you want to mention that maybe we haven't covered? Thomas (27:11) In terms of financials, one thing that happened early in my career when I was with Flora Seda I was looking at the books and I was asked what do you see as a problems here? I was very young. I was only about twenty-three at the time when I started looking at this. And I looked at it and looked at it and I was like, everything looks good to me. The thing is, you don't know what you don't know and you don't even know enough to start asking questions. And so we all have to start from somewhere. And that financial, the journey for financial literacy and financial education doesn't matter where you're starting. We all started, we all started from somewhere. We all started from zero at some point. Some people have started in high school or some people started you were talking about money conversations within the home growing up. So there is no shame in learning now. There is no shame in getting started now. It's not about finding out where you are, what your shortcomings are. It's simply about how to better understand your business and how to be able to better understand how to move forward with your business and how to help it grow and thrive. Marci (28:43) Good points, Thomas, thank you so much for being my guest today. We appreciate you taking the time to join us here. Thomas (28:50) Thank you for having us. Hopefully I haven't bored your guests to tears. Appreciate it. Thank you. Marci (28:59) I am sure they found you as interesting as I did. And to my listeners, I will be sharing a link to Thomas's information in the show notes and his podcast. Please check it out. There's a lot of interesting information. And don't forget to subscribe, leave us a review, and stay tuned. I'll see you next time. This has been MoneyMarci on Marci Talks Money (and Life). You got this. See ya.