SPEAKER_02 0:00

And something I something I believe is that if you are not having human resources problem, you are not growing fast enough. You know, because to grow you need people. People are going too long and too fail, but like we find out we're really bad at hiring, recruiting. So we just brought somebody that can do that, you know. You don't have to do everything, you don't have to deal with everything. If if you want to grow, you need to delegate, and and to delegate, you need to be able to spend money.

SPEAKER_01 0:35

Jet Harrow Business Hendor. Let's get into it.

SPEAKER_02 0:40

What's up, guys? Welcome back. Uh it's good to have you back. It's excited to do another episode. Thank you. Thank you for tuning in. My name is Jet.

SPEAKER_01 0:51

And I'm Harrow.

SPEAKER_02 0:53

We are two business partners just doing business and talking about business. And we want to be able to inspire uh business owners and share our share our journey.

SPEAKER_01 1:05

Give you a little free advisory.

SPEAKER_02 1:07

Yes, give you some free advisory and then we get to it. And we we like to make this fun entertaining and we like to make it as real as possible. And yeah, so we'll just make it real. Like if we are having a normal conversation, Hero, tell me about your week. What has been the highlight of your week?

SPEAKER_01 1:26

You know what? I will tell you about that. Thanks for asking. Yes. The highlight of my week is here.

SPEAKER_02 1:32

Podcast Podcast. You love podcast day?

SPEAKER_01 1:34

Hey, it was fun. It's been it's so much fun to sit here and just chat about business. It is. And like we used to do this like without being recorded, but like that's kind of what led us here, I think.

unknown 1:44

Yeah.

SPEAKER_01 1:44

When we first met, we would talk for hours. Yeah.

SPEAKER_02 1:47

Should we should we have more real conversation about our business here? This podcast.

SPEAKER_01 1:52

If they're lucky.

SPEAKER_02 1:54

Yes. Let us know if you really want us to have some real conversation about our business and some actually the decision making stuff. I think next week. Why don't we do this? Now a conversation we have is we are planning our next measure and acquisition. I feel we gotta do next podcast about that. Just talk about just see people our thinking process. Yes, into acquiring, and then I think people can learn a lot uh from that. So awesome. Hey, I love that you love these podcast days, guys. Can you drop in the comment? I love that hero love podcast day. I think that would be cool. Let her know, give her a shout out, and yeah, we're I really enjoyed this. Um, you know, both of us are really passionate about this. So please, we appreciate all your support.

SPEAKER_01 2:48

Okay, so what about you?

SPEAKER_02 2:50

Man, the highlight of this week has been uh my mom morning test. Have I told you, have I told you how my mom sent me every morning a test? A morning test. Okay, so and I don't know why she gave me a morning text yesterday though. What did she say?

SPEAKER_01 3:09

She thanked me for giving sending her more clients.

SPEAKER_02 3:12

Was that at the morning? Yeah. That's awesome. That's awesome. Hey, my mom is great at morning test, and that that is something I want to start doing whenever I have a family with my kids. And my mom is great at it. Like every morning I get a test.

SPEAKER_01 3:27

And even Okay, and and tell me what it said.

SPEAKER_02 3:29

Okay, so let me read you the. It has been for the last five years. So let me here translate what she sent to me on Monday. And Monday just hit the spot because Monday I was kind of just, man, a week, I had a long weekend. And it's really talk about what we're doing. So I'm going to tell you what she said to me. I'm going to read you all what she said to me, and then we can digest through this. And I just say I just love the support system I have with my mom and my brother and all of that fun stuff. It's just awesome.

SPEAKER_01 4:12

Yeah, family is important for sure.

SPEAKER_02 4:14

So she said on Monday morning, let's see what time, at 6 32 a.m. Well. The funny thing is this, like while I'm having breakfast and she's sitting on the sofa, she just texts me this instead of telling me, which I think may make it a little bit more meaningful. She said, Have a wonderful and blessed start of the week. May God watch over and guide us and grant us abundant health and wisdom. I love you with all the strength of my heart. Heart emoji. And then she sent another test. And this was what really kicked me. Yeah, she said, let's hear it. May God grant you the strategy to work with both quality and speed. I'm like, I needed that.

SPEAKER_01 5:04

Wow.

SPEAKER_02 5:04

And then may he teach you how to be a great leader. She said boss. She called me boss. Big kisses.

SPEAKER_01 5:17

Tell me how she said boss in Spanish. Like, what is it?

SPEAKER_02 5:19

Jefe.

SPEAKER_01 5:20

Jefe.

SPEAKER_02 5:21

She called me jefe. You know, I love that she said about be a good leader.

SPEAKER_01 5:25

Jefe reminds me of cow in English.

SPEAKER_02 5:29

So you know that in Spanish to call a female jefe is like jefa. In Americans, sometime ago, Michelle Trep and the leader called her jefa, jefe. They hate that because it sounds like the cow thing. That is kind of inappropriate.

SPEAKER_01 5:44

So but but jefe is boss. I'm gonna start calling people jefe.

SPEAKER_02 5:48

Jefe. Yeah, it's boss. Yeah. Jefe is boss. But in the female is jefa, but it sounds like a cow. It's not good. So yeah, that that was the highlight of the week. That was just a highlight because I feel right now we are in a part of the business where we are growing and we have more people and more clients to watch over. And I just trying to figure out how to be a better leader at the business, better leader in my community, at my church, and just, you know, just been praying about it and see how that goes.

SPEAKER_01 6:17

Yeah. I mean, hey, that's pretty good. And I like what she said though, because she never said like I feel like a lot of people gear everything towards like monetary, especially in the US. But I love that she was focused on like wisdom and like leadership and health. Like that just shows what kind of person she is.

SPEAKER_02 6:35

No, I agree. And then uh yeah, I feel yes, and those things are good. And I think really impressive, like she has been sending me those morning tests since since ever. And that put the standard really high.

SPEAKER_01 6:48

Like, whenever I get married, I'm like, hey, if you ain't texting me every day.

SPEAKER_02 6:53

If my girlfriend, if my girlfriend or my future wife ain't sending me a morning text every morning, she ain't cutting it.

SPEAKER_01 7:00

But but as the man, are you going to send the morning text first? Yes. Okay.

SPEAKER_02 7:04

I don't know. Maybe. Maybe, maybe. It depends who wakes up first.

SPEAKER_00 7:09

Who wakes up first.

SPEAKER_02 7:10

You know, but you know, that is something at least with my kids, I think that's so impactful, knowing like no matter what, your mom, your dad, it's always going to be the Allen. They showed that by having the consistency every morning, just to send you a morning text, even if it is the same thing. Uh, with the same thing. You know, you know what is good about that though? Uh sometimes whenever I am in the dating game, and whenever I'm like testing people and I get ghosted or something, I'm like, hey, at least I have my mom.

SPEAKER_01 7:41

Yeah, I'm still gonna get my boss message tomorrow.

SPEAKER_02 7:44

Does that mean we'll need this? You know, so that puts that puts a lot of stuff into perspective. And it's it's good to have a good uh foundation system there. So so what what are we talking today, Hop? What is the topic for today?

SPEAKER_01 7:58

Today we're going to talk about something that's very important or should be very important to business owners cash flow, yes, cash in, cash out, yes, and the flow of that.

SPEAKER_02 8:09

Cash flow is key. So uh what do we want to what do we want people to get out of this?

SPEAKER_01 8:15

So I want them to get a good understanding of just cash flow management. And we've talked about cash flow management a couple of times, but it's so important as business owners, and like you and I, we have cash flow conversations pretty much daily. I I feel like, especially right now during tax season and how busy we are. And I think definitely getting out, like understanding their business cash flow coming in and going out, um, helping them make decisions for big purchases, helping them plan for unexpected expenses because that's going to happen. And within that, unexpected expenses, unexpected delay of payments. So we see that in all different sectors. So we see that in nonprofit from like government shutdowns, like grant funding issues, things like that, went to like clients or customers who are unable to pay, or maybe big orders were lost or damaged, and then you don't get the rest of your payment. Um, a variety of things, but just making sure that your business has the cash flow management systems in place to survive those things.

SPEAKER_02 9:22

That's good, yes. And cash flow is key. And I see a lot of businesses that struggle, that struggle with it, and that struggle with it. And if you don't have a good control of your cash flow, you don't know where your expenses or your money is coming in, uh that really will affect you. So I guess uh what should be the ideal cash flow strategy for every business? For example, uh there are different phases of business. You know, we have the baby business that has been that just started one GL, two GL, then we have measured business. So let's start with the bring new business owners, uh, bring new business owners, businesses that that are new, and let's tell them how they have to set up cash flow. So now I don't know anything about business. Hope let's assume I don't know anything about business. I'm starting a business. What should be the first thing I have to do for cash flow purposes?

SPEAKER_01 10:27

Thanks for asking, Jet. So the first thing to do for cash flow purposes when you're starting a new business, and this is rule number one, is make sure that you have a business bank account that's separate from your personal account.

SPEAKER_00 10:41

Yes.

SPEAKER_01 10:42

It's okay, and actually it's um very easy if you use the same banking, like so, like US Bank, Bank of America, Chase, Wilson Bank and Trust, whichever bank that you want to use. It's actually easier if you use the same bank for your personal and business, so you can easily transfer money back and forth. But make sure that you have a business, a dedicated account to use for business that you're not interfering with your personal. That's probably one of the biggest mistakes that new businesses make. And oftentimes they make it because of education issues, like that they just don't know lack of education. And maybe they're brilliant in their field, like we have doctors and lawyers and et cetera, professionals who do this intermingling because they had no knowledge otherwise, right?

SPEAKER_02 11:25

Yes, I agree. So uh I completely agree with you. So tell me about you, your story. Uh, because I feel whenever you start a new business, people go through the thinking phase of it. And and I know Boso Fath went through a lie. Uh we opened a business bank account before we were professional, just because we were doing it on the side, and then whenever we got professionalized and went all in, the whole stuff changed. So I guess when through the business, at what stage a person, an entrepreneur, should go to the bank and and and open that business bank account and what structure. And I feel the best way to do this is just tell me how you did it, and then I will tell you how I did it.

SPEAKER_01 12:12

So, like you said, I opened the business bank account before I ever even talked to the first client, even as like a side hustle type thing.

SPEAKER_00 12:19

Yeah.

SPEAKER_01 12:19

And in my opinion, you open the business bank account before you ever make any money for your business, you know. And here's why. One, like you want to prove to the IRS eventually that it's not a hobby, yeah. Right, that you're making a revenue and income source, like to the IRS to maybe a future mortgage lender, right? Like, hey, hey, I'm fine. And you also keep track of your expenses and your revenue. So we have business owners all the time who we can't properly write off like business expenses because they use their personal card or they didn't know what card they use. So it keeps you organized, even if you don't have an accounting system like QuickBooks or Zero, et cetera, at the time. And when you're really small, you don't need that. But having that business bank account helps you stay organized. And I think it holds you accountable also to what not intermingling or commingling your business and personal expenses.

SPEAKER_02 13:14

I agree. I think like uh what I will add to that, and I think we got into the same point here, is that in a business, you want to have the right foundation and have the right organization. Because if you don't have the right foundation, the right organization at the beginning of the business, and you are proactive about it, once you start your business and your business start blowing up that small activity, you get more busy, it's going to get really harder to set that up. And this is what I advise clients, and this is and this is how I personally do. Whenever you're thinking of your side hustle, go to the bank and open a sole proprietorship bank account. Like you don't need an LL or C. Don't even think I tell people, don't open an L or C until you know you have a real business. Because an AOL or C have real cost to it. Here in Tennessee, you have to pay Julennial Report, Julenius Report, $300 every year. And sometimes, sometimes I tell people like, why are you opening an LL or C for a business that you don't know if it's going to be around for six months or more? And then now you have to deal with $300 every year, and you get into all of this administrative stuff. So if you have an idea about the business, agree with you, go and open a business bank account. Just go to your bank, to your local branch and say, hey, want to open a business bank account. I want to make it a sole proprietorship. And if you want, you can go into the IRS website and get an EIN for a sole proprietorship.

SPEAKER_01 14:42

And that's free.

SPEAKER_02 14:44

That is free. And that is free.

SPEAKER_01 14:45

And to add to that, I've ran into a couple situations where the banks did not would not open a technical business account unless you had an established entity. So like LLC or a C Corp or something like that. But what I tell my clients to do in that scenario is just open another personal account. There's no limit how many accounts you can have. Yeah. Just open another personal and just and in your mind, that is your business account.

SPEAKER_02 15:09

I agree. And then I opened this account like two years before I went into real business because I kind of wanted to check it out. I wanted to, I wanted to keep it organized. I didn't want it to commingle business and personal staff. And that account didn't have any activity. But then whenever I went full time into the business, and I said, okay, I'm doing this full-time. I don't have any other option. And I know you have a business that is going to be around for more than a year, and you already have some sales, and you know you can blow the business up in a good way. In revenue, like you know, just blow it up. Now you go and create your L L or C and open your real business bank account. And then every business staff goes through there and set up and set up all your stripe with the right identification number. So I think the first thing for cash flow management, you need to have a good foundation and don't be coming only personal funds and business funds. Always keep those cents and separate and then make sure you have that and separate. So now you are on the first few months in business. First years in business, cash flow is hard. Now let me ask you this question though. Something I wish I would have done, and something I wish more businesses do that they don't do is that they don't put themselves a business plan, and they don't know what is going to be their cash flow needs for the next two years, and they also don't know where to stop. You know? Like how will you go about that? I know you advise people more on the finance, on the finance people, on the finance side and the create and creating a business plan. What would you advise people before that they start a business? Should they be running projections, at least for expenses, for the first year, two GL, and then should they be putting cap into like, hey, if I see myself getting in debt for this amount or losing this amount within this amount of years, this is just a sign for me to close the business or to move or to move to something. How would you advise people to like plan for it? Because as we have mentioned before, something that happened to me was that I was really optimistic about business as every business owners. And sometimes I see a lot of people that people are optimistic about the business, but they don't know anything about accounting, and then the business is just losing, losing, and they keep pouring more money into the business.

SPEAKER_01 17:46

Yeah, great question.

SPEAKER_02 17:47

Yeah.

SPEAKER_01 17:48

And that's something that I did for my business. I put I made a forecast, right? And that's something that I help clients with now and people who want to start new businesses. I um a hundred percent recommend creating a forecast and along with that is a budget. So your forecast will kind of look like a profit and loss statement.

unknown 18:06

Yeah.

SPEAKER_01 18:06

If you're not familiar with that, Google it.

SPEAKER_00 18:09

Yes.

SPEAKER_01 18:10

Uh so a profit and loss statement will show your revenue and then it'll show your expenses and it'll show your profit or your loss. So it literally is shows you what your business is doing. And the way I create it is I create like our my estimated revenue. So obviously, for the unless you have some sort of contract in your business for the first month or two, three, six, twelve, even, you're going to expect zero own revenue. But you will need to plan for your expenses. So oftentimes that looks like rent if you need to pay yourself or pay other people. Um, again, we've talked about this before. Try not to pay yourself until your business is profitable. Um, but you'll need to pay like contractors or employees, you'll need to have like utilities and gas, meals with clients or meals with potential um investors, etc., whatever you need for that business. So planning that out and also making sure you aggregate it like over a period of time. So every month is not going to be the same, especially as your business grows. So keeping taking that into account, and especially like the seasons. So every bus or many businesses are cyclical, not every, but many. And what that means is they change throughout the season or throughout the year. So maybe like for us, like we're busier and probably have a larger um revenue source or potential revenue from January through April. So our expenses are usually higher and our revenue is higher. We're paying, we have more people, we have more things going on. So we plan for that, and that's what I would encourage any business owner to do. Plan, and you should know your business well enough to understand what seasons and when it will be busier. Not going to say that there's not going to be surprises because there are, there's always a surprise, but definitely creating that at least for like a six or 12 months. So what I did for my business when I first started it, I did like a three, I did like I created a year, but I did like in three month increments of growth. So I would make it flat for three months and then I would do like a 10% growth.

SPEAKER_00 20:10

Yes.

SPEAKER_01 20:11

Which I vastly exceeded it, thankfully, but that's um a good foundation.

SPEAKER_02 20:17

That's good. And I feel also that that is important to create that forecast is important. That way you know what you are working for, what you are thriving for, and what is your goal. And then if you don't have a goal, if you don't have a vision, you are not getting anywhere. I remember before starting my iBusiness, I created this little forecast and I uh I created this little forecast and I was telling to my p to people. And the and in the forecast, in the first year of business, uh I meant I put in there that, hey, I'm going to make revenue half a million dollars. I was just telling that, I was telling that to people before I even started, because that's just the way I work. I just tell people, I like to tell myself a lie that I would believe. Like, okay, I'm making my I'm making half a million dollars in the first year in business. And then you also have to believe it. Like, if you don't know that, then you gotta maybe take action based on that. But if you don't have a forecast, you don't know, and then you need to figure out like, okay, if I'm making half a million dollars in business, like what are my expenses? Yeah, where are all my caps there and what and what I have to pay uh for it. And people are not going to believe you. And I encourage you to create this business forecast. And also if you need funding, you need this. You need to take it to the bank.

SPEAKER_01 21:34

Yeah, yeah, you need to do it. You need to sell it. Yeah, they they're not going to give you a loan for nothing. You need to have a plan and a forecast as part of that plan. But something that you said, I like that you said the half a million the first year of business. It's an ambitious goal, it's a great goal, and it's achievable, and it was achievable. But I want people to also take into account you can't just say, I'm gonna make a million dollars, right? And then also making a million dollars is relative. So Maybe that's your revenue, which is like a top line item. So that's not how much money you're taking home, right? So make it you think about do you want to make a million, like bring in a million dollars in revenue, or do you want to make a million and put a million in your pocket? Because those are much different things. But I will say, have a plan to get to that revenue number. So don't just say I'm going to make half a million this year. You need to work, you need to break that down. So maybe you say half a million, 200,000 or a million, five million, whatever the number is. Then like think about how you're going to get there. Do you need 50 clients to get there? Do you need to do 12 jobs? Do you need to build four houses? Like, how do you get there? What what are the stepping stones? So then in your mind, you say, okay, I have to sell four houses. I have to get 50 clients. Okay, how many clients do I have to get a month to turn into a million dollars a year?

SPEAKER_02 22:51

Yes. And that and that is and that is how you plan for cashing flow. You need to have a goal first. For cashing flow for sales, you need to have a goal first. You need to make sure it's achievable. You need to make sure you just don't say an umbell out there. You need to work backwards too. Okay, if you want to make your first year a business, half a million dollars, and you are a restaurant, like in sales. You gotta look at your margins and everything, figure out everything that you that you will need. Okay, so what about this? What about the business owners that just have an idea but they don't know anything about accounting or finance? How do they I guess how do they do it? Or how do you see what do you see in your experience that that happens like? Because we were fortunate enough that we knew all of this because we were an accountant and finance. But sometimes people just start a business because they have an idea, they want to be the lone boss, and they're just taking risks and they don't know what they are stepping to it. So what will you what what will you tell to this type of business owners of entrepreneur?

SPEAKER_01 24:01

That is the majority. And I will say, like, if you're intimidated and scared about accounting and your numbers and cash inflow and outflow or cash flow in general, like you're in the majority.

SPEAKER_00 24:12

Yes.

SPEAKER_01 24:13

Like we are very much in the minority of business owners who care and understand and talk about I mean, not not that you guys don't care about it, but oftentimes business owners I find they don't want to know the numbers because they're too scared, they don't understand it. They they don't want to hear that they're losing money.

SPEAKER_00 24:30

Yeah.

SPEAKER_01 24:30

They don't want to take the time to sit down and go through it or understand it. And that's valid. Like I understand you start the business because you are a tattoo artist and you're really good at what you do.

unknown 24:40

Yes.

SPEAKER_01 24:40

And then you start the business and that's all you do, right? But then you need to find someone who knows it and who can help you with it. And again, in the beginning, you may not have the funding to do so. And I think we've talked about this before. And that's okay. How you do it is making sure that you have a business bank account that's set up, so then when you can afford that, it's easier for that accounting team to go in and to make sure they're pulling those numbers from your business banking.

SPEAKER_02 25:06

I agree. And then, yeah, and then you have to check your business bank account every week. Yes. And I would tell people don't spend money you don't have.

SPEAKER_01 25:14

Exactly. Don't be talking to you. If you spend less than you make, it'll work out every time.

SPEAKER_02 25:19

It will work out every time, for sure. Okay.

SPEAKER_01 25:21

So that's very basic. Spend less than you make.

SPEAKER_02 25:23

Yes, no, for sure. Then you need to do that. So yes, and something I will add to those people that uh that they don't uh business owners that don't know much about numbers. I'm telling you this if you want your business to succeed, you gotta know the numbers game. You gotta know the numbers. So I will I will encourage you to take ownership and kind of try to learn it. Try to sit down and ask people, explain me this. How do I read this? Understand how to read a PA or understand how to read a balance sheet, look at your bank account and then don't be scared about it. Just if it's not in the best situations, take ownership of that. Like my first four months in business.

SPEAKER_01 26:05

It is your business after all. Like, yes, you should understand at least at least how much money is coming in and going out.

SPEAKER_02 26:11

I know it can be scary, and sometimes we put ourselves in different situations, but just take ownership of that and understand and do something about it. You know, for example, the first four months in business, I was like, okay, this is not because I was checking at the numbers every week. I'm like, okay, this is not working out. I gotta make some changes here. You know, that's how you know we merged. I stopped using credit cards and all of that. And people know my story on that. Okay, perfect. So for small businesses owners, for new business owners, it's like organization, open business bank account, foundation, found have a good foundation, and then don't don't underestimate the power of good accounting, good balance sheet and check and good habits. So I guess how do you set up those habits, those good habits from the beginning?

SPEAKER_01 27:00

So again, it goes back to that having that business bank account. That that's number one, not spending money that you don't have. That's number two. Yes, a great habit. You know, robbing Peter to pay Paul. We've talked about that one before. So that's definitely within that good habits, and then making sure that you're at least checking your bank account and looking at the business numbers. So you may not have a profit and loss or a PL or an income statement. There's those are all names to identify the profit and loss statement. And you may not have one yet when you're first getting started, but you will eventually if your business is successful and continues going. So understanding what that says and don't be shy to ask your accountant to explain it to you.

unknown 27:44

Yeah.

SPEAKER_01 27:44

The more times you see it, the like you'll understand it um better and better. Um, I don't think anyone would feel any type of way like to explain it to you. I mean, I I'm more than happy to. Like we do it all the time for our clients. And again, like you're in the majority of business owners who don't understand their accounting or their finance or their numbers.

SPEAKER_02 28:04

You are not the only one. And then, you know, that is some fees, accounting fees, legal and professional services, but you gotta pay that. You know what I mean? You gotta, you gotta make that investment because if you don't make that investment at the beginning and you don't understand something, and you and and you don't spend and and you don't invest money in somebody explaining you the accounting, walking you through the numbers, and you understand it, you are going to have a higher chance of losing your business. So we rather pay somebody a thousand, two thousand dollars to help you understand that and keep you on track, or just you are having a hard time and you fire bank corrupty and you don't set up everything right, and then you lose way more stuff at the end of it because you didn't get the right help.

SPEAKER_01 28:49

I mean, and you're exactly right. I mean, it it can lead to like that drastic of a circumstance, or it could lead to something as as little as like just not understanding your numbers and not knowing how you can pay yourself, how much you can pay yourself, if you can give your employees raises, if you can afford, you know, to expand your business and you can miss out on growth opportunities from just purely not understanding your numbers.

SPEAKER_02 29:12

Yeah, I agree. I agree. And to grow, you need to know your numbers. So even before I start the business, know your numbers, know your margins beforehand. Yeah. Perfect. So now, first years in business, clients have taken, you know, they're learning everything. They're learning now about taxes, how to fire taxes, like about cash flow. They have been watching, they have been watching their bank account. Now they have a better feeling of their business. Now, because they understand their business, they know where to invest, they they know where to bring more people. Now they get to this, like let's call it one year, two years in business.

SPEAKER_01 29:51

Say in a mature business.

SPEAKER_02 29:52

A mature business. Uh, probably more than that, but almost let's call it a teenager business.

SPEAKER_01 29:58

Yeah, yeah, well, okay, teenager. Yeah, okay.

SPEAKER_02 29:59

Teenager business. So now it just gets harder because now the numbers get bigger. Now the to keep the growth going, it just gets bigger. And the thing in with business is like every month you start at zero. Every month you're working for that goal that you need to make payroll, to pay yourself. Like, how do you manage that? How do we manage that? Because that's something with us, is like, I'm going to be real, like, you know, oh, come December, oh, we close the GIS, then we achieve all of all of our goals that we have for the GIS, but then come January, now we have bigger goals, we have bigger numbers, and we have to start back from zero. Like the PL gets wiped out, we start at zero. And I will tell you something, like January and February, I'm like, I was kind of, I was kind of, man, let's see how this year's come around because this is our second year in business. I'm like, let's see how this year goes around, and only this season that this is our busy season or while money season. I'm like, man, hopefully we get this right. Because if we don't get it right, we don't do that. So, how can people gain confidence on their projection for the next year? And on their projection for the next year, and how can they feel confident that they can achieve the goals they put themselves, even though they have to start from zero and the goals are bigger than last year? And probably in January, in February, the business they don't know how to get there. Yeah. How do you go about it? Planning for that cashing flow and you need the money to for all these new people. You gave raises, you gave bonuses and all of that. How do you go about it?

SPEAKER_01 31:41

So I would start with number one. I'll answer the projection forecasting part of that. So making sure that you have really solid numbers for the last year, last two years, you have to know those numbers before you can ever even pretend to create a forecast for the following year.

SPEAKER_00 31:59

Yes.

SPEAKER_01 31:59

Right. I mean, if you don't know where you were, how do you know where you're going? Right. So that that whole thing. So that would be the step number one is understanding that. Step number two is things that you've put in place to expand and grow. Because again, like a business isn't going to go from a hundred thousand to half a million to a million without doing anything. Right. So, like, what did you put in place? Like, are were there some efficiencies that were made that's going to help you increase your revenue, increase your capacity to take on clients or customers? Or are there marketing things that you're doing, like business development things that you're doing to reach those potential clients or you know, customers or jobs or things like that? So you have to know, you have to have a plan to how you're going to get to those new numbers. So, yes, you can forecast it, you know, take your good data that you had from last year, the last two years, use that for your expenses, do a slight inflation because everything gets more expensive every single year. And then work backwards and say, okay, if we made half a million last year, we want to grow and make 700,000 this year. How are we going to do that?

SPEAKER_02 33:09

I agree. And you're completely right. And about that, uh what I what I tell people is a lot of people don't do that, and I see a lot of young business owners in the two years, first year, two years in the business because they're working in the business. But if you want to grow your business and you want to control your business, don't let your business control you, you have to take the time in the end of December, the beginning of January, and make sure your data, be intentional about it, make sure you invest the money, make sure you close the December books, make sure you, if you don't know anything about accounting, pay somebody to do it. It's going to give you clarity.

SPEAKER_01 33:58

And it's so much more affordable than people realize. Yes, and clarity. I say that.

SPEAKER_02 34:03

And clarity is kindness. Yeah. And more for you, if you don't have clarity or you have a false vision of what happened last year because of perceptions, you know, numbers don't lie. Make sure you look at the numbers and you understand your numbers. So the base for that, as you said, I agree with you. Come December, make sure they're closing the book, make sure they're looking at it, make sure the books are good, and then that is also going to help them to do taxes. And taxes is going to be a breeze. You know? So then the projections, yes, they gotta like, you know, put a goal to it. Like, okay, if we want to keep growing, as something I will advise is like ask them what they have to do, what they did to get to that number that they did last year, and what they have to do to get to the next number, and then making may and then make investment in there. And an action plan to get in an action plan, yes. So now, and also to do that, you have to work on your business. If you are still wholesaling and if you are like on Christmas Eve, like keep like, you know, keep working on your business, you have to step out.

SPEAKER_01 35:15

Yeah, you can't create a job for yourself. You have you unless you want to. Again, like it's for me, like I'm very much like whatever the business owner wants. Like if everyone has, I think I've said this before too, but like everyone has their own goal for their life. And if your goal is to be a doctor and you want to have your own practice and be a doctor every day, great. Hire people to do the marketing, hire people to do business development, hire accountants, right? But if your goal is to actually be a business owner and actually take and wear that hat, then you have to spend time outside the business. So sometimes maybe that that looks like working the 40-hour week in the business and working another 40 hours outside of it.

SPEAKER_02 35:55

I agree. Yes, okay, fair. Yeah, and then you gotta keep those projections and keep track of it. Keep track of the projections, like look at your books every month, look at your financial statements, look at your quick books, and then make sure you are tracking, you are tracking for it, and then if you have a team, which you should, you should be able to communicate effectively those goals. Hey, this year we have this staff in goals. Now I know growth can be challenging and intimidating, at least at the beginning of the year, but if you put a plan for it and you work for it, you do it. So now we are in this phase where we are a major business and we had big goals for this year, and we have been achieving them. Uh thank God a few on Q1, we have 5x, what we did last year on Q1. And that just doesn't happen automatically. So, how do you do that? How do you go and let's talk to them that this is the next the next plan for cash flow? Like, how do you, and let's talk about here on a merchant business, how do you make sure how do you look at your cash inflow and your cash outflow? How do you make sure if your goal is to grow 5x from last last quarrel from like let's call let's call it Q1 quarter one of last year to quarter one of this year? How do you how do you make sure you get that cash in flow? How do you get how do you go about that? How do you plan for it?

SPEAKER_01 37:24

Yeah, so how you plan for the cash inflow of the 5x thing?

SPEAKER_02 37:29

Yeah, yeah. So I think this is how you do it. Like you need to know, this is what I this is what I do. I think you you have to be thinking already about it in the last year, in Q2 and Q3 and Q4 of last year, and be building up to it, you know, and be building up to it, and then kind of have a lot of clients and understanding and understanding of it. So we are laughing here, Alan. Let's be real. In our business, Hero here, she likes to put off these big goals. And then I'm like, okay, hero, how are we going to do that? And then I'm the person like, okay, that is not realistic. How are we going to do that? You know, so so but okay, but the thing with that is you gotta have your sale, your marketing, your business development in mind.

SPEAKER_01 38:16

Yes, no, you you definitely have to have that put in. So I mean, yeah, so growing from the 1x or you know, from where we were to 5x year over year, the way to do that definitely is business, I mean business development, but also it's for us because we're a service-based business, it's people. Yes. So investing in your people and processes, SOPs, making sure all of that. And it's not going to be perfect, trust me, ours is less than perfect. We're really fine-tuning it now though. But I but you don't know what you need until you just do it. And that's the same thing I was talking about last episode with business development and just like jumping in and like going and seeing what you don't know. That's exactly what we did this tax season, and we found out. We found out what we didn't know and like what we need to do better, but we just had to do it. So we because I didn't know we like we didn't know the thing processes that we need to put in place and mistakes that we were gonna make. Yeah, but we made them this year because this is our first tax season together.

SPEAKER_02 39:15

Yeah, you gotta you gotta tell yourself, yeah, you did a lot of accounting. I love doing that.

SPEAKER_01 39:20

Yeah. I did a ton of accounting that. So but again, like now we have these people we learned from and and we went through this tax season, and we'll be do a big debris debrief and all of that and figure out what we need to do better next year. But I think we have a pretty clear picture already. But like I want to dive into mature businesses a little bit more. So we talked about so mature businesses, we talked about the expansion, like the growth of the and how you grow your revenue. At this point, like you kind of know and you you probably have established like a pretty good like year-over-year growth curve, right? Like you know, okay, this year, like I'm going to grow three percent. Like you have a good measure, you have good metrics. Same with your exp like your expenses, right? And usually like when you get to that mature area, you stay the same. Maybe you grow three to five percent, something very like very minor. But if you want to go to the next level, especially on your cash flow, you have to start investing. And maybe that's marketing and ad spend, maybe that's an expansion, maybe you want to expand into a different country, yeah, multiple countries, maybe a different state, maybe different cities, different towns, different locations. And all of that takes capital. So whether that's capital from investors, loans from banks, yeah, or owner investments, or capital just from your business. So using that cash flow wisely and seeing that excess cash and putting it towards things that are intentionally um used for growth.

SPEAKER_02 40:45

That's true. And and to do those things, you need to sell the bishop. So you need to have to have those forecasts, those numbers, the accounting down right. For banks to give you a big loans, to work for with investors to make them feel comfortable.

SPEAKER_01 40:57

You probably need to have a lot at the end of the day, the accounting is always everything goes back to the accounting.

SPEAKER_02 41:03

Think about it, like companies that become Unicorn. Now, now you hear about all of these AI companies that just grow a lot and become billion-dollar companies, they are not making any money, but they have good accounting, they can bring investors, they know how to sell a dream, and they know the numbers. So they can tell you the numbers. So everything is about the numbers, so you need to have those numbers. So I guess how do you plan for cash outflow? How do we do a how do we how would how do we do that? How do we plan for the expenses?

SPEAKER_01 41:31

So for a mature business, yeah, you typically would have a cushion account, so like a savings account for a few three to six months or so. So you're usually pretty comfortable with your regular recurring expenses. And for mature business, you should have at least a 12-month like uh forecast with budget, maybe even 24 or 36 months projected out. I mean, most mature businesses do.

SPEAKER_00 41:56

Yeah.

SPEAKER_01 41:57

So you'll already know like what to expect. However, when you're a mature business, this is when things, yeah, outliers occur, and where it's important to have insurance and protection because things like this occur where you have legal expenses because maybe someone's going to sue you. Right. When you're well established, and and maybe maybe there's an employee issue, right? Or maybe there's like some people are starting to quit, like your managers, like your directors, people who are key people, and then you then you're flailing, you know, trying to figure out. So those are the some of the things that I think are like outlier expenses. And maybe a director quitting doesn't sound like an expense, but it's a very expensive, it can be a very expensive expense if that director had a lot of power and a lot of control and did a lot of things. Yeah. Because oftentimes you see people who quit who were with the company for a long time and they just didn't get that raise that they wanted. And then they have to hire three or four people to do their job. Yeah, that's so then going from paying someone a hundred thousand to going to pay three people eighty thousand a year, that's a big difference. And that's probably something that the company did not plan or expect to do.

SPEAKER_02 43:07

Yeah. I would tell you something about cash inflow, cash outflow, and something I watch with a lot of business owners. Sometimes at the beginning, money is tight. But I feel sometimes a lot of people have a lot of business owners have this scarcity mentality and they want to chip out in the stuff that they know they need. They want to chip out or they are unreasonable, ship out on, you know, accountants, like legal and professional fees on their people. And I feel like as long as you have in your mind that you're either going to pay the cost at the beginning or at the end. So you have you need to figure out on people. So with that being said, you figure out when do you want to pay the cost? You want to pay now at the beginning or just pay it at the end? You want to be proactive.

SPEAKER_01 44:00

And we've we've seen that, you've seen that lots of times where people have people come into us and they're like, Oh, oh, I I didn't go with you guys because you guys are tax preparation was expensive, right? There's a reason for it, but it was expensive. And then they go to someone else and they come back, they're like, Hey, can you look at my over my return? We look it over. Jet goes back to them and says, Yeah, we can save you 40 grand. Like we we can save you like all of this attack, like things were done improperly, or maybe mistakes were made. And maybe oftentimes I feel like we look at tax returns and like there were no books coinciding with the tax return.

unknown 44:36

Yes.

SPEAKER_01 44:36

So you're like, how did you get these numbers that they pulled them from bank accounts all over the place, right?

SPEAKER_02 44:41

And then that just brings a lot of stress with that. So and then I would say treat your expenses the same way you treat your revenue. Like if you're chipping out on your expenses, on your people, on your people, and all of that, you're probably going to have the same mentality with your revenue, and that's going to affect you. And that's probably because of that mentality. You are not you are not growing as much. So now let's talk about personalities of business owners. I know we have the optimistic business owners that they think they grow too fast, they have a big ego, and then they spend money and get on depth thinking they're going to get the money. They're going to get that. And then sometimes I see the the frugal business owners that if they will be investing in the right people, on the right person, and they would not be doing everything by themselves, they would grow faster. So I guess uh how many personalities do you see, and how do you think people should go about it?

SPEAKER_01 45:38

That's a good question. I mean, I see a lot of different personalities, obviously, but and I think I talked about this before, but most business owners more I mean, most business owners tend to lean more on the heavy ego, um, big confidence side. So they think they're gonna make a lot of money and they don't, and they fail, and then they completely like blow up their lives. Like that that does happen. And then you have the other one that has the big ego, the big confidence, and they succeed, right? But a lot of those, like you talked about before, like they go into debt and their cash flow management's really, really poor. So the ideal, I guess, and then then like you said, you have the other ones who are more conservative and like they don't want to spend and they're they're more on like the scarcity mindset, right? And those, I mean, and a lot of those are like professionals, so they're really good at what they do and they usually make a good income, but they never grow. And it's because of that scarcity mindset and then the lack of ability to spend excess money or even any money. Like I've seen people where they're these people have like 60% net profit. These people are like making crazy money. I saw this grant writer one time. 60% net profit is what they were making. Didn't want to spend a dime. Like that bank account had so much money in there, she could have bought a beach house, you know. And like, I mean, she had like four years of you know of revenue in her bank account. And I'm like, use that money to, and not a current client, by the way, but use that money to invest in your business and grow and expand it and retire yourself.

SPEAKER_02 47:11

Yeah, you know? Well, what is so so sometimes something I heal about from business owners is that they want to give that mentality because they don't want to deal with the people, they don't want to deal with the growth of the business. What do you think about that mentality? You see that a lot. You see a lot of business owners that have grown the business to where they can handle it, and they don't want to go grow more than that.

SPEAKER_01 47:32

And again, I'm all for people having their own goals, you know. Like that is not a goal for me. Like, I have I'm like, I want to do too much, I think.

SPEAKER_02 47:39

I agree. It's a good personality.

SPEAKER_01 47:41

Yeah, yeah. But like, so I'm like, if that's your goal, that's great. But like for me, when I see it, it kind of pains me for them because I'm like, what a loss of potential. But again, that's a me problem.

SPEAKER_00 47:51

I agree.

SPEAKER_01 47:52

I'm happy for them. Like, if if they're meeting and exceeding their goal, that's great. But again, like for me, so my my version or my thought, and and again, there's not an ideal personality, like everyone's different. Yeah, my personality probably is not ideal for a lot of people. Yes. That's fine. You know?

SPEAKER_00 48:09

Yeah.

SPEAKER_01 48:09

So, but like my vision of like what I think makes a great entrepreneur is like you have a big ego, but you have you also have some like humility about you where you're like, okay, I'm great, but I could be better. I could learn, like, I don't know everything. Teach me, show me the way.

SPEAKER_02 48:26

Yes, I agree.

SPEAKER_01 48:27

But then they also have they're they're not, they don't have the scarcity, they have like, okay, wow, I'm gonna make all this money. The confident, like the bolstering confidence, like the overconfident, yeah, and then coupled with over-responsibility. Yes, when you have that combination, like ego with humility, like crazy confidence, and then the overassumption of responsibility, that creates like someone who's so hungry, and they take responsibility for everything that happens, right? So they're like, Oh, that per okay, I'll take it, whatever, I'll do it. Like, let's figure it out. Why didn't that work? Okay, that that was on you, but no, I'm the owner, it's on me. Like, let me fix it. Yeah, let me move on. But I do think that personality is like ideal for the entrepreneur. And when I say entrepreneur, I mean someone who's just now getting started. Yes. And the personality has to change and shape as the business goes on. I don't know how we got into this like psychological deep deep dive.

SPEAKER_00 49:27

Yeah, no, my thing is moving.

SPEAKER_01 49:28

I'm no psychology made or anything like that, but this is just what I've seen. But I think that personality has to shape, unless that person's gonna stay in on the entrepreneurial mode. But I think as your business grows and becomes a more mature business, that has you have to, at least in my opinion, you have to collect kind of like hone in and become more of a business owner and a business head. So you can't have the the over-responsibility is still a good aspect, but it has to come down some, or you get the business owner who's wanting to do and sweep the floors every night. And you just can't have that. Or you have a business owner who has a hard time giving up tasks. And and you can't have that with if you want growth, you have to be able to give away your work.

SPEAKER_02 50:14

Yes, delegate and and sometimes and business owners don't want to deal with people because the thing is that, but hey, just take ownership about it and over the last two years, we we are we are at around 10 people. You know, like yes, you're going to have issues with people, but you just deal with it and you just be your system and you just put good system around it and uh and something I something I believe is that if you are not having human resources problem, you are not growing fast enough. You know, because to grow you need people. People you're going too long and too fail, but like we find out we're really bad at hiring, recruiting, so we just brought somebody that can do that, you know. You don't have to do everything, you don't have to deal with everything. If if you want to grow, you need to delegate, and and to delegate, you need to be able to spend money on invest money on people to come in, but look at it as an investment. Don't look at it, you giving like 80k, 100 grand to somebody to help you. Look at how much money that person is going to bring you. Now they, for example, if if you are not growing your business because you don't want to deal with people, invest money in an HR person and let that person handle all of that. And now you can spend your time in more productive stuff, and that HR person is going to make your life so much easier. And I guarantee you you're going to make way more money. And then if that person is not making you money, you know, like you do not have the right hire, or you are not doing your business, or you are not managing your business the right way. But as you said, at the end of it, it's just taking ownership and at the end of the day and figuring it out, you know, just take ownership and that. And so for sure.

SPEAKER_01 51:58

So so back to like cash inflow and outflow, like that impacts, like that's obviously a cash outflow. Yeah. Right? So not everything that you spend money on is going to make you money directly or inherently, right? So sometimes there's going to be things like the HR team. Like it feels like, at least in my opinion, and and people are gonna hate me for saying this, HR people. I thought at first, like, oh, it's a waste of money to have admin HR people, right? I was wrong. Yes. It is not a waste of money to have admin or HR people. Honestly, best money I've ever spent.

SPEAKER_02 52:31

I agree. Yes, it really have saved for business. Yeah.

SPEAKER_01 52:35

It have changed the way we do business and then and like obviously it impacts like cash outflow and it doesn't directly bring us money, but it brings us a little bit of peace. Probably honestly a whole lot of peace.

SPEAKER_00 52:49

Yes.

SPEAKER_01 52:49

And it makes us more efficient. So like we have a billable hourly rate and like what the the things that we do bring our firm money, not only the business development side, but the actual work that we're doing. So having that HR and admin, like taking those hats away from us. Yes, even our email management, taking that time out of our days allows us to grow our business by networking, right? Business development, spending time at the podcast, and advising our clients and doing the work for the business, like working inside the business.

SPEAKER_02 53:19

I agree. Yeah, you have to invest in those stuff and stop looking at the expenses like an expense, look at an expense like an investment. I think that's the change of mentality a lot of business owners have to do. It's an investment. And then you just gotta know your margins and know when and where you can spend the money. Hero, I think that was a good chat. So I guess what would be the takeaway for it, for cash inflow and outflow.

SPEAKER_01 53:46

Yeah, so the takeaway is there are levels. So again, like setting everything up for success, foundational and good habits. And those are going to start for small business owners. I mean, it's never too late to set those up and change, change things around, but definitely when you start your business, setting up things correctly the first time makes it easier down the road.

SPEAKER_00 54:06

Yeah.

SPEAKER_01 54:07

And then for teenage business, you know, making sure that you have good data to build your forecast on, and how are you going to grow your business? So you can't just say, oh, I'm gonna pay, you know, make half a million this year, grow 50%, 100%. How are you going to do that?

SPEAKER_02 54:24

You need to have the operation for it.

SPEAKER_01 54:26

Yes, and the operations. And then for a mature business is understanding how you're going to grow and how you can expand and manage your expenses and your revenue.

SPEAKER_02 54:36

Yes, I completely agree with you. And I then and then take ownership of it. You're the business owner, you're the owner. If the business is not growing as fast as you can, it's not because of an employee or something, it's because of you. Just take ownership on that, make the hard decisions, investing money, and don't look at expenses like an expense. Look at it as uh as an investment, and if that investment is not making money, you bring somebody else. You replace that. That's good. Awesome guys. I hope you found this helpful. Thank you for watching. Thank you for your time. Please subscribe, comment, share this, and pay the fee.

SPEAKER_01 55:14

Pay the fee.

SPEAKER_02 55:15

Yeah, just share and subscribe. Thank you, guys. You have a good week.