Sponsors Melio Payments: https://cloudaccountingpodcast.promo/melio Jirav: https://cloudaccountingpodcast.promo/jirav Show Notes https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp  Connect with Michael and Sabrina Michael Ly, Founder/CEO of Reconciled Website: https://getreconciled.co/ LinkedIn: https://www.linkedin.com/in/michaelly/ Twitter: https://twitter.com/michael_ly_ Facebook: https://www.facebook.com/burlingtoncfo Sabrina Parsons, CEO of Palo Alto Software and Board Member of Oregon Pacific Bank Website: https://www.opbc.com/ LinkedIn: https://www.linkedin.com/in/sabrinaparsons Twitter: @mommyceo Get in TouchThanks for listening and for the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, please do us a favor and write a review on iTunes, or Podchaser. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus, and NOW, you can see our smiling faces on Instagram! You can now call us and leave a voicemail, maybe we'll play it on the show. DIAL (202) 695-1040Meet Blake and David in person!  No current appearances planned.Need Accounting Conference Info? Check out our new website - accountingconferences.comLimited edition shirts, stickers, and other necessitiesTeePublic Store: http://cloudacctpod.link/merchSubscribe Apple Podcasts: http://cloudacctpod.link/ApplePodcasts Spotify: http://cloudacctpod.link/Spotify Google Play: http://cloudacctpod.link/GooglePlay Stitcher: http://cloudacctpod.link/Stitcher Overcast: http://cloudacctpod.link/Overcast ClassifiedsGo here to create your classified ad:https://cloudacctpod.link/RunClassifiedAd  TranscriptMichael Ly: [00:00:03] One of the things I'm telling clients is this is not a growth loan; this is not a VC, or private equity fund investment; this is not angel funding. The intention of this loan- the intention of these loans is to keep people on payroll.____________This episode of The Cloud Accounting Podcast is sponsored by Melio Payments. Do you have clients that are logging into their bank website to manually pay their bills or, even worse, clients that are still handwriting paper checks because the alternatives are either too complicated, or too expensive? You need to introduce them to Melio Payments. Melio Payments is easy-to-use B2B payments and receivables. Think Venmo, PayPal, or Zelle but for small businesses.Melio is an app that all small businesses are capable of using, regardless of size, shape, or budget. By using Melio, your clients can pay their bills easier than using their bank website, and you get the process and controls you need, like support for multiple users, approvals, and two-way syncing with QuickBooks Online. Melio can also help your clients improve their cash flow by allowing them to pay their bills using their business credit cards to take advantage of up to a 45-day float until their next credit card billing cycle. Now, paying the rent can lead to earning those credit card points your clients love. To learn more about Melio Payments, and to get your very own Melio.me link that you can use to receive payments from your business clients, head over to cloudaccountingpodcast.promo/melio. That is Cloud Accounting Podcast dot promo forward slash M-E-L-I-O. ____________Blake Oliver: [00:01:29] Welcome to The Cloud Accounting Podcast. I'm Blake Oliver. David Leary: [00:01:32] And I'm David Leary. Michael Ly: [00:01:34] And I'm Michael Ly. Sabrina Parsons: [00:01:35] And I'm Sabrina Parsons. David Leary: [00:01:37] Blake, I've got special guests for us tonight. Blake Oliver: [00:01:40] I am so excited, David! Thank you so much for setting this up. David Leary: [00:01:43] There's lots of questions on what the programs rolling out from the SBA are. Even me, as a small business owner, I don't know what the answers are. I'm trying to navigate them myself. So, I brought on an accountant/bookkeeper, Michael Ly, who is advising hundreds of his clients, probably, on how to navigate this process; and then Sabrina Parsons, who's been on the podcast before. She actually is on the board of directors at a bank, and Sabrina has inside tracks with the SBA, and the SBDC, so she can kind of give us, like what's happening behind the scenes during this process, as well. With that said, Michael, and Sabrina, if you guys wanted to jump in and maybe say hi? Michael Ly: [00:02:19] Yes, hi. Thanks, David and Blake, for having us; for having me and for having both of us. David, yeah, your situation is very similar to many millions of other small business owners across the country. Sabrina Parsons: [00:02:31] Yeah, thank you. I'm really happy to be back with you guys, Blake and David. The last time we were together, we were actually at a conference, which seems so far away and so foreign now, since we're not allowed to ever do that in person for I don't know how long. So, I'm glad to be talking to you guys in some way or another, and I'm really glad to be doing this content today because the number of small businesses in the United States, right now, that are struggling is staggering. But there are some programs that can help them, and these programs are very difficult to wade through and figure out what's good for what business. So, hopefully we can help people. Blake Oliver: [00:03:11] Sabrina, what bank are you affiliated with? Sabrina Parsons: [00:03:14] I'm on the board of Oregon Pacific Bank, which is a small community bank in Oregon. Blake Oliver: [00:03:20] Gotcha. Michael, for the folks who may not know who you are, listening in, where are you located, and what's your firm look like? Michael Ly: [00:03:30] I'm normally located in Burlington, Vermont, though I'm sheltering in place in Tempe, Arizona, right now. I am CEO and founder of Reconciled. We're an online bookkeeping and business advisory practice. I've got 27 employees working from nine states and serving about 150-plus clients across the country. Blake Oliver: [00:03:49] So, you must be really busy right now with all of these SBA loan questions, applications, I imagine?  Michael Ly: [00:03:55] Oh, yes, yes. From sunup to sundown, that's all I'm doing right now. Blake Oliver: [00:03:59] So, even though we can't see each other, and we can't get together, you, and David, and I are all in the same state because I'm in Phoenix, right now. I'm normally in L.A., but I am also sheltering in place in Phoenix. Michael Ly: [00:04:09] Yeah, the one time the three of us are in the same state, we can't even see each other in person.  Blake Oliver: [00:04:12] So, we're representing Phoenix, Tempe, and Tucson. Those are like the three cities in Arizona, right, David? David Leary: [00:04:20] Yeah, there's still Flagstaff, and there's still a couple other, but yes [crosstalk]  Blake Oliver: [00:04:20] Okay.  Michael Ly: [00:04:20] They're the only three worth gonna, right?  Blake Oliver: [00:04:20] Right. What we're gonna talk about tonight is the two types of SBA loans available. I understand there are two, right now, and, of course, this could all change very quickly. We've got the Paycheck Protection Program, also known as the PPP, and the Economic Injury Disaster Loan Program, a.k.a. EIDL. By the end of this, we will all be really sick of acronyms. Am I right? Did I get that right, Michael? Michael Ly: [00:04:54] Yeah, you got that right, and actually, those are the two we'll talk about, primarily, on the show, but there's actually plenty more that the SBA does, but those two specific ones have gotten the most press over the past several weeks. Blake Oliver: [00:05:05] Yeah. So, where do we wanna start with all of this? David Leary: [00:05:09] I think I've heard from a lot of accountants and bookkeepers, there's a little bit of a playbook here, right? Like, "Hey, you want to first get control of your expenses; go for any free money that you can go for; renegotiate interest rates in your loans and any terms you can with your vendors. Then, it's like, okay, now stimulus is out there ... You go to CNN, and you see there's gonna be, what is it, $350 billion dollars for small businesses. It goes live tonight at midnight, and it's just this grab. But then you step back, and the rules are just overwhelming. What's a small business owner ...? What should you do first? Do you do the emergency thing first? Do you do the Paycheck Protection Program first? It's kind of, in a way, Michael, I'm coming to you is a client, maybe, and I'm like, "What do I do? What's the first thing?"  Michael Ly: [00:05:53] That's a great question, David, and that's a question I've been asked hundreds of times throughout the past several weeks. So, first, the first advice is what you exactly did is you asked an advisor of yours. If I was advising you ... You came to me as an advisor, and you said, "Hey, here's the situation ..." So, I'm telling every client, "It's great that you came forward and that you're wanting to advise ... Hopefully, the advisor you're working with has actively come out to you and been proactive with you to help you through this worldwide pandemic situation; very unique situation." I recommend any of the listeners to go to their banker, to their attorney, to their accountant, CPA, business advisor and talk through this, and if they're working with an SBDC rep, or an SBA rep to work through this. [00:06:34] The first thing you wanna assess is what is the state of your business and your cash flow? You wanna work with your accountant, or your internal accounting staff, to assess that situation and to really see if your business- how it can survive and if it will survive over the next 60 to 90 days and for the rest of the year, and what kind of impact this COVID-19/coronavirus pandemic will have on your business. I think that's the first thing you wanna know before you apply or go for any assistance. You just kind of want to know the state of your business. [00:07:06] Secondly, every state, depending on where you are, and every industry is actually gonna have different types of grants and incentives that are available to you, so you're gonna want to research and reach out to both your state's economic, or development authority to see what grants might be possible in your area. There are both private and public grants, and assistance, and loans that are being made available that are on a state-by-state, and industry-by-industry basis. Just doing a quick Google search is gonna help you, and also reaching out to your industry's trade association, which can be very, very helpful. That's where I would begin your journey before you look at any of this. David Leary: [00:07:47] Okay.  Blake Oliver: [00:07:47] So, then, let's say we do that, and we've determined that it ... We are gonna survive, or we have a path to survival, if we take advantage of some extra financing, or take on a loan, or something like that, because we don't want to do it if we're just gonna fold anyway, right?  Michael Ly: [00:08:01] Right, right.  Blake Oliver: [00:08:03] So, we decide, okay, we can get through this. We just need the financing. So, now, we're gonna go get one of these loans and maybe this is a good place for Sabrina to come in ... Well, let me ask this. There's so much, I can't even think. Why are the banks involved in this? How is this whole thing working? So, this is a federal program with the Small Business Administration, but the all the lending is going through the banks, not the SBA; the whole loan process is all happening through the banks. Sabrina Parsons: [00:08:33] Yes. So, that's just for the PPP. It's just for the Payroll Protection Program where it's going through the banks. The EIDL, that's a loan that's actually ... That loan structure has been around for a long time, and it's used in mostly natural disasters. So, think of Katrina, New Orleans- that comes raging through; what you saw in Houston. You have a huge national disaster ... Sandy. Small businesses get wiped out. They have to close. [00:09:09] The SBA is able to offer these loans as soon as the state declares a state of emergency. When the governor of the state says state of emergency, oftentimes they'll do that, and they'll declare it in certain counties. Your county has to be declared. Now, given COVID-19, we're pretty much at a place where every single governor has declared every single county, so it's unprecedented. Almost everybody is eligible to try and apply. Now, not everyone is going to be able to get that loan, but that loan is not through banks. That one is directly- you apply directly to SBA.gov, and it goes through Treasury; that is not through the banks. [00:09:58] That is a true loan. It is not gonna be forgiven, and there are qualifications. If you don't have a good personal credit score as a business owner, you're not gonna get that loan. 650 or below, and you're not gonna be eligible for that loan. If you're not willing to put personal guarantees on the line, you're not gonna get that loan either. To Blake, or David, I forget which one of you said, if your business is gonna fold, you certainly do not wanna get an EIDL loan because you will be personally responsible for paying back that loan. That one isn't through the banks. [00:10:32] The PPP is through the banks because it's in the format of the SBA 7(a) loan, which are always done through SBA-approved lenders. Those are lenders that have gone through a process. They get approved by the SBA, and the SBA backs those loans. The SBA is gonna PPP loans at 100 percent, if they're used correctly. So, that's just to kind of position these two particular loans. The process is different. How you get them is different. Who qualifies is different. The EIDL will not have forgiveness, although it's a great interest rate over 30 years, 3.75; whereas the PPP, if you don't get forgiveness, it's 24 months at a very low interest rate, but it's only a 24-month loan. David Leary: [00:11:22] For the emergency one, if I heard you correctly, I have to put up personal guarantees, regardless of my business formation. So, if I'm an S Corp, et cetera, I still have to have personal guarantees. Interesting. Sabrina Parsons: [00:11:35] Yep, you have to have personal guarantees, so you have to think through that. One of the things that, from that bank perspective, because ... The reason that I know a lot about the loan process is because I'm on the board of Oregon Pacific Bank, but through Palo Alto Software, we work with a lot of small businesses, so that's where I'm in touch and working very closely with the SBA, and the SBDC. Through going through all of that, what we're realizing is people- number one, they don't understand the difference, and some businesses may need both. [00:12:14] My advice to a business, very much along what Michael said, you've got to start with understanding what is this gonna do to your sales, your revenue, and are there any expenses that you can cut except personnel? Because you will not have the loan forgiven, if you're laying off people because the Payroll Protection Program is exactly for that. So, you have to go- you've got to do your numbers. You've got to figure out how is my revenue affected? Are there any expenses I can cut? I'm gonna model this out without losing and laying off any staff because if I do, I'm not forgiven. [00:12:52] Once you do that and you understand how much cash you need to make it, say, the next six months - let's just think six months - then you have to go through the Payroll Protection Program and say, "Okay, I'm eligible for a certain amount that I can borrow," and that is different from the amount that is forgiven. So, you figure out what you can borrow, what is forgiven; and I'm suggesting that people borrow what is forgiven, but that number may not match what you need. You may need more, and you may need to use it for things that you can't be forgiven - inventory, other expenses that aren't payroll expenses. Blake Oliver: [00:13:38] Michael, that's what you were talking about when you said run these numbers. It's not just will I survive as a business, it's also does it make sense for me to take this loan because I have to keep all of my staff or substantially all of them, right? Michael Ly: [00:13:51] Correct. Correct, exactly. One of the things I'm telling clients is don't view this as ... This is not a growth loan. This is not a VC or private equity fund investment. This is not angel funding. The intention of this loan- the intention of these loans is to keep people on payroll. It's to keep businesses afloat and keep people on payroll. [00:14:12] I've had many clients who have shut their doors or temporarily shut their doors, and they're thinking, "Okay, well, I've laid off all my employees, or I furloughed all of them, or terminated all of them. I wanna get this loan and bring it back to work ..." The first question I ask is: "Des your business have any potential to bring in revenue at all for the next two to three months, or four months? Are there any customers that are gonna be purchasing from you? If you're a restaurant, or a retail store, do you have any reason that you think you're going to be an ongoing concern? Because if you don't, you'll be bringing people on thinking that you're gonna get forgiveness and then you're just gonna be laying them off again. It's a pointless process for you." That's really why you want to evaluate, and as Sabrina said, the point is you believe you continue to be an ongoing concern and that their goal is to keep people on payroll, to operate your business, and that you still have customers out there that are willing to buy your product or service. Blake Oliver: [00:15:07] Sabrina, I think I heard you say that if I don't get the forgiveness, it's a 24-month loan? What is that interest rate then? Sabrina Parsons: [00:15:16] The interest rate is very low. It's 0.5 percent, so it's almost nothing, but you have to pay it back in 24 months. So, again, exactly what Michael said, the point of this money is to keep people on staff and to pay your rent or mortgage interest; so, you can use it for that, as well. Right now, we're going through ... It's April 2. People have had to pay their personal rents, and personal mortgages, and there's all this forgiveness, and you can't get evicted. On the business side, all the commercial building owners also need to pay their things. So, they're trying to help you keep people on staff and pay your rent, basically. That's what they're trying to help you do. So, Michael's exactly right on. Your business may also be a going concern, but may not be able to support itself, if you have to keep everybody on. [00:16:08] Now, another big question people have is, "I've already furloughed or laid people off. I can't do this?" You can, if you bring people back. So, you can bring people back, but again, it's got to make sense. You just have to do the numbers . You just have to figure out how much can I get, how much is forgiven, and what does that do to my current financial forecast? Once you figure that out, it makes a whole lot more sense, because I don't think that you want to get saddled with a loan that has to get repaid in 24 months. Now, if the loan is $6,000, maybe that's fine, but if you're trying to deal with 50, 60, 70 employees, those people's payrolls, you're talking half a million to $2 million. Nobody wants to be saddled with that, even at a low interest rate and have to pay it back in 24 months. Michael Ly: [00:17:00] That's where accountants are so relevant, right now. If, at any time in history, accountants are relevant, it's now for small business owners because accountants are equipped to be able to help their clients figure out which route to go makes sense for their business. Blake Oliver: [00:17:16] There may have been some breaking news just a few hours ago. I recall seeing something, somewhere on Twitter, about this interest rate changing from half a percent to one percent at a news briefing.  Sabrina Parsons: [00:17:28] It's changed a couple of times. It was actually up at four percent for 10 years, and that's what a lot of people thought for a while, and the banks, as well. Then, when all the paperwork to the banks came through, and it was actually half a percent for 24 months. So, if it's changed again, I haven't heard about it, but it's changed twice- I mean, it's already changed once. It was originally a 10-year loan at four percent, and that changed to be a half a percent for 24 months. Michael Ly: [00:18:01] Yeah. Blake, I think you're referring to the SBA's administrator finally put out on the SBA website, between 4:00 and 5:00 p.m. Pacific Time. They put out the interim final rule that the administrator wrote up of how they would go about advising and providing guidance to the banks and community banks. That did say, in that final rule that's going to the Federal Register now, that the loan interest rate would be one percent for this loan. Blake Oliver: [00:18:30] Okay, so that just happened because I'm reading here, on a CNBC story that is dated April 2 at 7:09 p.m. Eastern, and we're recording at 8:00 p.m. Pacific, that Mnuchin announced in a press conference this afternoon, or in the evening, Eastern Time, that interest rates were raised to one percent, after hearing concerns from banks. So, I guess-  David Leary: [00:18:57] I'll check his Twitter [crosstalk]  Blake Oliver: [00:18:57] Yeah, because that's where official policy is made these days. So, apparently, there was a resistance from the small banks. Sabrina, maybe you have some insight on this. Resistance from the small banks because they're getting a cut of all of these loans that are being originated, and it wasn't gonna be that much money. Like, for a $100,000 loan, it would be $5,000. Now, they're raising this percentage, so the banks are gonna get more for these smaller loans, or something like that?  Sabrina Parsons: [00:19:30] Yes, exactly. I do know that the banks were concerned. Now, ours is a small community bank, and our perspective had been, you know what, we need to help small businesses. We need to help our community. There is a small fee that the bank gets for getting the loan through; and given that interest rates are basically at zero - 24 months and 0.5 - our community bank's perspective was it's fine. It'll be worth our while, and our community desperately needs it. But there was definitely some kind of pushback from some small community banks that said, "We don't get anything."  [00:20:11] Now, the biggest thing there to really consider is it's all the very small businesses that they're most concerned about; that they have this volume of thousands and thousands of businesses that need Payroll Protection Program loans that are gonna be less than $100,000; because the loans above half a million- and I forget, there's ... I think it's half a million, but loans about that amount, they get three percent for, but if you're getting $1 million, the bank's getting $30,000, and that's not bad. It's not the business model the bank has, but you're making something from it, and it's worth the time; versus, for $100,000, you're making $5,000. [00:20:56] So, there was definitely concern, not just from the banks, but I think from the general community, that if you didn't make a teeny bit more incentive for the banks, you don't want people playing with things and not serving all the businesses. You don't want cherry picking. The SBA will the auditing banks, so they do want preference for underserved entrepreneurs - entrepreneurs of color, women, and rural entrepreneurs need to get preference. Banks are gonna have to prove that they're doing that. This was kind of a concession to sort of make sure that we can serve as many small businesses as possible.____________ This episode of The Cloud Accounting Podcast is sponsored by Jirav. Jirav sounds a lot like giraffe, and that's no accident. Giraffes are the tallest animal in the world. That gives them a great view. Our goal at Jirav is to give you a similarly great view of what's going on with your business. We do that by helping you understand where your business has been and, most importantly, predict where it's going.  Jirav connects your cloud-based accounting, payroll, CRM, and billing data together to automatically update shareable online dashboards, monthly reporting packages, and sophisticated financial plans, and budgets in real time. If you're using Excel for reporting and forecasting, you'll save hours every month with Jirav. To learn how accounting firms are using Jirav to deliver connected insight, strategize growth, and help their clients make more profitable decisions, visit Jirav.com, and start your 30-day free trial. That's J-I-R-A-V dot com. See farther with Jirav. ____________David Leary: [00:22:40] All right, I got all my ducks in order. I know I'm not gonna have to lay off people. I'm ready to apply for these loans. I've started to see things about fees. Can the bank charge me a fee, like an origination fee? If Michael's helping me prepare my paperwork, is he allowed to charge me in the process of trying to apply for this loan? What's okay and not okay out there? Sabrina Parsons: [00:23:01] A bank can't charge you. That's absolutely not allowed. The bank cannot charge you for the PPP, and the SBA is not gonna charge you for the EIDL at all. Now, in terms of will Michael? I expect he will, and he should, if he's doing work for you. The work has to be done. In our company - we're a small business; we're under 100 employees; we've been affected by this, and we've been looking at it - we do have a CFO. So, he's taking his time, and his effort, and he's looking at all of this and seeing what makes sense for us. I would expect that if Michael's gonna do this, he should be charging you, and you should pay him because you should want him to do really good work. Michael Ly: [00:23:43] Yeah, no, definitely Sabrina. Like any accounting firms, we're prioritizing on focusing on our own customers first because those customers have agreements with us. They're paying us advisory fees, and monthly servicing fees, right now. In the same vein, the banks- many banks have communicated that they're gonna first prioritize and focus on their current customers that they have relationships with and that they may also already have SBA-backed loans with. They're gonna be focusing on those customers, putting them in line - that would make sense - before new customers get in line with them. [00:24:17] Like I tell my customers, you do want to reach out to your current banker, or your current bank. If you don't have a relationship with them already besides just a deposit relationship, you want to find out who the bank lender is at your bank and have a- communicate with them, form that relationship, and begin to let them know what assistance you'll need, and what option you want to go with, and get the help of your accountant, or your attorney, or your advisor to walk you through this, as you apply for these loans. Blake Oliver: [00:24:45] The banks are gonna get one percent because the SBA is going to pay the interest to the bank on the small business's behalf if they comply with the program and use the PPP money to maintain payroll. Sabrina Parsons: [00:24:59] They're not actually ... If you get full forgiveness because they're ... You have six months' reprieve, basically, to pay back the loan. If you get full forgiveness, the bank is only getting that percentage, either five, or three percent, depending on the amount. The bank is not getting paid the one-percent interest. It's beyond that, and anybody who keeps the loan and doesn't get full forgiveness. So, that's my understanding that the bank isn't necessarily gonna make any money, per se, from the loan, those eight weeks. The little bit of money to be made is from that three or five percent that they're gonna get, depending on the loan amount. Then, if people borrow more than is forgiven, or they don't spend it in the right way, then the bank can make that one percent, and it's the actual- it's the borrower that will pay it. Blake Oliver: [00:25:54] Okay, so the one percent applies only if the loan is not forgiven. Sabrina Parsons: [00:25:58] Exactly.  Michael Ly: [00:25:58] Correct. Blake Oliver: [00:25:59] The portion that is not forgiven. What is this three to five percent, again? Sabrina Parsons: [00:26:02] So, it depends on how much you're getting. It's a sliding scale. If you're eligible for ... I think it's- and I'm trying to find the exact information here ... If you are eligible, up to $500,000, the bank gets five percent of that. Beyond that, the bank gets three percent. Blake Oliver: [00:26:20] So, that comes out of the amount that I would get is like [crosstalk]  Sabrina Parsons: [00:26:25] Nope. That's getting paid by the SBA. Blake Oliver: [00:26:27] Oh, okay.  Michael Ly: [00:26:27] It's basically a lender fee. It's basically a lender fee, yeah.  Sabrina Parsons: [00:26:30] Yep.  Blake Oliver: [00:26:30] So, the banks are gonna make a lot of money from this. Sabrina Parsons: [00:26:34] Well, it depends, right? If your average loan is $50,000, and you get your five percent, $2,500 for the amount of scrambling, and work, and dealing, that's not ... The banks aren't making a ton of money. I mean, if you're looking at it from I'm gonna be a ... This is gonna be a huge moneymaker; maybe in bigger communities, where businesses are bigger, if your average loan size gets up above $500,000, it's an opportunity for banks to make money. Blake Oliver: [00:27:08] Because they're making five percent on those bigger ones? Sabrina Parsons: [00:27:11] Three percent [crosstalk] It's five percent on the lower amount; three percent on the bigger one; but it's just more money, right?  Blake Oliver: [00:27:16] Right.  Sabrina Parsons: [00:27:16] From the community bank perspective, as a board member, the opportunity I see is it's an opportunity to actually serve your customers, serve them well; help them so that they don't go out of business. I don't want them to go out of business because then I don't have a customer. So, I am incentivized to help them stay in business, and it's an opportunity to actually serve people who may become customers. Anybody who's banking with a community credit union, they don't do SBA loans. They're not SBA-preferred lenders. Blake Oliver: [00:27:53] Oh, interesting.  Sabrina Parsons: [00:27:53] Different banks are ... Yeah, community banks can't. Credit unions can't be SBA lenders, the way the credit union makeup is. There are gonna be people out there who have banks that are not SBA-approved lenders, and they're gonna have to go to other banks. So, it is an opportunity, if done correctly, to grow your customer base. I think that's the bigger opportunity. It's, number one, you don't want your customers to go out of business because that's not good for you, and, number two, if you're able to figure out a way to streamline this and help a lot of customers, you could be in a really good position, once we get out of this crisis [crosstalk]  Blake Oliver: [00:28:35] The reason I brought this up - I'm sorry, Michael. I'll come back to you - is that I did- in my head, I did the math. I said, okay, $350 billion; five percent of that is $17.5 billion dollars. That's a lot of money that the banks are gonna get. Michael Ly: [00:28:52] Yeah, well, the majority of these loans, again, are gonna be smaller than $350,000, and the final rule said for loans not more than $350,000, they would receive that five percent; but then it does step down to three, between $350,000 and $2 million; and then it drops down to one percent, if it's a loan above $2 million. So, between [crosstalk] $2 million and $10 million max that you're allowed on the PPP, the banks only gonna get one percent of that loan. Blake Oliver: [00:29:17] And it's limited to ... Is it two-and-a-half times your average monthly payroll? Michael Ly: [00:29:24] Yeah, two-and-a-half times the average monthly payroll cost, and there is a definition to that monthly payroll cost that's provided by the SBA on what they're defining as monthly payroll costs. Blake Oliver: [00:29:36] And I should say, is it the monthly payroll costs? So, I take a month of my payroll costs and multiply it by 2.5, with all those provisions, or is it a larger period of time? I was confused on that. Michael Ly: [00:29:47] Yeah, according- Sabrina Parsons: [00:29:48] You have to take- Oh, sorry. Michael Ly: [00:29:50] I was gonna say, according to the final rule, it's the previous 12 months of payroll costs and the average of that [crosstalk] So, it's the total. Yeah, over 12 months [crosstalk]  David Leary: [00:30:00] So, when I go to the bank, I have to have some report that shows my payroll for the last 12 months and then the current quarter, by month. Sabrina Parsons: [00:30:07] Yeah, well, they'll actually ask you on the application. So, the SBA has an SBA application. Some banks are rolling that into their applications, but the SBA already released it. It's out there, and you can get it - their actual application. On their application, what they want to see is that actual calculation of ... You have to do everything. You go, you do your rolling 12 months; you get your payroll, you divide it by 12, you multiply it by 2.5, and now you've got what you're eligible for. So, that'll be a line. Then, the next line will be basically you have to figure out what is actually eight weeks, because that's not two-and-a-half months, and it's eight weeks of now, and what are all the approved expenses? So, that's a different number. When you go to them, you do have to have some records. [00:31:02] Basically, if you've been using accounting software, and you have your payroll in it, you'll have some records. If you have been paying payroll tax, you'll have all of that. That's really what they want. They just want to be able to see that. One of the things that a lot of people are recommending is that when you get your PPP money, that you actually open an account, you put it all in that account, and you pay only approved expenses because it's a very clear, easy, trackable way to be able to show and make sure you're gonna get your forgiveness; rather than co-mingling, and then you have to be very careful with recordkeeping. You still have to be careful, but if you're getting a chunk, and you're gonna pay eight weeks of payroll, and rent, and utilities, which are approved, put it in a separate account, and pay it all from that account, and only pay those things, and it'll make your recordkeeping easier. David Leary: [00:31:58] I do the calculation based on my payroll, and that's how they figure out how much the amount for the loan is, but I can use it, and spend it on my rent, and other items. Michael Ly: [00:32:09] Yeah, there's a list of forgivable expenses that are covered in the covered period. It includes payroll, rents, utilities, and other items that's been listed out by the SBA. David Leary: [00:32:19] Is my rent and all that included in the original calculation? Sabrina Parsons: [00:32:22] No, and that's why the original calculation is two-and-a-half months, I guess. You get to calculate two-and-a-half months, and you only get forgiven for eight weeks. That allows you potentially to have some extra, to pay for rent and other things. Blake Oliver: [00:32:41] I was wondering if the wo-and-a-half months was just how long they hope this is gonna last, at the longest. That it's like, "Let's really hope that it's done by April, May, mid-June ..." because if not- that brings me to my next question, which is the amount is $350 billion. How quickly is this gonna go, Michael, or Sabrina? Sabrina Parsons: [00:33:03] Every small business in America applies for it, and everybody just gets $12,000. Blake Oliver: [00:33:11] Great [crosstalk] Wow, I hadn't thought about that. Sabrina Parsons: [00:33:15] So, there you go. But not everybody's gonna apply, right?  Blake Oliver: [00:33:18] Right.  Sabrina Parsons: [00:33:18] To Michael's point, and what he said already - you may be in situations where it just doesn't make sense. If you've already laid everybody off; if you've shuttered; if you can't open for the next two months, you should be thinking of other options. Maybe it's the EIDL, and maybe it's something else. But not everybody is gonna apply for this. It isn't going to make sense for everybody. Michael Ly: [00:33:44] Correct.  Blake Oliver: [00:33:44] When do the payments start? Do they start immediately? Is the whole amount due in 24 months, or what?  Sabrina Parsons: [00:33:52] No. Oh, the payments for the borrower? You get six months' reprieve.  Blake Oliver: [00:33:55] Okay, got it. Six months, and then I start making payments on principal and interest, if I [crosstalk]  Michael Ly: [00:33:59] Correct.  Blake Oliver: [00:33:59] If it wasn't forgiven. Sabrina Parsons: [00:34:03] But I really would encourage small business owners to be working with a financial advisor, whether you have someone internally, or you're going to an accountant. Because I really ... The way this loan pans out, you should be getting what can be forgiven. That's what this is for, and that's how you should think about it. That's really, I think, what people should think about calculating. Then, if you need more, go to the EIDL, and then think about how you're gonna deal with the EIDL. If you're gonna go bankrupt, don't get any of it. Michael Ly: [00:34:37] And if you're hoping or banking on forgiveness, you've got to remember that the whole purpose is for payroll, and payroll costs. So, at least 75 percent of this loan, in order to be forgiven, needs to be spent on payroll costs. You can't be using this for rent, utilities, and other costs that are listed as forgivable costs and have that add up to more than 25 percent of the loan- of the portion you want forgiven. So, you really need to focus on making sure that this is spent on payroll costs, and that you have a way to spend that, and you have the people employed, or people returned from unemployment, in order to do that. Blake Oliver: [00:35:20] Sabrina, you said I shouldn't get this unless I'm gonna still be in business, but is there a personal guarantee? Do I have a risk, if I take this and then, I go out of business? Sabrina Parsons: [00:35:29] No. The Payroll Protection Program does not have a personal guarantee, but the whole ... If you're really going out of business, you probably have already laid people off. When you do your calculations, you're gonna see it doesn't pan out ... It's not just to pay yourself. You can do that. There is a independent contractor, and sole proprietor clause to this; nonprofits can also apply. They've also beefed up unemployment, and everybody's getting $650 more per week. So, I mean, you really have to weight it.  [00:36:04] The whole purpose of this program is to help businesses that really can survive and need that extra help to keep their FTE where it is and not pour people into unemployment. Obviously, you can do whatever you want to do, and people are gonna do it, but from a kind of mission of helping small businesses, I really would advise people to think very clearly what their options are and apply for the right programs. David Leary: [00:36:36] So, I have a question, Michael. You've advised me to ... Or Sabrina [inaudible]. I'm gonna set up a different bank account; I'm gonna make sure I only use this money to do payroll, and my rent, and the qualified expenses. Does that mean in six months, when it's time to get it forgiven, do I have to create some report, and go back to the bank, and show them something, or is this more like an IRS audit situation? Like, maybe, one day, the SBA will show up and want to see justification ...  Sabrina Parsons: [00:37:02] No, you will have to ask for forgiveness. When you ask for forgiveness, there will be a process which is not clear yet because they barely have clarity on how you can apply for it, but there will be a process, and you will want to do that a good 60 days before the six months, because you will have spent all your money in eight weeks. As soon as you spend your money, you should be working with your bank and saying, "Great, what's my process? How do I get this forgiven? Here's all my recordkeeping. It's all in shape, and I have everything I need, and I can prove everything that I need to prove," so that you immediately just get it forgiven and you don't have to worry about. Blake Oliver: [00:37:41] Now, somebody said that I can get this loan even if I'm a sole proprietor; I don't have a business entity; I'm an independent contractor. I think there's lots of different terms that are all interchangeable, here. So, how is that gonna work? Michael Ly: [00:37:55] Yeah, I believe the application process opens up for another set of borrowers, like self-employed, and independent contractors, starting April 10. That guidance, I think there's gonna be more clarity put out even for that group of people, but they're gonna have to wait until April 10, in order to do that. Blake Oliver: [00:38:14] I assume then- let's say I'm that person, I'm gonna be the only person on payroll, right? I can do that? They're gonna let me do that, instead of having to go [crosstalk] Go ahead, Sabrina. Sabrina Parsons: [00:38:24] There's gonna be a process. There's gonna be a process for it of being able to prove, from your taxes and what you filed. People have asked me, "Well, so my 1099 people, they don't count as FTE, if I'm not using them?" They don't. When we're talking for the PPP, if you employ people, it's people on payroll, you pay payroll taxes for. Your independent contractors are eligible, but they're gonna have to apply on their own. Like Michael said, that application date starts April 10, and I almost think that it's because they're not sure what that process is gonna look, and they're just dealing with this one first. Blake Oliver: [00:39:03] You mentioned that if every small business in America applies for this thing, we're all gonna get $10,000, which, to me, indicates that we've got, what, like 35 million small businesses that might apply? Sabrina Parsons: [00:39:16] If you look at exactly all the numbers. This isn't enough. I think Michael alluded to ... There's already talk about what's next because this isn't gonna- or maybe, Blake, you asked - does this mean it'll be over in eight weeks? Probably not. So, there's gonna have to be another aid package. They're gonna have to do something else. Blake Oliver: [00:39:36] Where I was going with that question is - are the banks gonna be able to process tens of millions of loan applications, potentially? I mean, even if it's just in the millions, it's a lot to do all very quickly. How soon is this money actually gonna get out to people? Sabrina Parsons: [00:39:50] That is a really good question. I have heard from some people that larger banks already have a full online application process, and they're saying you can get your money in 48 hours. I have no idea if that's really gonna be the case, given that- Blake Oliver: [00:40:07] Well, Chase doesn't. Chase just has a landing page up saying that they're not gonna be done by ... They're saying they're not gonna have it by Friday. David Leary: [00:40:14] I saw an article on CNBC that says that every bank they've asked has said they're not gonna be ready this evening. This goes live in, what, three hours, two hours? Another hour, right, on the East Coast? Midnight, right? Sabrina Parsons: [00:40:26] Oregon Pacific Bank will be ready. Blake Oliver: [00:40:29] All right!  David Leary: [00:40:29] There's one.  Sabrina Parsons: [00:40:29] I know a few other banks that will be ready. U.S. Bank apparently has an online application, and they're one of the ones promising 48-hour return. I don't know how that is possible, but for what that's worth ... Michael Ly: [00:40:46] Yeah. It's interesting to see how the online and fintech players are trying to get involved, even Fundera and other online fintech players. Although they're not SBA lenders, they're trying to help customers get their documents together and ready. They either must have some kind of referral fee relationship with banks that do SBA lending, or they're trying to position themselves as an agent. There is information about being an agent and how agents get split on the SBA fee. They get a small portion of that fee. It is interesting to see how the fintech players are positioning themselves, in order to take advantage of this application process and help process these loans. David Leary: [00:41:29] Yeah, I'm on my bank website, right now, BBVA Compass, or it used to be Compass. It's just BBVA. They are a national preferred lender by the SBA, but it says nothing of the PPP on this website, in any way, shape, or form. Sabrina Parsons: [00:41:43] Wow. David Leary: [00:41:45] Blake, you said there's just a holding page on Chase's, right now? Blake Oliver: [00:41:48] Yeah, it basically said that they're not accepting applications at this time, but just check back. Then I read another news story, where they said they're not gonna be ready by tomorrow. Michael Ly: [00:41:56] Yeah, and many of the [crosstalk] I'm just gonna say, many of the larger banks have emailed, and I've seen emails from clients that they've received these emails, have said, specifically, "Do not go to your branch. Do not come in. We will provide information. Your branch, your lender at the branch, will not be able to help you." So, many of the banks are not ready and will not be ready tomorrow. Blake Oliver: [00:42:17] So, we'll find out. I think we'll see just how many of them are on the ball with that. Sabrina Parsons: [00:42:22] And I would say this is a great time to reach out to your community bank. The reason I joined a community bank board is that community banks were created to really be a part of the community. They're smaller. They can be more nimble; not all of them, but there's a couple other community banks here locally that I know are also ready. They don't have as much of the sort of big infrastructure and all the organizational structure to get through to be less nimble when something like this happens. I would say think about, if you're not banking at a community bank, just reaching out and seeing because they may be very happy to help you. Blake Oliver: [00:43:06] That's great.  Sabrina Parsons: [00:43:06] They won't do it in person, though. Do not go to the branch!  Blake Oliver: [00:43:09] And this is good because we should all be social distancing. It would be ridiculous if millions of small businesses showed up at their banks to have to fill this out. Michael, I want to make sure, before we go, that we talk a little bit about the practical aspects of handling this for your clients. You said you have, what, 150 clients? How are you going about helping your clients with this? Do you have a- did you email them a service offering? What's the workflow? What documents are you getting together? Is this driving you insane? Are you up all night? Michael Ly: [00:43:41] Me, and my team have been working a lot. Definitely. One is we've- I personally got on the phone over the weekend and over the past few weeks and actually contacted all of my major customers that I had a relationship with and just talked to them by phone, just checking in on them, making sure they were okay and their families were okay. Then, I'm letting them know about their options that we were aware of and then helping them prepare the documentation in order to work with their bank. [00:44:09] Oftentimes, we would ask, "Hey, if you want us to interface with your bank, we're more than happy to be the direct communication line so that you don't have to be involved other than going into your bank, and signing, and approving that you do wanna do this loan or do wanna go through this process. We're also helping just calm anxiety and fears with our customers who are worried if they can even still be in business, or maybe they're doing really well, and they're trying to assess, "How do I continue to grow during this time when most of my friends and peers around me are not? How do I have enough empathy and also take advantage of the opportunities that this pandemic is providing some of my e-commerce clients and other clients, where industries are growing and doing very well?" Blake Oliver: [00:44:52] Yeah, that's a good point. In every economic downturn, there is opportunity, and some businesses will fold, many will fold, but many giant successful businesses came out of downturns. If we can help them, like you're doing, then that's ... We're doing some good there. Michael Ly: [00:45:10] Yeah, exactly. I've been spending almost every day with a few other accountants that many of you know; we're doing a daily update on Facebook Live for our peers, and also for clients that we can send video formats to. I'm also engaging a local [crosstalk] chambers. Yeah?  Blake Oliver: [00:45:26] Tell us about that group. Where can Sage Intacct chamber that tell you. Where can people listen in or join? Michael Ly: [00:45:35] Yeah. I'm doing a daily Facebook Live on my Facebook page. Just search for Michael Ly on Facebook. Michael Ly, spelled L-Y. I'm doing that with Jacob; Jacob Schroeder, Amy Walker, Chris Macksey, and Dan Luthi, who all are accounting firm professionals, and accounting firm owners. We're providing that daily update at 5:00 p.m. Eastern, 2:00 p.m. Pacific, every day. We'll continue to, as we go through this pandemic, until we get out of it, just so that we can continue to provide recorded and live advice and answer questions for people. Blake Oliver: [00:46:13] Sabrina, thank you so much for joining us. If people want to connect with you, find out more about the Oregon Pacific Bank- did I get it right?  Sabrina Parsons: [00:46:21] Yep. Oregon Pacific Bank. Blake Oliver: [00:46:24] Where can they connect with you? Sabrina Parsons: [00:46:25] The best place to send people is just my email address: sabrina@paloalto.com. I usually am a huge advocate of work/life balance, and now that we're just stuck in our homes all the time, I have lost all sense of it. To be honest, I feel like closing the door of my home office and pretending nothing else is going on outside of my house, which is a typhoon of teenagers on Xbox, eating everything in sight. I'm available a lot. So, just email me! Sabrina@paloalto.com.  David Leary: [00:47:03] Sabrina, I feel like, in the past, you've always advocated ... Not work/life balance; you've [inaudible] work/life integration, and I think you've achieved [crosstalk] at the peak of this, right now, right? We've achieved this now. It's your dream, Sabrina.  Sabrina Parsons: [00:47:19] Oh, God, I don't know if this is my dream, but, yes, I certainly have always advocated integrated life. I don't think I quite imagined this, you know? I say to all of you who have little, little kids, I get it. It's really, really hard. But I will see your little kid and I will raise you by two teenage boys, any day [crosstalk] how do we trade?  Blake Oliver: [00:47:47] Maybe you can ship your teenagers over to me and you can take my five-year-old, who's bouncing off the walls because they closed the pool at the complex we're staying at. It's a challenge for everyone, right? Sabrina Parsons: [00:47:58] It is. It is David Leary: [00:48:00] So, thank you both for joining, because I feel like I have a little better plan of attack on Saturday, when I sit down to decide some calculations of what I think I want to do or not do. Hopefully, any accountants and bookkeepers listening will- they'll maybe reuse what you're saying when they communicate with their clients, because I think even accountants and bookkeepers, this has been changing so dynamically and so fast that they can't keep up with it. If they can't, for sure, the clients can't. Blake Oliver: [00:48:25] Michael is ... You're really on the cutting edge; you were on this from the beginning. I think a lot of accountants- I mean, we're all so busy. It's the worst possible time this could happen in that it's tax season and the deadline wasn't even extended until, what, last week? I mean, I don't even know what ... I don't know even when things are happening anymore. They're happening so quickly, and nobody has had any time to wrap their minds around this. So, thank you so much, Michael and Sabrina, for joining us and helping us get some clarity, because now I feel like I understand at least the PPP a lot better. Michael Ly: [00:48:59] That's great. Well, thank you. Thank you for having us on. You're right, accountants, this is your opportunity to shine. I've even seen accountants send emails to their clients that said they're available to help after July 15th, so I'm just amazed by that, and going, "This money, and their business will be gone by July 15, without your help." Accountants, this is your opportunity to shine. Your tax returns are delayed. Go and reach out to your customers and give them some help on this process. Sabrina Parsons: [00:49:28] Anyway, March was 8,000 days between now; and July 15, it's gonna be another 20,000 days before we even get there. Blake Oliver: [00:49:37] Well, it's because we're living on an exponential timeline now, right?  Sabrina Parsons: [00:49:40] Oh, God!  Blake Oliver: [00:49:40] Every week is twice as long as the week before. We're never gonna get to the end of the year at this pace. David Leary: [00:49:50] All right, well, we should let everybody get back to the application process because it opens in a few minutes, so we should probably wrap up.  Blake Oliver: [00:49:55] Yeah, I'm gonna be furiously checking all of my bank websites that I have relationships with, seeing if they are ready. If you're listening for the first time, this is The Cloud Accounting Podcast. This was a very specific episode on the PPP program, and the SBA loan options for clients. Normally, it's a weekly news roundup of all the latest accounting news with a bias towards technology. So, come back and join us for one of our regular episodes. If people want to reach you, David, online, where can they do that? David Leary: [00:50:26] The easiest place is gonna be probably Twitter, or LinkedIn. I'm just @DavidLeary.  Blake Oliver: [00:50:30] I'm @BlakeTOliver. Michael, Sabrina, thanks again so much for joining us, and we'll talk to you soon. David Leary: [00:50:36] That's a wrap.  Sabrina Parsons: [00:50:36] Thank you so much. Michael Ly: [00:50:38] Bye, everybody.____________ Want to get the word out about your newsletter, webinar party, Facebook group, podcast, or that fancy Excel macro you just created? Why not let the listeners of The Cloud Accounting Podcast know by running a classified ad. Hit the show notes, and the links to get more info.
Sabrina Parsons is CEO of Palo Alto Software, the company behind the best-selling business management software, LivePlan. Palo Alto Software is dedicated to serving the needs of entrepreneurs and small-business owners, and offers an entire suite of software and tools to help startups plan, manage, market, and grow their business. Sabrina has overseen the transformation of Palo Alto Software from a desktop software company to a cloud-based software company.
SponsorLivePlan: http://cloudaccountingpodcast.promo/lpbootcamp Show Notes  00:31 – A personal word of thanks to our sponsors  01:00 – Sabrina and Kathy define advisory from their perspective   03:05 – Finding the why - Asking the right questions to help build a strong advisory service  07:01 – Another model of combining bookkeeping and advisory - former guest, Kenji Kuramoto  10:22 – Worth repeating: Bookkeeping is not what creates value in the mind of the business owner   11:37 – Adapt or die ... Stop fighting AI and get creative   13:29 – Sometimes Kool-Aid is good. Sabrina breaks down the myth that strategic planning is not a small-business imperative 15:14 – Want to take your client-advisory skills to the next level? The LivePlan Client Advisory Services Boot Camp is just what you need!   16:41 – For small businesses that don't have the budget for CFO-level help, there are endless opportunities for accountants skilled in strategic planning and advisory  19:10 – When you've got the 'who, what, where, and why,' LivePlan gives you the 'how'   19:53 – Kathy shares the inspiration behind LivePlan and describes some key features  22:08 – LivePlan is launching a new QuickBooks Desktop Beta. If you're interested in taking part, visit LivePlan.com/strategicadvisors to learn more 25:16 – LivePlan offers tools that remove the complications and make it easy for small business owners to work alongside their accountants  27:15 – Why Palo Alto transformed from desktop to cloud, and how they found the method to their madness within their own method - LivePlan   31:53 – How does Palo Alto Software stay profitable, and continue to reinvest in its own growth? Strategic planning   34:07 – Sabrina give a brief glimpse into her side gig - advocating for working moms and working families and how it took her to the White House more than once Connect with Sabrina and Kathy  Email: accountants@liveplan.com Website: LivePlan.com Twitter - LivePlan: @LivePlanSA Twitter - Sabrina: @mommyceo LinkedIn - Sabrina: https://www.linkedin.com/in/sabrinaparsons Twitter - Kathy: @KathyGregory1 LinkedIn - Kathy: https://www.linkedin.com/in/kathy-gregory-821525112/ Get in TouchThanks for listening and for the great reviews! We appreciate you! Follow and tweet @BlakeTOliver and @DavidLeary. Find us on Facebook and, if you like what you hear, please do us a favor and write a review on iTunes, or Podchaser. Interested in sponsoring the Cloud Accounting Podcast? For details, read the prospectus.  Subscribe Apple Podcasts: http://cloudacctpod.link/ApplePodcasts Spotify: http://cloudacctpod.link/Spotify Google Play: http://cloudacctpod.link/GooglePlay Stitcher: http://cloudacctpod.link/Stitcher Overcast: http://cloudacctpod.link/Overcast TranscriptBlake Oliver: Welcome to The Cloud Accounting Podcast, I'm Blake Oliver. David Leary: I'm David Leary. Kathy Gregory: I'm Kathy Gregory. Sabrina Parsons: I'm Sabrina Parsons. David Leary: Sabrina and Kathy, where are you guys from? Sabrina Parsons: We are from Palo Alto Software, makers of LivePlan and also Outpost. But I think, for today, it's really makers of LivePlan, because we're here to talk to you guys about all kinds of things related to LivePlan and advisory. David Leary: There's the word - advisory. We're in the Summer [00:00:30] of Advisory. We were talking about this last night- Blake Oliver: Yes, yes ... Oh, and before we get into that, though, thank you so much for sponsoring and making this whole event possible for us. Sabrina Parsons: Oh, absolutely. Blake Oliver: We appreciate it!  Sabrina Parsons: We love Cloud Accounting Podcast. David Leary: Thank you. Blake Oliver: So, yeah, let's dive right into it. Let's do it. Advisory. David Leary: It's everywhere. We actually had an interview earlier today, where they're starting to ... People are getting scared by the word advisory, because it's like- Kathy Gregory: Being overused.  David Leary: Do advisory or die! What does it mean to you two? [00:01:00] Kathy Gregory: To me, you can't advise a small business or client. You can't advise your client unless you're doing strategic planning. For me, right away, you better be doing some planning, and broad-level strategic planning should be included and then the follow-up to the planning, but it can't be just ... I've heard people talk about advising on IT solutions, and advising, obviously, on tax. I completely understand that, and I think all of that can be included, but you're not gonna help a small business get [00:01:30] to where they wanna be - either grow or retain where they are, or even scale back ... Sometimes a business is trying to slow down, and a person's trying to retire out, or they're trying to just take it down and end it. Whatever it is, whatever the plan is, you're not gonna be able to do that unless there is strategic planning involved. David Leary: There's no plan, there's no map. What are you advising? Kathy Gregory: Right. Sabrina Parsons: Exactly, and I think that's ... I know, people get scared about it, and I think 'The Summer of Advisory' ... They're hearing all these things. There's a lot [00:02:00] going on right now, but I think the reason they get scared is because it is so undefined, and people define it in so many different ways, and it feels overwhelming. But, at the end of the day, really what you're doing ... What we all say by advisory, we all mean helping small businesses. That's what I like to kind of reframe and help people understand that it doesn't have to be this big, scary word that means 500 things. Really, what you're doing is helping a small business client. [00:02:30] How do you help a small business client without understanding their strategic roadmap, and where are they going, and really interpreting their financials for them? Because if they need IT help, maybe they'll come to you, but they're already there with you because you know numbers. If you're an accountant, that's why a small business client is with you. I think sometimes I see that disconnect, where, sure, you can learn IT, you can advise on IT, but your [00:03:00] strength as an accountant is your- the way you know numbers and embrace them. Blake Oliver: One thing I see, and I'm guilty of this, is people will ... When I was in practice, they'd come to me and they'd want a service. They'd say, "I need bookkeeping." Then I would just jump in and start doing that for them. Or maybe they would need some controller-type services. It was always best if I stopped for a moment, and I asked why. Not just "Why do you need my services?" Which I got better at asking that ... From a sales perspective, that's really important. But also, it's like, "Why are you in [00:03:30] business?" Sabrina Parsons: Yes.  Blake Oliver: We fail to stop and think about that. It could be, like you said, for strategic planning, Kathy. Maybe they wanna sell the business; they wanna retire, or I don't know, maybe it's just like they wanna quit their day job ... Everybody has a different reason, right? Financial independence- Kathy Gregory: I think, in the accounting industry, and in the public accounting industry, for so long, because of compliance-based services, a public accountant can literally sit back and wait for the client to come to them, because [00:04:00] they need whatever compliance-based service they need. But if you're going to work at a higher level with a client and help them grow their business, or help them achieve their goals, you have to lean forward, and you have to ask those questions that are different, and new, and more broad. Then, know how to apply that information. If the client tells you, "I'm trying to really just make enough money to send my kid to college," or, "I'm trying to purchase a new piece of capital [inaudible] company," or whatever it is, all of those are [00:04:30] business goals, and you have to be able to translate those into whatever financial plan that will help them achieve that. It's just it's a different type of work. Blake Oliver: Yeah. How do we get comfortable with that as accountants? Sabrina Parsons: You know, I think the first place is to also realize - and Blake, I don't know how much- whether you'll agree with me or not - but I feel like if you ask those questions to a small business, "Why do you need the bookkeeping?" I feel like we hear a lot from small businesses. We work directly with them. We started, and still [00:05:00] to this day, more than 80 percent of our revenue is direct from small businesses. We interact with millions of small businesses ... When they have the money to hire a bookkeeper, they don't understand what bookkeeping means. What they think to themselves is, "Whew ... I finally made it. I have enough money for somebody else to do the financials.". Blake Oliver: Right.  Sabrina Parsons: They don't understand that bookkeeping is literally compliance, and you're not helping [00:05:30] them analyze what's going on. You're just recording what happened. I think that's part of the disconnect. When accountants are afraid of advisory, because they don't know how to sell it, the biggest message I want them to hear is you don't have to sell it. You just have to do it, because that's why a small business owner is coming to you. I think it's a huge disconnect-. Kathy Gregory: And be able to know what the right price is for your firm and your ecosystem for that, too. Make sure you charge for it. But [00:06:00] yeah, just do it, because they expect that. Blake Oliver: Yeah, a lotta times, we give it away, right? Kathy Gregory: Yes!  Blake Oliver: We charge for a tax return, but we're doing a ton of advisory that's way more valuable to the owner. David Leary: And the owners will pay for it, because they'll understand the value- Kathy Gregory: If they understand it. Yeah, and I think that seems to be the next step for the accounting industry as a whole is to decide what it is, and then be comfortable with systematizing it, because I think it's ... I hear two things said a lot at conferences and at places, that advisory is knowledge [00:06:30] work. I hear that a lot. It's knowledge work ... It is, 100 percent, but you can still systematize knowledge work. You can still do that. You can set up for yourself a process and a system. Then, once you have that, then it's defined, and then you know what you're doing, and you can train your staff on it, and everybody knows what their piece of it is. Then, you can price it easier, and you can market it easier, and you know what that is. They need to embrace both - the fact that it's knowledge work, but that you can also make it a system. David Leary: Yeah. I think, this summer, a couple things I've [00:07:00] observed is Kenji ... Say Kenji's last name for me.  Blake Oliver: Kuramoto.  David Leary: Kuramoto ... Who was actually at The Accounting Salon. He was ... If you go back a couple episodes, listeners, you can listen to his interview. It was interesting, because he started 100-percent virtual CFO advising only. He's worked his way backwards into bookkeeping, because he realized he can't do any advising if their books aren't accurate-  Kathy Gregory: Oh, yeah. You've gotta have that.  David Leary: What's interesting, you guys have an app, LivePlan, and that connects to the accounting systems, but then also helps do the advising, right? There was a slide last week on Twitter. It was at the AICPA, and somebody was ... It was like, "Stop [00:07:30] doing bookkeeping and do advising!"  Kathy Gregory: Oh, boy.  Blake Oliver: Oh, yeah.  David Leary: How is that possible? Kathy Gregory: No, it's not possible.  David Leary: How do you do advising if you don't have good numbers? Kathy Gregory: No, no, you gotta have good numbers and a very clean month-end, or at least having it happen quickly. Sabrina Parsons: And if you can control that ... Kenji working his way to bookkeeping and understanding that, then your advising is gonna be better, because garbage in is garbage out. If you've got terrible charts of accounts and someone isn't doing the bookkeeping correctly, it's gonna be really, really difficult. But there's [00:08:00] an opportunity there, whether you wanna do all the bookkeeping or not. This is also where I think people have to not be afraid of what technology is bringing to the table.  I know a lotta people are afraid of all kinds of online services now, including Intuit, that are offering bookkeeping, right? I really want an accountant to look at that and say, "Okay, is that work that I wanna do - that work that's commoditized that I [00:08:30] can no longer charge as much for, because it's so easy for people to go online, and find services, and package services at ridiculous rates?" If it's well done, and you can then do the advisory, the value is not in the bookkeeping.  At some point, it's even gonna be ... I mean, technology, automation, IA, is gonna continue to work on the bookkeeping side and continue to make that an automated artificial-intelligence [00:09:00] process. That's fine. Let that happen, and use that, and then build your advisory services. Wouldn't you rather do super-interesting work, help a business grow, or sell, or add a partner, or add a location? Really be that entrepreneurial catalyst for your small business. That's so much more invigorating. You can bring passion to that. Don't be afraid of all the online services, because there's only gonna be more, and more, [00:09:30] and more of them, and that's okay. Kathy Gregory: You get to keep playing with numbers, too. It's not like you don't get to keep playing with numbers. You just do them in a different way; you analyze them in different way. Knowing that each metric that comes off of your standard P&L balance sheet and cash flow ties back to something going on in the operation that's working, either well or not well? That's a super-fun job. I nerd out over that all day. I think it's so fun to dig into those metrics and try to figure out [00:10:00] what's happening in a small business operation that's working, or not working, then asking the right questions of the business owner. There's nothing more fun than that, and there's nothing more fun than seeing their eyes light up, when you hit on something, you've uncovered something. They go, "Yeah ... Yes, that's not working right, and I don't understand it, but I didn't get the numbers to be able to know it." You know what I mean? It's like these two brains coming together. It's so fun. David Leary: Something you said, Sabrina, and I think this is the problem ... People hear some of the sentences, but maybe not the whole conversation. You said bookkeeping is not the value, but I [00:10:30] think people hear that, like, "Bookkeeping is not valuable," but you can't do the valuable stuff without solid bookkeeping. Nobody's saying bookkeeping is not valuable. Blake Oliver: Well, it's not what creates the value in the mind of the business owner. David Leary: Correct. Yes. Blake Oliver: It's essential to do the work, right? Sabrina Parsons: Exactly. Exactly. I think that's exactly right. Blake, you should repeat that again.  Blake Oliver: It is not what creates value in the mind of the business owner. Sabrina Parsons: Exactly. You also can't fight ... I believe you shouldn't [00:11:00] fight that technology battle. You should embrace it. I don't mean that bookkeepers aren't smart, that they aren't doing valuable work, that what they do today is somehow lesser. I just mean this is the reality. This is what's happening, and they can't stop that. Right? It's the same way where, if you're a taxi driver, at this point, you've probably stopped fighting rideshare, right?  Blake Oliver: Yeah, probably. Sabrina Parsons: Ten years ago, it didn't exist; five years ago, taxi [00:11:30] drivers fought it; at this point, they've given up fighting it and they've either joined or moved on to do something else-  David Leary: We've talked about that on the podcast, in the past. There were some articles, because we brought this up ... There's taxi drivers, and taxi associations, in taxi people that are doing very creative additional services. It's forced them to step up their game. Blake Oliver: Yellow Cab, I think, created their own app now. They are being forced to improve, I think, and the same thing's happening in our industry with these software plus a service type of offerings - the Botkeepers, the ScaleFactors, the- [00:12:00] David Leary: QuickBooks Live-  Blake Oliver: QuickBooks Lives. That's forcing us all to up our game, but it's also creating a bigger market for these services. Now, people are aware, "Hey, this is not just a niche thing. I can get this." Sabrina Parsons: The other part that I think, to Kathy's point of this can be exciting work, is that we've lived in an environment in the U.S., where small businesses understand they need bookkeeping. As soon as they can afford it, they want somebody else to do it. They've understood [00:12:30] that they can't run a business without bookkeeping software. That's why you've got all these big players and lots of players in this market. They embrace that. They know that. But they're still failing. If you start a business in five years, 70-percent chance that you're outta business. 60 percent of the ones that fail were actually profitable. They ran out of cash. They're not managing their business, and this has been for years, and years, and years. What I think is the super-exciting [00:13:00] opportunity is that if all of these services online and all of this technology really pushes bookkeepers and accountants to innovate and to be really thoughtful about what they bring to the table and bring real value with their experience, their knowledge, their human mind that technology can't do, we actually have a chance in the U.S. of changing the economy. Small businesses drive the economy, and a rising tide lifts all boats. I [00:13:30] know I sound like I'm dispensing Kool-Aid, but I find it to be super-intriguing to look at those numbers and think about could we really affect the economy by getting accountants to do this sort of advisory work? It is good for small businesses. Intuit does strategic planning. Xero does strategic planning. All public companies do. When we know and we see all those reports from Wall Street ... Did [00:14:00] Google make their numbers? How's Microsoft doing? How's Intuit doing? What they're talking about is their forecast, and what they're doing is saying, "Here's the forecast, here's the actual. Did they make their numbers?" Startups do strategic plans.  Small businesses are kinda told this myth that business planning is for startups only, and for raising capital, which is a total myth, because even large [00:14:30] private companies, they do planning, and they have a board, and the board has to approve the plans, and they look at it every month. It's almost this myth that small businesses have been told, and then accept, because strategic planning is hard, that they don't need it yet. Yet, everybody else that's successful and bigger does it. Kathy Gregory: Even without the board, even ... I spent years in a fairly large engineering firm, and we did it just for middle operational management, pulling data [00:15:00] out of the accounting system, because the accounting department wasn't doing that; massaging it in a way that made sense, building forecasts, so that operations managers could make decisions; could make strategic decisions. This episode of The Cloud Accounting Podcast is sponsored by LivePlan. This has been The Summer of Advisory. Everyone at every conference, and every session is telling you to become an advisor, but the fact is, a 50-minute CPE session at a conference does not make you an advisor. [00:15:30] Some of you even took to Twitter to vent about this fact. Well, I have some good news for you. Believe it or not, Twitter led to the creation of a three-day course, or should I say a boot camp on advisory? Yes, that is right. You can now really become an advisor by attending the LivePlan Client Advisory Services Boot Camp on October 2, 3, and 4, 2019. The three-day event in Eugene, Oregon, will include deep learning, and hands-on workshops to learn the LivePlan method for strategic advising, and how to market, sell and deliver this vital client [00:16:00] advisory service to your small business clients. To learn more about attending the LivePlan Advisory Bootcamp, head over to CloudAccountingPodcast.promo/lpbootcamp. That is Cloud Accounting Podcast dot promo forward slash L-P-B-O-O-T-C-A-M-P.  David Leary: I suspect small businesses do wanna make plans, but they get caught up running their business, and that's where partnering with somebody who could actually come in and just ... In a way, it's advising- just [00:16:30] holding them accountable a little bit is just gonna help them. Sabrina Parsons: Also, if the accountant does the advisory, because the small business owner is doing a million things ... Really, it's like Kenji being a CFO for hire. That's what they need. They just, they can't take on that role. They don't have that knowledge. They don't have the expertise. They need that value from somebody else, and they will welcome it. Once you do it correctly, they'll be addicted. They are not gonna drop you. Your [00:17:00] retention with that client is gonna be as long as they have their business. If you're charging them $2,000 a month, you're not getting a CFO for $24,000 a year. That is not happening. You can't get that sort of strategic level of experience for that sort of money. So, if an accountant can do that, there is room for thousands of dollars a month that are still completely doable [00:17:30] for a small business, and the value is there. Blake Oliver: So, I'm an accountant. I'm ready to make this leap. I want to get started in advisory, but I don't know where to get started - that's the classic problem. I wanna do it ...  David Leary: You just go to conference. There's lots of sessions. Blake Oliver: How does LivePlan create that starting point for me. How does it work?  Kathy Gregory: From soup to nuts, if you do it [00:18:00] all, you would start with a broad conversation with your client to understand their big goals and begin doing real strategic planning with them that would include everything from looking at their market, and looking at how they're selling, and who they're selling to, and why they're selling it, and having a fairly deep discussion with them about that. Then translating those things into a forecast. There are simpler ways to start, if that is work that is new to you. In our software, you can dive into those- yes, I'm sorry?  Blake Oliver: Sorry, I'm just trying [00:18:30] to picture it in my mind. I'm creating a strategic plan. It's like a business plan. Am I thinking the same terminology?  Kathy Gregory: Yeah, we call it a Lean Plan. Blake Oliver: Lean Plan, okay-  Sabrina Parsons: I will just interject, before Kathy describes it, because you asked how LivePlan helps. I think the number-one thing, to David's joke of just go to conferences, because they have all these sessions, is that I think part of the problem for accountants is they all get talked at about why, and they [00:19:00] don't need that. They already bought it. They know why-. Blake Oliver: This is the classic problem of conferences, all high level. Sabrina Parsons: Exactly.  Blake Oliver: "You need to do this." Then you go home, and you wonder like, "Well, how do I do it?" Sabrina Parsons: Exactly. Exactly. This is what we've learned over the years. Our tool is a tool for small business owners. It is a platform and a system for accountants, and it's two different things. What we've really understood that what accountants needed is not to be convinced. They're convinced. They buy it. They [00:19:30] nod their heads. Then they go home, and they don't know what to do. What Kathy's really built, and then I'll let her describe it, is the 'how,' and in a way that makes sense to someone who's been doing tax and compliance work. It is a system and a process with tasks that you can learn how to do. We've really gotten into the weeds to show accountants, and train them- Blake Oliver: Yeah, we like checklists, so this is-  Sabrina Parsons: Yes, yes-  Kathy Gregory: It is a checklist. Yeah, my background is in a lot of things, but business process design [00:20:00] is one big piece of it. So, it was realizing- it was coming to these conferences, when I first came to Palo Alto Software, and realizing, oh, this industry doesn't have a business process for this, and that really is what's needed. Then, once there is a master kind of business process, then firms can adopt that in whatever way makes sense depending on the things they focus on, or the skills they have. If they focus on only bookkeeping, there's pieces of it you can do. If you're sort of CFOs for hire, then it's different; but you have to have the master plan first and then be able to [00:20:30] pick apart pieces of it you like- Blake Oliver: Got it.  Kathy Gregory: -and deal with capacity planning, and resource allocation, and all of the things that you have to think about when you roll out a new service. Blake Oliver: So super-high level, just overview for those who are not familiar at all with LivePlan ... I think I used LivePlan actually, myself, as a business owner. Kathy Gregory: Great. Blake Oliver: I don't know if you know that. When I started my firm, I created my business plan, that one-page pitch to get an investor with LivePlan-. Sabrina Parsons: That's awesome. Blake Oliver: Now, of course, I was bad, and I didn't follow through with the forecasting, and the [00:21:00] budget-to-actuals, and any of that-. David Leary: That's because he was a bookkeeper, and he was too busy. Blake Oliver: I was too busy. So, that I'm familiar with. I could create that business plan and try to get investment or just really distill in my mind what it is I'm doing, which is actually just a great exercise. Can you explain your business in like-. Kathy Gregory: Isn't it great? Blake Oliver: -in one sentence? Kathy Gregory: And how it limits you to those characters? Blake Oliver: Yes!  Kathy Gregory: Because it seems like a nothing thing, but it's important, because you strip out all the words that don't matter, and you get down to the words that ... It really is powerful. Blake Oliver: So that part I did. Then, if I had actually continued, I would then [00:21:30] create a financial forecast? Kathy Gregory: Yeah. Blake Oliver: I wanna hire employees; I wanna expand ... It's building out a forecast. Kathy Gregory: Yeah, and then really thinking through the things to forecast. That's a critical piece of it. The software helps you think through that. If you already have maybe a chart of accounts with a ledger, you've got codes already, but the things you wanna forecast should be strategic to your business, and they should roll out of that Lean Plan. Blake Oliver: Got it. Then, once I've created that, I can pull in the actuals from my accounting software. What GLs do [00:22:00] you support? Xero, obviously, because you're here at Xerocon. You're also doing ...?  Kathy Gregory: And QuickBooks Online-  Blake Oliver: QuickBooks Online. I pull in those numbers ...  Sabrina Parsons: We are also going back to ... We used to support QuickBooks Desktop. The Sync Manager went away. We were hesitant to build our own sync manager, waiting to see what Intuit was gonna do; but it's clear that QuickBooks Desktop, at this point, still has a lotta usage, and it isn't [00:22:30] going away. So, we are launching our beta for accountants next week. If anyone is curious and they want to be part of the QuickBooks Desktop beta, they can contact us. If they just come to a LivePlan.com/strategicadvisors, they can find the information, but we are back to supporting QuickBooks Desktop.  Blake Oliver: All right. Well, the folks who are signing up for Right Networks, for their Always On feature, which claims to make QuickBooks Desktop just as good as QuickBooks Online, now [00:23:00] they've got LivePlan integrating with it, too. Sabrina Parsons: We are actually using Right Networks, their ...  Kathy Gregory: Autofy.  Sabrina Parsons: They just purchased Autofy, and-  David Leary: Yep, yep, that's what we were talking about [cross talk] Sabrina Parsons: Autofy is who's actually doing our Desktop integration-. Blake Oliver: You don't have to be logged into as a user, too, for the sync to work, all that stuff?  Sabrina Parsons: Exactly. Exactly.  Blake Oliver: We oughta talk about this more, David. I'm actually more bullish on hosting than you might think. Yeah, yeah. Well, that's great. Okay, now it's kind of making sense in my mind. Kathy Gregory: Yeah, so you [00:23:30] connect the accounting solution, and then LivePlan's dashboard is going to present you with the metrics - each individual metric. It was built, remember, for small businesses. That's the cool thing about it, for accountants, that they don't have to now reconstruct and build reports that makes sense to small businesses, because they're already built; they're already done. Blake Oliver: Got it. Kathy Gregory: Then it shows me very clearly the difference between plan and actual; really simply, like with green arrows up mean good, and red arrows down mean bad. [00:24:00] Again, it's cool for the accountant, because it's a talking point. Have you ever been in an advisory meeting or any a meeting with your client, maybe at month end, and you've got the talking points. You know what you're gonna tell them, but your brain just breaks down in the middle of the meeting, and you kind of forget the points? This is nice, because it helps guide you through- Blake Oliver: It's that agenda for that meeting.  Kathy Gregory: Yeah, it is. Then our business process that's outside of LivePlan comes with meeting agendas, and scripting, and all the other things that help you- that support you. Sabrina Parsons: Initially, if you're [00:24:30] afraid, or you don't know, the scripting is great, right? We kind of prompt you with, "Here's some questions you should be asking." When people actually start doing this, then they build their own questions. They get more comfortable. They understand their style and the style of the client. It goes back to that whole idea of everybody gets the why; How? How?  We've realized that getting down to even providing you with scripts really helps people get over that hurdle and that fear, because the other part that I think is really vital, and [00:25:00] I would say is a competitive differentiator for LivePlan versus other reporting analytics apps, is that we didn't build this first and only for accountants, who then put stuff together and presented to clients. That's fine, and other people have chosen to do that, but we built it so that the small business owner works with the accountant; so that the small business owner's also using the dashboard, and so that the reports make sense to the small business owner, because what we heard from accountants [00:25:30] is they stop using a lot of these other tools because they send stuff to their client, and the client never responds, doesn't look at it month, after month, after month. They don't, because it's too complicated, because it wasn't built for them.  David Leary: And essentially, because you guys have a 25-30 years’ experience servicing small businesses, and you attacked it from that direction. It reminds me of Intuit; years ago, in my career at Intuit, with TurboTax. They, at one time, hired an editor from People Magazine to basically go in and change all the text in TurboTax, because it [00:26:00] was easier to use then, because it was written with all this accounting language, and nobody could understand it. It's kinda the same thing. If people are coming from the accounting dashboard side, trying to push down the other direction, you're probably not gonna communicate to the small business owners. You guys already had that DNA in you, and then came the other direction. Sabrina Parsons: Exactly. We actually started working with the accountants because they came to us. We got to a point of critical mass of having LivePlan out there in the marketplace, that the small business owners were taking LivePlan to the accountants. We started hearing [00:26:30] from accountants saying, "What is this? Do you have trainings? How do I use it? My small business clients have it, and now I have to learn how to use it." We really were pulled by the accountants to come into this market because of our DNA with small business owners and the fact that the small businesses were already using it, which I think was appealing to accountants. They don't have to position, or sell, or market this other tool or these other reports. David Leary: Could you speak to ... It's [00:27:00] not really advisory related, but I think it's a cool story, because everybody's in this transition still, constantly - desktop to cloud. We just talked about desktop a couple seconds ago. But, tell the history of LivePlan, and Palo Alto software, because it was a desktop company, and now you've changed it into a SaaS cloud company. You've made the transition yourself. Sabrina Parsons: Yes, we have. I took over the business in 2007, and we were basically a Windows desktop company. Our flagship product was Business Plan Pro. A lot of people have used it; millions of entrepreneurs. [00:27:30] But the writing was on the wall, and we understood, as a software development firm, what the cloud had to offer in terms of usability, in terms of development, getting away from that Golden Master, and installations, and the support side; also, the ability to iterate more quickly and really bring customers what they want consistently and not once a year with this big release. We started, [00:28:00] at that point, planning. I think what is interesting to me is for people to understand that the way LivePlan was born was really saying, yes, we've gotta go in the cloud, but also recognizing that Business Plan Pro wasn't doing the ongoing management the small businesses needed. We were using Business Plan Pro. Every year, we'd create our strategic plan, and every month, we would compare plan, versus actual, versus previous period, versus previous [00:28:30] year, because those data points tell you a lot. If you're a retail store, and you're looking in January, you look at previous period December, and the numbers are not gonna look ... You're gonna look, like, "Oh, my God, I'm doing so much less ..." but that's obvious, right? Seasonality. You want previous period, but you also want same period last year, because that tells you even more. That was the way we managed Palo Alto Software every month, but it entailed exporting from Business Plan [00:29:00] Pro, exporting from Accounting Solution, massaging data, and so- David Leary: Because you were using your own product, you realized all the things it sucked at.  Sabrina Parsons: Exactly. Exactly, and the ongoing small business management ... We built LivePlan, and the methodology that's behind that process and system that Kathy has built for accountants is what we used to build LivePlan. There is a management methodology to LivePlan. When you take a company and you switch it from Windows development [00:29:30] software to cloud, you have to have whole different developers. There's a lot of resources there, and there's a real big push on cash. All of a sudden, you need to hire all these other people for a product that's not bringing you revenue yet. We changed technologies. That's hard. It can be very difficult for a company. We also changed business models. We had a piece of software that we were selling, and it was more transactional. You bought it ... Yes, we got some upgrades, but you bought it, and you didn't [00:30:00] keep paying us, right? You bought it, and, on average, we were making 160 dollars from every user, because we had a couple of versions - $99, $199 - different things that you could buy, but we were getting all the money at once.  So, not only did we have to switch from a resource perspective and hire all these new developers, but we also, all of a sudden, were in a situation, where we were gonna be getting $20 a month ... We didn't know, were we only gonna get $20? Were we gonna get $300? Were we [00:30:30] gonna get $160? Were we gonna get more people but less money? That's kind of a scary thing and a huge cash flow implication, because all of a sudden, we're getting 20 bucks, and it's taking us over a year to get to that average transaction that we already had.  The only way we were able to do that is using the LivePlan method. That's exactly how we used it, right? We forecasted. We understood our cash. What [00:31:00] we did is that we saw our runway, and we slowly introduced LivePlan, while still selling Business Plan Pro, so that we were able to really strategically ... But there's no way we coulda done it without managing-. Blake Oliver: You did a cross fade. Sabrina Parsons: We did ... Obviously, I'm proud of it, because I love LivePlan, but I also want people to know it's how we manage the business. We are privately owned. No debt. Cash-flow [00:31:30] positive. We've never taken on an investment, and we continue to grow. We've done that, and we're able to do that because we eat our own dog food, because we do strategic planning, because we don't spend money we don't have. Blake Oliver: That's interesting. That's kind of a rarity. You are profitable, cash-flow positive, and not interested in taking on investment money?  Sabrina Parsons: No.  Blake Oliver: Are you planning to stay private, and just ...?  Sabrina Parsons: You never know what happens in the future, but it works for us, and we don't need it. We've built up cash that we can [00:32:00] reinvest. We've built up enough cash that we've launched a whole 'nother product. We've been able to invest in that product. We have a team of 20 people and that product is just barely launched. We've done that all with using our own revenue and profits from our existing product line, but it takes a lot of super-careful planning. Blake Oliver: That's very refreshing. David Leary: It's very hard for companies to get off the desktop model to a cloud model. We actually did an interview last week with Shafat from BQE- Blake Oliver: Similar [00:32:30] story. David Leary: Similar story. Instead of how you cross-faded it, to take Blake's term-  Blake Oliver: He did a hard cut off. David Leary: He just stopped. The second it was done, it was launched. You couldn't buy his desktop product anymore. He went for it. Maybe he didn't use LivePlan. He just jumped right in.  Sabrina Parsons: Maybe he had a credit line, or he had some investors. You have to have some cash to do that, right?  Blake Oliver: You've got to have a lotta cash to take that kinda risk. David Leary: I think it was private, but, see, they were an existing desktop app that had an established base for a long time. Blake Oliver: If people wanna find out more about LivePlan [00:33:00] and connect with you, and your company online, where can they do that? Kathy Gregory: If you're an accountant, the best way is you can email us at accountants@LivePlan.com. That's the first way. Our website is LivePlan.com. Then, in the upper right-hand corner, it'll say Solutions, and there's a dropdown, and you can pick Accountants. That'll get you to the site that has all the resources. There are tons of resources on our site. Blake Oliver: Are you two on the social medias? Do you like the Twitter- Kathy Gregory: Oh, yeah, I'm on the social medias. My Twitter handle, I'm supposed to know that, right? I think it's @KMGregory1. I [00:33:30] believe that's what it is. Yeah, that's what it is. I have fun on Twitter all the time with accountants, but I can't recall ... [cross talk]  Blake Oliver: It's like knowing my own phone number. Kathy Gregory: Yeah, right, but I do have-  Sabrina Parsons: Kathy also helps manage our LivePlan Strategic Advisor Twitter, and that's @LivePlanSA.  Kathy Gregory: Yeah, @LivePlanSA, and there's a blog that I think is fun and good on the site.  Blake Oliver: All right, great.  Sabrina Parsons: And my Twitter handle is @mommyceo Blake Oliver: I love that. And as always, I am @BlakeTOliver. [00:34:00] How about you, David? David Leary: I'm @David Leary. I think this is interesting, because I don't think we've had anybody on our podcast that has spoken to a president before. Sabrina Parsons: In my spare time, I do a lot of advocating for working moms and working families. I have been lucky enough to be invited to two summits during the Obama presidencies, and, yes, was able to have some really cool experiences because of that and speak at a White House summit-. Blake Oliver: Wow. [00:34:30] Sabrina Parsons: -and bring two of my three boys to come ... One of them was has been too young to also be able to experience that ... Being a CEO, woman, working mom in a technology software company, there's not a whole lot of us. I am hoping that 20 years from now, that's different, but I am definitely a big advocate of working parents, and working moms, and try to do a lot [00:35:00] of political advocacy to actually make change. David Leary: Nice.  Blake Oliver: Wonderful. Thanks so much for joining us [cross talk] Yeah, great to talk to you.  Sabrina Parsons: Thank you.  Kathy Gregory: Thanks so much. It was really fun.  David Leary: All right, bye.  
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Creator Details

Oct 6th, 1973
Oregon, USA
Episode Count
Podcast Count
Total Airtime
1 hour, 48 minutes