1:49

Hi everyone, my name is Vincent

1:49

Aguirre. I'm the president of

1:52

web of a web design company

1:52

named distinct since 2013. We've

1:56

worked with over 400 small

1:56

businesses to improve their

1:58

online presence through web

1:58

design, SEO and marketing. I'm

2:03

also the host of this podcast,

2:03

small business big ideas. We

2:08

also have a Facebook group at

2:08

the same title. Today I'm joined

2:11

by Ken idle, who's a longtime

2:11

entrepreneur, a friend and a

2:13

mentor, Ken and I will be will

2:13

be hosting a series entitled

2:18

beyond the launch. Today's

2:18

session will focus on essential

2:21

business finance. Ken is a

2:21

lifelong advocate for civic

2:25

civic leadership and

2:25

entrepreneurship. Ken's career

2:28

has included small business

2:28

creation and ownership, the

2:31

director of an entrepreneurship

2:31

center, faculty member of a

2:34

community college and leadership

2:34

in the nonprofit and community

2:38

development organizations of his

2:38

community. Let me bring Ken into

2:41

the chat. Good morning Vince,

2:44

Good morning, Ken, how are ya?

2:44

I'm doing fine. I want to give

2:47

you an opportunity first to say

2:47

a few words about yourself your

2:50

experience and why you're

2:50

interested in doing this? Well,

2:53

first, first, I'd like to thank

2:53

you for the opportunity to talk

2:57

a little bit about some of my

2:57

experiences, and specifically

3:01

about those things that you will encounter after you

3:03

start your business. You know,

3:06

we all do the planning, we have

3:06

finally find the money, we open

3:12

the doors, and then it's kind of

3:12

what's next. And so the title

3:16

here beyond the launch is about

3:16

that it's about what are those

3:22

challenges and high points and

3:22

low points that you'll see? And

3:27

how you can really, hopefully

3:27

kind of avoid those. And if they

3:30

do come up? How can you correct

3:30

them? Yeah,

3:34

that's great. And I'm really excited. I know, you and I have talked about this for years,

3:36

especially as I've kind of

3:39

learned and grown as a business

3:39

owner. We talk about all the

3:42

time, but people we see both in

3:42

our community and other places.

3:45

So I'm really excited. I know

3:45

you and I have talked about

3:48

this. But anyone watching at home, I want to let everyone know that I have a little

3:50

outline on this screen. So I'll

3:53

be looking at the outline. I'm

3:53

also taking some notes. So

3:55

you'll see me doing a few

3:55

things. But can I want you to be

3:58

the star of the show. And I know

3:58

we kind of discussed some topics

4:01

before we before we met today.

4:01

So I think we're gonna jump

4:04

right into financial reports and

4:04

forecasting. And specifically,

4:09

you know, why financial reports

4:09

and accurate financial reports

4:12

are important to a small business. Well, I think one of the

4:15

challenges that you have, as you

4:21

open your business, you know,

4:21

you've done forecasting, you've

4:25

kind of made a educated guess,

4:25

so to speak, in a lot of

4:29

different ways on how you think

4:29

sales will go and what you think

4:33

your expenses will be and how

4:33

many employees you might need

4:36

and all of those kinds of things

4:36

that really just can be kind of

4:39

fun to talk about and do. But

4:39

then you begin to have actual

4:44

sales. They may exceed what you

4:44

thought they may not exceed what

4:50

you had projected. And so how do

4:50

you understand what's going on

4:55

in the actual business? Not

4:55

necessarily on paper, but how's

4:59

it performing? So, there are two

4:59

types of financial statements.

5:02

One of those is an earnings

5:02

statement. And the other is

5:06

assets, liabilities and net

5:06

worth, sometimes called the

5:09

balance sheet. These are two

5:09

very different types of reports.

5:15

That earnings statement is for a

5:15

period of time, a month, a

5:19

quarter, a full year. Whereas

5:19

the balance statement is just a

5:25

snapshot in time. It shows you

5:25

where your debts are, where your

5:29

assets are. And it's quite

5:29

honestly, probably more

5:34

important to the bank, or

5:34

whoever you're trying to help

5:37

have finance your business, then

5:37

is the earning statement. Often

5:43

a business can be profitable,

5:43

but still have no cash. And so

5:48

you have to have cash cash is

5:48

king Vince knows that. I've said

5:52

that several times. And that's

5:52

how you pay your debts. And so

5:57

it's very important to stay on

5:57

stay up to date on these types

6:01

of things. So how do you use

6:01

those to forecast? Well, you

6:07

used to use those things to

6:07

forecast when you stablished

6:12

your business when you were

6:12

working with a business planner,

6:15

it might be somebody like a

6:15

SBDC, which is a local Indiana

6:19

Small Business Development

6:19

Group. They have counseling free

6:23

no charge. But it helps you when

6:23

you look at those to make

6:28

corrections. Am I not do not

6:28

have a strong margin is my are

6:35

my expenses too much do I have

6:35

too many employees. It also

6:39

helps you forecast trends. And

6:39

in the businesses that I was in,

6:45

especially the last family

6:45

business, I kept 10 years works

6:49

with comparatives. And so while

6:49

I didn't do that every month, I

6:54

usually did it every quarter,

6:54

and every six months. But our

6:58

year ended our fiscal year ended

6:58

in June. And I usually went on

7:01

vacation in July. And I always

7:01

took my year end with me. I

7:06

didn't look at it until the end

7:06

of the week. But I did an in

7:09

depth analysis of those trends,

7:09

and compared them to the last 10

7:14

years. And it was always very

7:14

eye opening, both exciting. And

7:20

also some real realizations

7:20

there. So you get to see your

7:25

successes. But going forward, it

7:25

also, excuse me, helps you set

7:30

goals. And that's the other part

7:30

that's really important. You

7:33

know, a budget based on your

7:33

experience, whether it's an

7:37

average of that 10 years or five

7:37

years, or whether it's something

7:41

that you're you're looking to

7:41

expand budgets important to give

7:46

you guidance, you never will be

7:46

exactly on budget, you'll be

7:50

over or you'll be under. But it

7:50

does give you some way in which

7:54

to know how you're going it

7:54

gives you a roadmap. And kind of

7:59

the same way that goes do soft

7:59

goals. I'll call those not

8:04

financial goals. So those are

8:04

the things that are important in

8:07

accuracy and accuracy is

8:07

important to your future.

8:11

Because it helps you know where

8:11

you've been, it also helps you

8:15

project where you might go? Absolutely, absolutely. I want

8:17

to go a little off the script

8:21

because something came to mind

8:21

as you were talking. I know some

8:25

businesses that we both engaged

8:25

with who had extensive business

8:29

plans leading up to opening and

8:29

kind of going with the title of

8:33

this series right beyond the

8:33

launch. Can you talk a little

8:37

more about corrections and the

8:37

good and the bad, you know,

8:41

maybe you're not selling x

8:41

product as much as you expected,

8:45

or product y is just taking off

8:45

and become part of your revenue,

8:50

like a business that we both

8:50

know of? Can you talk a little

8:54

bit more about those corrections

8:54

and how you can adapt and not be

8:59

in that paralysis of this isn't

8:59

my plan? This isn't what I was

9:01

hoping for? Well, I think realism is

9:03

important. Yeah. Also test in

9:11

markets is important. Yeah. I

9:11

use a term called conservative

9:18

risk. And I use it a lot.

9:18

Because

9:24

I didn't mind taking the risk as

9:24

long as I didn't bet the whole

9:27

bank. And I think that's part of

9:27

the part of, of expansion of

9:32

experimentation. The other thing

9:32

that you can stumble into, and

9:38

this is a business that Vince

9:38

and I both have been involved

9:40

with, is you. You thought you

9:40

were going to be doing certain

9:45

things as your major business

9:45

and all of a sudden you discover

9:49

this market you didn't see.

9:49

Yeah, it's still relative to

9:54

what you do. It's still a piece

9:54

of what you do. But all of a

9:59

sudden Here, here's your future.

9:59

Here's where the cash is. Here's

10:04

here's. And another term I use

10:04

is backdoor business. Yeah.

10:12

Oftentimes what you see when you

10:12

go into a business, let's just

10:17

take a restaurant as an example.

10:17

There, if they are strong in

10:22

catering, that is a backdoor

10:22

business that you don't see. Our

10:28

we own a family flower shop. And

10:28

people saw one thing when they

10:33

came in the store, the retail

10:33

side, but they didn't see the

10:36

weddings and the special events

10:36

and the large banquets and all

10:41

of those things that we did. And

10:41

oftentimes, it's those backdoor

10:45

things that you don't anticipate

10:45

that ultimately will provide you

10:49

with a good living.

10:52

Absolutely, yeah. For me, it was

10:52

the adaption of recurring

10:55

revenue in our business model.

10:55

Never really was in mind when we

10:58

started the business, and then

10:58

it changed the way we do things

11:01

with recurring revenue. So yeah,

11:01

I think it's really important to

11:04

be able to adapt like that, and

11:04

especially the backdoor revenue,

11:08

you and I talk about that often.

11:08

And it seems like every year

11:11

becomes more and more important.

11:11

You know, we see small retail

11:15

boutiques, that you know, they

11:15

do good business in the store,

11:20

but they sell a lot of their

11:20

their items online. And it's

11:25

necessary. So you might not see

11:25

that foot traffic in the store.

11:28

But it complements and helps

11:28

them promote as well. So

11:31

absolutely. Real good example here advanced

11:32

to continue a little bit down a

11:36

rabbit hole here. Is is what's

11:36

happened in in the in the

11:40

hospitality business,

11:40

particularly in restaurants. You

11:44

see now or at least you read

11:44

about restaurants that have the

11:48

in person restaurant, but they

11:48

have a whole nother operation

11:52

that is delivery and pickup. And

11:52

it's kind of a take off on

11:57

catering. But as a customer

11:57

dining in, you don't see that at

12:04

all. Yeah. And that's a perfect

12:04

example of an adaptation. Yeah,

12:10

absolutely. Can before we move

12:10

on, I think it's important. You

12:14

kind of mentioned the flower

12:14

shop. Can you talk a little bit

12:17

just for you know, a minute or

12:17

two about the history of the

12:20

flower shop and your involvement. I will flowers and gifts was

12:25

founded in 1908 by my great

12:28

grandfather as a wholesale

12:28

grower here in our community.

12:33

And in five or six years, they

12:33

then opened a retail site in

12:39

Greencastle to allow surplus to

12:39

be sold. That continued for a

12:46

number of years. It had a number

12:46

of different locations

12:51

eventually ended up in 1946,

12:51

when my father came back from

12:55

World War Two in one location

12:55

and stayed there until it

13:00

ultimately closed in 2010.

13:00

Excuse me 2019. In 2010, my wife

13:09

and I sold that business to our

13:09

local manager who'd been with us

13:13

for 10 years. Ultimately, the

13:13

business closed when it was 112

13:17

years old. We were fourth

13:17

generation. And it just just

13:23

served our family extremely well

13:23

of the community. But we also

13:29

gave and wanted to give a great

13:29

deal back and I learned that

13:33

through the generations of my

13:33

family that that's something you

13:37

did you gave back. And for that

13:37

period of time, we had a lot of

13:40

different products did a lot of

13:40

different things. What with the

13:43

market. Another word that I use

13:43

is organized abandonment. That's

13:49

a whole nother session. Great. And and you did write a

13:51

book about the history of the

13:54

flower shop, right? I did with really just a

13:54

collection of memories and

13:59

pictures. And we then donated

13:59

any extra copies to the local

14:04

museum. And they have that for

14:04

sale as a fundraiser.

14:07

Yeah. Awesome. All right. Now

14:07

I'll go back to the script. I

14:10

apologize for varying us off.

14:10

But I think these are important

14:13

things to talk about. So I think

14:13

the next subject and correct me

14:17

if I'm wrong is talking about

14:17

what information should really

14:20

be available in these reports

14:20

and how frequent you should be

14:24

running them. and things along

14:24

those lines. Do you wanna talk

14:27

more about that? Can we were fortunate. We bought

14:28

we, when we bought the store, we

14:36

bought it at a time when in the

14:36

eight late 80s period of

14:41

inflation, a number of different

14:41

reasons. And we're able to, to

14:46

grow that and diversify. And as

14:46

we did that, it became more and

14:51

more important that you kind of

14:51

have a sense of where you were

14:55

going. So the earning statements

14:55

we did monthly And early on, we

15:02

used a very, very much of a

15:02

manual system. I don't quite

15:07

predate computers, but I'm

15:07

pretty close. But as electronics

15:13

began to come, become available,

15:13

we eventually had a proprietary

15:17

system that had capsules for

15:17

payroll, as well as merchandise

15:23

and purchases. And I actually,

15:23

everyday after we posted, I

15:28

could run a current financial

15:28

statement daily if I wanted to,

15:32

I didn't, but I could. So what

15:32

we what we needed to look at

15:38

when we did that, and when we

15:38

did get accountant, accountant

15:41

prepared statements every month.

15:41

And they had comparatives to the

15:47

year prior. So we knew where we

15:47

go on what was happening. And so

15:52

we had three months statement,

15:52

six months statements that had

15:55

all the, you know, the year to

15:55

date information. And as I said

15:58

earlier, I maintain 10 years

15:58

worth of records. So what you

16:03

need in those earnings

16:03

statements, depending on

16:05

frequency, you need, you need,

16:05

of course, your total sales,

16:10

less any returns that you have.

16:10

And in our case, as a flower

16:13

shop, it was a perishable so if

16:13

you're running a restaurant,

16:17

which is somewhat similar, that

16:17

you wanted to make sure you

16:20

weren't throwing your profit out

16:20

in the dumpster. A restaurant,

16:24

you may want to make sure that

16:24

at the end of the day, you don't

16:27

have two dozen hamburgers still

16:27

on the grill, and you have to

16:30

throw those out. So you need to

16:30

account for that and that you

16:34

have less returns as well. The

16:34

other one other thing that's

16:38

extremely important, is gross

16:38

margin. And the gross margin is

16:43

your cost of goods sold less

16:43

your your sales, less your cost

16:47

of goods sold the product and

16:47

merchandise you buy, to resell,

16:52

and that will give you a gross

16:52

margin. And that gross margin

16:55

then is what you pay all the

16:55

rest of your expenses with. And

17:00

after you do that and pay those

17:00

expenses, then you should show

17:03

either a net profit or net loss.

17:03

Not every month is going to be

17:08

profitable. And every month will

17:08

be different. And hopefully over

17:12

a period of 12 months, you end

17:12

up with something left. So I

17:18

think those those are what's

17:18

important. However, there are

17:20

three things that you need to

17:20

look at that are extremely

17:23

important. One of those is your

17:23

cost of goods sold percentage to

17:26

sales. And generally speaking,

17:26

we tried to keep ours around a

17:32

third 33% some margins, and

17:32

you'll hear that as an example

17:37

on Shark Tank, somebody's got a

17:37

margin of 80%. You need to know

17:41

how that's figured first of all,

17:41

but I knew what where we needed

17:45

to be just from his history,

17:45

then you need to understand what

17:49

your fixed expenses are, that

17:49

make a difference what you sell,

17:53

you still got rent, you still

17:53

got utilities, you still got

17:56

insurance, those things you

17:56

know, you're going to have, in

17:59

our case payroll would

17:59

fluctuate. Is it Valentine's

18:03

Day? Or is it Mother's Day? Or

18:03

is it the middle of July? And

18:07

it's hot? And everybody's on

18:07

vacation? And so you know, what,

18:12

what is that? expanse that that

18:12

changes with the with the month

18:18

or with the day or with the

18:18

week. So what are your fixed

18:22

expenses, you can kind of

18:22

project based on history, what

18:26

your expenses are going to

18:26

fluctuate might be. But the

18:30

other really important thing is

18:30

to keep your total Payroll

18:34

Expense in line. Now it's out

18:34

outline, I have total in

18:39

capitals. One of the AHA costs

18:39

of most people when they go in

18:45

business are hidden taxes.

18:48

Now, seriously, they're not.

18:51

They're hidden just from people

18:51

who have never been in business.

18:55

And I know when I taught

18:55

business classes, we did a

18:58

actual business model. In one of

18:58

the business classes, I taught

19:02

an entrepreneurship class. And

19:02

we started putting together a

19:05

business, an expense sheet and

19:05

all of a sudden, here's payroll

19:09

tax, here's workman's

19:09

compensation insurance, here's

19:13

the fact that the business has

19:13

to match the Social Security

19:17

that is taken out of that is

19:17

taken out of the checks. And

19:23

that has to be paid folks

19:23

monthly. And so and sometimes

19:27

quarterly, and as I began to

19:27

transition out, and now that is

19:32

taken directly out of your

19:32

checking account. And if you are

19:37

paying attention, you don't have

19:37

that and one of the other

19:41

favorite quotes that I'll have

19:41

to give here is do not mess with

19:46

the government. Pay the

19:46

government what you owe them and

19:52

because they have very deep

19:52

fingers so you need to know cost

19:58

of goods sold you need to know

19:58

your expenses. And you need to

20:01

know your total payroll

20:01

expenses. What I always did is a

20:05

third, third, third, and worst,

20:05

where's your profit? Well,

20:12

that's a percent profit. And you

20:12

read that up, you hopefully you

20:17

come out that way. But that's

20:17

kind of just a good, good rule.

20:22

Then the other one we talked

20:22

about was the balance sheet. And

20:26

there, you're going to have your

20:26

current liabilities, what you

20:28

owe currently, and you have to

20:28

pay within 30 days, you're going

20:32

to have your long term

20:32

liabilities that are maybe the

20:36

cost of your facilities,

20:36

equipment you've purchased, that

20:40

you owe after 30, or over 30

20:40

days law, then you have current

20:45

assets, cash, things that you

20:45

can get your hands on in 30

20:50

days, of course, to pay your

20:50

current liabilities. And then

20:55

when you subtract all of that

20:55

out, in addition to your long

20:58

term liabilities, you end up

20:58

with your net worth. And

21:03

hopefully, the equity, so to

21:03

speak, or your net worth is on

21:07

the plus side, that you are not

21:07

what people call upside down.

21:13

Yeah, and all of this works

21:13

together. It seems complicated.

21:18

That's why I always recommend

21:18

you have an accountant, as one

21:24

of the important people you have

21:24

in your in your business life.

21:29

But if you don't have these

21:29

reports, and you don't

21:31

understand the percentages, it's

21:31

really hard to manage your

21:34

business effectively. It all

21:34

starts with sales. But from

21:39

there, it's up to you to manage

21:39

what where you end up?

21:45

Absolutely. Absolutely. I think

21:45

this is going to be a trend that

21:50

I continue to do. And I

21:50

apologize, but I have a couple

21:52

of rabbit holes, I want to take

21:52

us down. So you and I talked

21:55

before we went live about the

21:55

importance of starting your

22:00

bookkeeping early. You know, I

22:00

look back when we started our

22:04

business as a bunch of kids with

22:04

$300 in the bank. Somehow we

22:09

understood that and I'm guessing

22:09

maybe you mentored us to do

22:12

that. And we worked with an

22:12

accountant from day one. But I

22:15

know a lot of people don't. So

22:15

can you just talk a little more

22:18

about that importance of both?

22:18

bookkeeping, maybe using a tool

22:23

for bookkeeping, and definitely

22:23

using an accountant from the

22:27

early stages? Well, if you do a business plan,

22:30

and you do a full business plan,

22:35

there's going to be a financial

22:35

piece to it. And the state, the

22:41

state group, I SBDC, as a matter

22:41

of fact, has an extremely robust

22:46

financial program that they can

22:46

put together also its

22:49

projections. But if you don't

22:49

you start out with that, but you

22:55

have to keep track of where

22:55

you're going from there. There

22:59

are some things that well, we've

22:59

all heard that good leaders

23:04

understand where their

23:04

weaknesses are. Yeah, well,

23:08

there's also a weakness in the

23:08

time you have available. And if

23:12

you're going to try to run a

23:12

business or conduct a service,

23:19

you don't necessarily need to be

23:19

bogged down in trying to post

23:23

and account for all the money

23:23

and all the invoices and do all

23:26

the billing and figure out where

23:26

that goes. There are programs

23:31

out there that advertise, you

23:31

can do it yourself. But as this

23:40

is, as you know, Vince says And

23:40

he's right, as a small business

23:44

person, you probably shouldn't

23:44

be spending days and days on

23:46

your own website. Same things

23:46

true with accounting. Yes, if

23:53

you have somebody that can

23:53

understand a program like

23:55

QuickBooks, that's well and

23:55

good. But if you don't

23:59

understand basic accounting,

23:59

it's very, very hard to set

24:02

QuickBooks up. And you need to

24:02

have a professional, a

24:06

consultant, or an accountant who

24:06

understands QuickBooks to do

24:09

that. And they are there. In

24:09

fact, they oftentimes can do

24:13

this work for you online. And

24:13

they never have to come in your

24:16

store, which is different than

24:16

it was actually 10 1015 years

24:21

ago. So you have to start that

24:21

from day one. Because I can tell

24:26

you from experience, it will get

24:26

away from you in a hurry. And

24:30

when you start writing checks,

24:30

just based on your checking

24:33

account balance. We'll talk

24:33

about that. I think probably

24:37

next time about how you stay out

24:37

of trouble. Yeah, but you can

24:42

get in trouble real fast. Yeah,

24:42

and $1 spent is $1 gone. And so

24:51

I I just hated to spend money.

24:51

Unless, unless unless there was

24:57

a return. Yeah, it's not a bad thing. And

24:58

you'll I'll add that oftentimes

25:03

I've run into people who say,

25:03

Oh, QuickBooks is too expensive,

25:05

even though QuickBooks Online is

25:05

relatively affordable in my

25:08

opinion. But you know, there's

25:08

other tools out there, we're a

25:12

partner with the Zoho platform

25:12

and Zoho books, which is a

25:15

QuickBooks alternative. There's

25:15

pros and cons to each there

25:19

actually offer a free package to

25:19

small businesses. The downside

25:23

is a lot of accountants and

25:23

bookkeepers might not be

25:26

familiar with it. But as a free

25:26

plug, my accountant is familiar

25:30

with it. So reach out to me, if

25:30

you use Zoho, and you want to

25:33

work with an accountant that

25:33

knows how to use it. We don't

25:36

have any sponsors, but I think

25:36

I'm gonna make some sponsors up

25:38

as we go along with this, Ken.

25:38

So the another thing that's come

25:45

up a question in the chat is,

25:45

what is an appropriate margin

25:50

for a business? And I'll kind of

25:50

start off with an answer for my

25:53

opinion and ask your opinion,

25:53

but each industry in my opinion,

25:56

is going to be very different

25:56

restaurants are gonna have much

25:59

lower margin than a software

25:59

company or a shark tank product.

26:02

But Ken, what's your opinion on

26:02

that subject?

26:06

Well, I would, I would agree

26:06

with what you indicated, Vance.

26:11

And there, there are a lot of

26:11

there's a lot of information

26:15

available at your fingertips,

26:15

about each industry. And, and

26:22

with a little research, you can

26:22

find out what those averages

26:25

are. In my business, there's a

26:25

couple different ways you could

26:32

account for it. And I chose one

26:32

particular way, my early

26:35

background was in furniture and

26:35

appliances. And so that that had

26:40

no perishable piece to it. In

26:40

addition to that, you didn't

26:44

manufacture a product. And so

26:44

the question that always came to

26:51

me was, is did I include the

26:51

production labor in the cost of

26:55

goods sold? Yeah. And that

26:55

becomes almost manufacturing

27:00

accounting. I did not do that.

27:00

It's the way I put mine

27:04

together. So I knew what I was

27:04

doing. I use the general rule

27:09

that my cost of goods sold,

27:09

including supplies was 33%. Now

27:15

that was probably a little high,

27:15

relative to the industry. But

27:19

when you got your information

27:19

from, in this case, FTD, or

27:25

Society of American florist on

27:25

floors of similar sizes, then

27:32

you were able to take a look and

27:32

see how you how you compare, and

27:35

it was all over the board. Yeah.

27:35

Now the other thing in our mix

27:39

was is we just weren't a

27:39

florist. We also had a large

27:42

inventory of gift items. And so

27:42

the markup on gifts, is

27:49

different than the markup on a

27:49

perishable. Absolutely. And so

27:54

it's it is all over the board.

27:54

Generally, if you can do a

27:59

third, third, the third and play

27:59

with that you should be okay.

28:05

But if you're doing a service,

28:05

it becomes a little bit

28:09

different. Yeah. The other thing

28:09

I've always said is, is you

28:13

always, always talk about the

28:13

low margins in certain

28:16

businesses. Yeah. But those

28:16

businesses base their cash and

28:21

their business on the amount of

28:21

cash they take in. Yeah, not

28:25

necessarily on margins, because

28:25

they have such a huge volume.

28:29

And so that's part of the

28:29

challenges of competing with

28:32

large businesses, small business

28:32

can't compete, you have to offer

28:36

service, you have to be

28:36

exceptional with what you do.

28:39

And you have to develop personal

28:39

relationships with your

28:41

customers. Absolutely. Because

28:41

you you can't do the volume to

28:47

keep the prices low. He just, he

28:47

just can't. So that's not a very

28:52

good answer other than to say

28:52

the information you're asking is

28:55

out there. And there's a lot of

28:58

it. No, I think that was a great

28:58

answer. And I'm jotting down our

29:01

time right now. Because I think

29:01

that was the nugget of the the

29:04

stream so far is that you know,

29:04

as a small business, you can't

29:08

compete on price against a large

29:08

corporation. So differentiating

29:12

with that service, the quality

29:12

of the personal connection, or

29:15

something unique that a larger

29:15

corporation just can't do is

29:19

going to help you stand out and

29:19

stay competitive. So I think

29:22

that that alone was the biggest

29:22

nugget you could have given

29:26

and best to come back with come

29:26

back to the purpose of this

29:30

particular session. That's going

29:30

to be more expensive in certain

29:35

areas. Yeah. To do those things.

29:35

Absolutely. And going back to

29:40

our discussion about an

29:40

accountant. Most small

29:44

businesses, people want to see

29:44

the owner. Yeah, if you have a

29:48

good accounting system and a

29:48

good accountant, you're not

29:51

worrying about that. You're out

29:51

there developing business. Yep.

29:54

And and that's to me kind of a

29:54

lost art today. Yeah, and many

29:59

small businesses is that you get

29:59

so involved in running the

30:03

business that you forget that

30:03

business development is your

30:07

future. Yep. So that may be a

30:07

discussion for another session.

30:12

But that's important. So let me

30:12

talk a minute about how you can

30:17

assure accuracy as we begin to

30:17

close here. Yeah, absolutely.

30:21

First of all, do not put your

30:21

business business revenue in a

30:29

personal checking account. If

30:29

you are going to start a

30:35

business way, even if it's a

30:35

sole proprietorship, please open

30:40

a checking account for that

30:40

business. Because when you start

30:44

commingling, you really have no

30:44

idea of what's happening in the

30:49

business. Secondly, we've

30:49

already talked about having an

30:52

accounting professional.

30:52

Thirdly, have a payroll cost

30:59

transfer account. And what do I

30:59

mean by that? Well, each week,

31:03

when you get ready to write your

31:03

payroll, take all of those

31:07

expenses, those taxes, we talked

31:07

about the matching FICA, or

31:11

social security, we talked

31:11

about, put all of that in a

31:15

different checking account, all

31:15

of it. So that when the bill

31:20

comes from IRS, the money is

31:20

already set aside and you

31:25

haven't spent it for something

31:25

else. And all of a sudden, you

31:29

owe the government several

31:29

$1,000 and have no way to pay

31:33

it. Mm hmm. A QuickBooks

31:33

advisor, a bookkeeper, we've

31:37

talked about that. And make sure

31:37

you have checks and balances.

31:43

You know, you hear the

31:43

statement, trust, but verify.

31:47

Yes, you want to trust the

31:47

people that work for you. But

31:52

just have a system that verifies

31:52

that the information that you're

31:56

seeing is correct. And there's

31:56

all sorts of ways that you can

32:02

do that just with normal

32:02

accounting procedures, to just

32:06

to check and make sure

32:06

everything's, you know,

32:09

accounted for in the proper way.

32:09

Yeah,

32:12

absolutely. Absolutely. Well,

32:12

well. So I have a few notes I

32:17

want to cover before we get off.

32:17

But I think just to reiterate

32:22

the importance of being involved

32:22

daily, right. And, you know, I

32:28

go through phases, I've gone

32:28

through phases, not so much

32:30

right now, but in the past,

32:30

where I don't want to look at

32:33

the books, because I'm afraid of

32:33

what the books might show. So I

32:36

ignore it, because if I don't

32:36

know it, I can't worry about it.

32:39

And that's a weird way to think of it. But I think a lot of business owners do that at

32:41

times, if I just don't look at

32:44

my expenses, then they don't

32:44

they don't exist right now. So

32:48

we just double down, Ken on the

32:48

importance of being involved

32:51

daily. Well, other than just the, what

32:54

I'll call the marketing side,

32:58

which we can talk we'll talk

32:58

about at some point later. I've

33:03

just, I've always believed that.

33:03

While you don't have to

33:08

personally wait on every

33:08

customer or greet every

33:10

customer, you need to be seen.

33:10

Yeah, if that business has your

33:16

name on it, or you're associated

33:16

with that, even before you hand

33:20

this individual off to someone

33:20

else to take care of it, the

33:23

owner needs to be seen that says

33:23

a lot about your involvement.

33:28

There's another book written

33:28

years ago, called In Search of

33:32

Excellence by Tom Peters, one of

33:32

the things that I took away from

33:36

that book was called Managing by

33:36

walking around. And that means

33:41

that you don't sit in your

33:41

office all the time, your

33:45

albums. In my case out on the

33:45

sales floor, I knew somebody who

33:49

was a plant manager in a very

33:49

large production for selling

33:53

facility, he practice that he

33:53

practiced going out on the

33:57

production floor and talking to

33:57

the people who actually operated

34:01

in this case, the extreme

34:01

presses. So that's, that's part

34:05

of that as well. Yeah. So yeah,

34:05

I think it's interesting, Vance,

34:11

that you don't want to look at

34:11

it, because you know, it's not

34:13

going to be good. But if you

34:13

don't read if you're not, if you

34:19

don't understand reality, you

34:19

have no idea where to go.

34:22

Exactly, and what corrections to

34:22

make. Exactly. Early in our

34:28

flowershop career, we were

34:28

struggling with margins, and,

34:31

and all those kinds of things

34:31

that go along with cash flow,

34:35

and all of that. And so I

34:35

actually went to a seminar on

34:40

financial accounting. And, by

34:40

the way, one of the best things

34:45

I ever did was taken accounting

34:45

class, so let's just take an

34:48

accounting class. Yeah. But I

34:48

realized that while I was

34:53

covering the cost of my flowers

34:53

that went into an arrangement, I

34:57

had forgotten that there were

34:57

invoices. that were charged to

35:00

that. And that there was those

35:00

little enclosure cards and there

35:04

was those little plastic picks

35:04

that you put the card on. And so

35:08

when I started adding up

35:08

everything that went into that,

35:12

I realized that all my money was

35:12

going out the door. And so you

35:17

have to be proactive. If there's

35:17

a problem, you have to find it

35:20

and you have to get the

35:20

education to know what it is.

35:23

Absolutely, absolutely. Another

35:23

book I read last year that

35:27

really helped me too is managing

35:27

by the numbers, by Chuck Kramer

35:32

and Ron resumo. Really good book

35:32

and helps just simplify the

35:36

numbers and give you the things

35:36

you should be paying attention

35:39

to if there's just one or two

35:39

things you have time to pay

35:41

attention to. Right. So, Ken,

35:41

before I wrap up, I have a

35:46

couple things I want to talk

35:46

about. I'll kind of go on a

35:48

monologue. But is there anything

35:48

else you want to say before

35:50

before we wrap up? No. I think when we get together

35:52

again, we're going to talk about

35:57

a little bit about how you stay

35:57

out of trouble. And then then,

36:03

you know, continue that on.

36:03

We've kind of gotten

36:05

freewheeling and we had an

36:05

outline. But as so often

36:08

happens, why, you know, the

36:08

outline just doesn't always get

36:13

followed. But it's important to,

36:13

as Vince said, I don't want to

36:19

look at it, but you do have to,

36:19

and how do I stay out of

36:22

trouble. And I think that's been

36:22

one of the things that I've seen

36:27

in many business, not many, but

36:27

several businesses I've worked

36:30

with. Once you start down a

36:30

certain path, it's a lot harder

36:35

to get back. And you just need

36:35

to not start down that path. I

36:41

appreciate this opportunity. And

36:41

to those of you listening, feel

36:45

free to contact Vance if you'd

36:45

like some more information.

36:49

Yeah, absolutely. Thank you,

36:49

Ken, I'm going to go ahead and

36:51

wrap us up. But I look forward

36:51

to talking with you again here

36:54

in our next session. Thanks.

36:54

Thank you. So thank you all,

37:01

everyone who's made it here this

37:01

long. And what I want to do now

37:05

is kind of talk about recap some

37:05

things that we went over and

37:08

some ways you can get more

37:08

information. You may have

37:10

noticed, we talked a lot about

37:10

Indiana. That's because we are

37:13

in Indiana. And the I SBDC is

37:13

mentioned a few times. That's

37:17

the Indiana Small Business

37:17

Development Commission. So I'm

37:21

going to go ahead if you're

37:21

listening to this after the fact

37:23

I'm going to put that in the

37:23

show notes. So you can click to

37:26

their website and get them as a

37:26

free resource. I'll also be

37:29

adding the Zoho Books link to

37:29

our website there as well and a

37:33

link to ask any question you

37:33

might have through video and to

37:37

be featured on the Small

37:37

Business Big Ideas podcast. If

37:40

you are interested in being

37:40

featured in a video or podcast

37:43

session, you can reach out to me

37:43

we want to talk with business

37:46

owners, we want to talk with

37:46

people who support local, really

37:50

anyone who loves small business

37:50

or works in a small business. So

37:55

I think that's all I have,

37:55

again, check the show notes for

37:58

these different links. And we

37:58

really look forward to having

38:01

our next session. So thank you

38:01

all and Y'all take care