Back to Bookkeeping Basics with Matt Remuzzi

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[00:00:02] Hello, everyone, Chris Snyder here, host of the Snyder showdown president at Juhll Agency and founder of Financial Services Platform Banks.com. On this show, we take a no B.S. approach to business success and failure, told through the stories of the top entrepreneurs and executives who have lived them. Join us today as we get the unfiltered backstories behind successful brands. Today's show is sponsored by Banks Dot Com, the world's most comprehensive and trusted branding and discovery platform for banks and banking related products and services. Banks dot com is aligning consumer core values with trusted financial institutions, bringing attention and awareness to leading financial brands. To learn more, you can go to banks dot com forward slash partners, or you can send an email to info at banks dot com. OK, without further ado, today's guest is Matt Remuzzi. He's the founder of CapForge, a virtual bookkeeping firm headquartered in San Diego, California. Matt started Cap Forge with an investment of five hundred bucks and has since grown the company into a bi coastal organization dedicated to helping small businesses. Matt is here today to discuss how the business of accounting is evolving in response to an increasingly remote workforce. Welcome to the show, Matt. [00:01:32][90.2]

[00:01:33] Thanks for having me. [00:01:33][0.7]

[00:01:34] I'm happy to be here and I'm happy to have you here, because you know what? Every founder that I've ever met in my entire life loves to talk about accounting and. [00:01:43][9.9]

[00:01:46] So not sure a true story. Oh, God. [00:01:48][2.7]

[00:01:49] It's already started. Well, look, before we talk about The Wonderful World and actually probably one of the most important calls I have every week is with my bookkeeper, probably the one of most important calls I have at the end of the year, starting in October. November is with my CPA and tax planner. So I know I'm being a little bit tongue in cheek here when I say everybody loves it. [00:02:14][24.5]

[00:02:14] Look, you better love it or else you're going to wind up losing all your shit. Yeah. Today. [00:02:28][13.7]

[00:02:32] The screen just froze there for a sec, so I missed your audio. If you just said something, Mac, can you hear me? I can hear you now. [00:02:39][6.7]

[00:02:40] OK, great. I will repeat the question. Tell us a little bit about your upbringing, where you grew up in how you got to where you are today. Got it. So. [00:02:48][7.8]

[00:02:48] Born in New York, grew up in L.A., came down to San Diego to go to UCSD and then just never left. San Diego was way too nice to go back to L.A. Certainly not going back to New York. All great places. All my relatives are there, but I love San Diego. So not leave in that after I got out of college. I was a restaurant manager for a few years. [00:03:09][20.5]

[00:03:10] I hated that job. It paid all right. It was fine. I learned actually a lot about small business and running things, managing people. I didn't realize I was learning at the time. I was just mostly hating, getting up every day and going to my work. So I decided to go back to school, get an MBA, because San Diego State down here has an entrepreneurship program. And that's what I always really wanted to do. I always knew I was a lousy employee. I was not cut out to work for someone else. I knew that in my heart I took jobs. I did the best I could, but I was just not meant to be somebody else's employee. It just wasn't, you know, both, man. Yeah. Hold on, though. [00:03:45][35.4]

[00:03:45] Do you get fired or did you quit? [00:03:47][1.5]

[00:03:48] I've had both. I've been fired from jobs and I've quit jobs right before I got fired. [00:03:53][4.9]

[00:03:56] Yeah, I've had my moments, but I went to San Diego State. They had a great entrepreneurship program. I got out of that program. I did get a job right out of there doing consulting for small businesses, helping them write business plans, do financial forecasting, stuff like that. This was right in 2000, the height of the dot com boom. So guess that company blew up like so many others. [00:04:18][22.2]

[00:04:19] But I realized, you know, there's probably still people out there that will pay me for consulting help until I find another job or figure out what I'm going to do. And so that's what I launched into. So 20 years later, never taken a paycheck from anyone else since I started that. But I really didn't start with a specific plan. I just thought, you know, there's other people who'll pay for what I know how to do and I can help them. And between 2000 and 2012, I did lots of different things. I started a couple of online businesses. I bought a restaurant. Since I had some background in that, I started some stuff that worked. I started some stuff that didn't work. And then about 2009. Right. Great timing. I got into I had sold my restaurant myself and realized, oh, you know, business brokering, selling businesses. [00:05:02][43.5]

[00:05:03] That's not that hard. And maybe what I'll do is I'll get into that and I'll look for my next acquisition. In the meantime, anything I don't like, I'll just sell make a nice commission. Awesome. Got into that. And over and over again, what I would see is the first thing that needs to happen to value a business is you need to look at the books. Yeah. [00:05:20][17.3]

[00:05:22] Ninety nine times out of 100, the books were either garbage or they'd go, oh, funny story. The books. Yeah. Let me. And then, you know. So every project would turn into a little first let's clean up your accounting and then we can actually value the business and maybe we'll be able to sell it. [00:05:36][14.4]

[00:05:37] And so that was interesting to me. But I didn't think of it as a business opportunity until I came across a business for sale that was a virtual bookkeeping firm. I was a guy in Texas who had some clients that he left behind in Hawaii and a couple other places, and he was still working on them virtually. And it never really dawned on me. [00:05:57][20.2]

[00:05:57] I was thought of bookkeeping as something that, you know, you have a middle aged woman named Gladys that comes to the office and sorts through your files and punches stuff into quick books and a data entry job. [00:06:07][9.5]

[00:06:07] And now you put all your receipts in a box. And when Gladys shows up or when you know, Jimmy shows up, you give him the box and it's a mess. This is a pile of shit. You get it to sort it all out and then they print the paychecks and leave them on your desk so you can hannum to your employees. Right. Very manual. [00:06:29][22.0]

[00:06:30] I would agree with that very, very manual, very old school. [00:06:33][2.9]

[00:06:33] And it didn't appeal to me at all because it seemed to me it's geographically limited. Right. The biggest look you can get is however far you're willing to drive. And so it just didn't occur to me that this could be anything else until I saw this listing for this virtual bookkeeping business. [00:06:46][13.1]

[00:06:47] And then I started looking into it and thinking, OK, if my market could be the whole U.S. instead of just places I can drive to and I can do it all from my office instead of going to client sites and having the drive time and the downtime. Maybe there is an opportunity here because I know there's a need, but I don't necessarily want to serve the need unless I can do it in a way that I can really scale, because I've always looked at stuff. What can I do that I can grow really big and not just be me? I don't want to just fill my 40 hours with billable time and be that's it. I want to have a team. I want to have a business that grows in value that someday I can have a CEO that runs for me and I just go, you know, go do other fun stuff that I want to do. That's that's always been my goal. So I looked at this bookkeeping thing and I said, you know, yes, I took. MBA. I've got an MBA and I took some accounting classes, but I don't know, Jack, about really doing bookkeeping. So the 500 bucks I spent to get this thing started, I started out on my spare bedroom. I took a accounting bookkeeping class to get familiar with Krech books. And I printed some business cards. And I made a website myself, which, you know. [00:07:50][63.7]

[00:07:51] And they didn't have Squarespace back then. [00:07:53][1.9]

[00:07:53] No. You know, you had to suffer. [00:07:56][2.4]

[00:07:56] You had to learn H.T. email or something. [00:07:58][1.5]

[00:07:59] I did. HGL it was not fun, but I kept it. You know, super budget conscious. I literally started by putting some ads out on Craigslist. Hey, if you're looking for a bookkeeper and built it literally one client at a time. But the goal was to grow it as fast as I could within six months. I had enough clients. I got an office. I hired my first employee. And that's when I stopped doing bookkeeping because literally I'm not really a bookkeeper. But that's kind of how I got to where I started. [00:08:27][28.8]

[00:08:28] So let's so let's unpack that a little bit, because it's not like I mean, you worked in restaurants which, you know, probably at the management level and at the owner level. So it's not like you couldn't have called a hundred restaurants. I mean, like, look, I can help you guys because you already had you been buying and selling businesses. You've been working in businesses. Clearly, you looked at the books and maybe you were having someone come in and do all that stuff that we talked about prior. Right. It was manual. So I would argue, like you already had, you know, maybe maybe like 10 years of kind of hard core business experience before you decided to fix this problem, maybe in that range. [00:09:09][40.9]

[00:09:09] Right. And the biggest thing that made me different. The reason it was so easy in quotes. I mean, it was still a huge process. I'm a pain in the butt. But the reason I could be successful going out as a bookkeeper and this blows the minds of all the accounting people I talked to, I had a lot of experience as a business owner. [00:09:28][19.0]

[00:09:29] Yeah. In in business. So when I would go out and talk to somebody who called and said, yeah, I need a bookkeeper, I would go out and talk to them about their business. Hey, what? Tell me about your business. What what do you guys do? How do you make money? Who are your clients? How does it work? How are you trying to grow? Know what challenges do you have? I could talk to them for forty five minutes before bookkeeping even came up and they would go, wow, it's so awesome to talk to somebody who gets my business, who understands what I'm trying to do, who seems like they really understand from a high level. Because usually when I talk to a bookkeeper or I'm interviewing bookkeepers, they're asking me about journal entries and credits and and asking me about, you know, why I'm using a certain account number for office supplies. And I don't know any of that crap. I own a business. Right. I got bigger problems than that debits and like, I don't know what that stuff means. So you're the first guy that's coming and talk to me like, you know, you understand my business. I don't even care if, you know, bookkeeping. I'm going to hire you because you seem like you know what you're doing. And I feel like you're gonna take care of me. And by the way, that's the difference. [00:10:28][58.6]

[00:10:28] That's why guys like you and I get into this business, is to have the God damn business discussions. We want to figure out what makes them unique. What kind of service do they provide? How do they make money? How fast can they grow? Who are they selling to? Right. What are their sales cycles or their channels? Is it geo located or Internet like? Dude, that's all the fun stuff, right? You jump. That's why business owners like you and I and everybody else that you've been talking. That's why we got into the business. Right. We we didn't get into the business to talk about this other stuff so that you're right. In retrospect, it's simple. It's a simple concept, but it's not easy. Right. Because I tell people this all the time strategically, this is this is not a strategic exercise. We're not creating Uber. Right. We're not trying to figure out how to put the man on the move. That's a market problem. We're not trying to figure out how to reinvent food. Those are market problems. Were you and I know we're talking about an execution problem and the execution problem. The nuance here, which is very simple, is, hey, let's talk to business owners about their business. And it's like. [00:11:45][77.1]

[00:11:47] Of course, yes. No. I could have those conversations. Obviously, I had to know what I was doing it beeping. And I also looked at the bookkeeping industry as it stood. And I said, what? What do people hate about it? Cause I had hired bookkeepers to write when I own my restaurant. Oh, my other stuff. I had a bookkeeper that I used and I said, what are the things I hate about bookkeeping? When I saw everything. Well, yes, but I wanted to narrow it down. So one thing is I hated that they charged hourly. Right, because sometimes five bucks an hour to eight bucks an hour, brother. There's a low. And then I want changes in there. And this stuff I already told them and I'm paying them now to make changes I'd already told them about or, you know, they make mistakes and they're charging me to fix their mistakes. And then they want to drive to my place and then they're late for the appointment or whatever, and they want to charge me for travel time and all that stuff like this. This doesn't make sense. It gets the same amount of work every month. So how come one month, it's eight hundred bucks in the next month is 400. The next month that's twelve hundred. And probably because you lost a client. Right. And you need to make up the money. So now you're charging me for your profit. That does doesn't make sense. So I said we're not playing that. We're going to do everything fixed flat fee. Right. I know how much time it should take. You shouldn't have to pay extra if I have a slow typer or a fast typer or if we have to make some changes. That's not on you. That's on us. Right. It's on me, to quote it correctly. But after that, you know what you're paying every single month. The other big thing is customer service. Right. All the time I hear I e-mailed my bookkeeper and three weeks later she get back to me and answered a different question. The one I asked, like, no, we're not we're not doing that. We're gonna get back to people in 24 hours or less. Most of the time you e-mail me in the morning, you have an answer by the afternoon or sooner. Customer service is what people can judge me on, right. Most people can't judge whether our accounting is good or not because they hired us in the first place because they don't know accounting, but they can judge if I get back to them, if I'm friendly, if I give them good answers, if I meet the deadlines and I tell you, no, I meet if we engage on a certain scope of service, they can tell if I did that or not. And we're not going to let them down there. We're going to get stuff done in a timely manner. We're gonna have great customer service. We're gonna be nice people to work with. We're going to answer your questions in plain English, not an accountant. Yeah, those are those are things that you can say. [00:14:02][134.5]

[00:14:02] I don't know if your counting is any good or not, but I know I like working with you, you know, and sure enough that, you know, zero clients to 800 clients, I think the formula's working. [00:14:11][9.0]

[00:14:12] Oh, my God. Eight hundred clients. That that makes me. Wow. That makes my head spin. I mean, we've run a services business here for 15 years, and I don't think we ever think we're in a different business, but I don't think we ever took more than like ten, ten or twelve clients a year. But it feels like, you know, your kinds of fees are probably between the twelve hundred and five thousand dollar a month range or, I don't know, even lower. [00:14:39][27.5]

[00:14:40] I mean, we've got we've got businesses, you know, they're small. There's not a lot to do. Couple hundred bucks a month that takes care of it. I'm all about charging a fair rate for the right for the amount of work that we're doing. Right. If it's a bigger client, a lot more moving parts, you know, obviously it's gonna cost more. But again, we'll scope it out and we'll tell you before we even start. Here's what we're gonna charge you. If that works for you, great. If it doesn't, no problem. But you don't engage with us and then the clock's running and then you get this invoice. That seems like way more than it should have. [00:15:07][27.5]

[00:15:08] So how so how did was the advent of quick books online, which I know was relatively new? I want to say we went to quick books online maybe ten years ago. I don't know exactly when quick books online happened, but the minute it happened, we went online. We had Bill, you know, Bill dot com is, you know, an online workflow as well. We pretty much had everything is we don't do anything with paper. When someone asked me to write a check or wherever, but this model, this this efficiency model, did did quick books online allow you to do that? I think zero's out there to what platforms allowed you to really take advantage of this? [00:15:48][40.1]

[00:15:48] It was yeah. I mean, really quick books online made a big difference. And then a lot of banks and credit cards started putting their data feeds online. Yeah. And upping their security and allowing us to not. I always tell people, look, if you want to mail me a bunch of paper statements, we're not a fit for you. Yeah. We want to do everything digitally. [00:16:06][17.8]

[00:16:07] I don't want to spend time doing data entry. That to me, that is a waste of time. That's what software is for, right? I don't. You don't. And it doesn't make sense. Don't hire me to hire somebody to type for you. That makes the time right. [00:16:19][12.4]

[00:16:20] Hire me to have smart people who jump in after the software has done the data entry part. That's the part the computers haven't replicated yet. Right. When the account bought two thousand comes along and we don't even need those people anymore. Great. We'll change our business model. But for right now, at least for data entry. Right. Let the software do the work, switch to the cloud, switch just quick books online and then we can charge you less because we're spending less time not typing, just doing the part that you need. Brain for that, you need the accounting training for. And then you get good results for less money. We can take on more clients because we can serve more clients with the same number of people. So that's good for us. Everybody wins. [00:16:56][36.5]

[00:16:57] And I still get calls from people who say, well, no, I want you to come to the office. I want you to drive to my office and sit at my desk and go through my files. Sorry. That's not us. We've put a hard line in the sand and said we don't do that if that's what you really want. Let me try and talk you out of it. Five minutes into it. If you're not into it, no problem. But if that's who you want, you've got to go find Gladis. That's who's still doing that. [00:17:21][24.4]

[00:17:22] Yeah, he's available. I know she is. I've gotten older. So so we've talked about kind of what makes you guys special. And you're you're differentiating factors. We've talked about a market that's huge. This is a huge market in this business. But what makes you different than everybody else? Right. Like, I have a bookkeeper and I have an account, an accounting firm. You know, I feel like, you know, the bookkeeper is involved deeply in the day to day. And then the accounting firm, depending on, you know, what I would consider to be major strategic either tax R&D credits or any kind of those types of implications. They take care of that. So, I mean, at the end of the day, what what makes you guys different, apart from the fact that, you know, you are remote and but I do feel like a lot of folks are are getting there. They're not there yet. But I feel like they're going there. So what? And, you know, you guys have great customer support. So what really makes you guys different than everybody else? [00:18:31][69.5]

[00:18:32] So I think there's a couple of things. One is me being an owner who doesn't come from an accounting background. I again, I really connect with clients from a business owner to a business owner perspective. Right. I'm always thinking to myself, if I was in your shoes, I say this to clients out on the phone as we're talking. If I was in your shoes, here's what I would be concerned about. Here's where I think the opportunities might be. [00:18:56][24.2]

[00:18:57] And here's where the challenges I see are. You know, does that kind of align with what you're thinking about thinking, oh, my God, yeah. Or no? You know, we have this, too, and that thing that you didn't mention. OK, great. But, you know, they're like you're the first accounting person that's ever really understood my business. Dick, other accounting people I've talked to in the past, they just want to talk numbers. They they don't. Whether my sales are up one hundred thousand last month are down one hundred thousand last month. They reported to me like it. You know, they're paying the numbers like it has no em nothing. It doesn't mean anything to them. They're just reporting they call the bank accounts reconciled. I don't know what else you want for me. They're obsolete. You mentioned the problem that I lost all those social observations. [00:19:37][39.9]

[00:19:38] They're not their observations. They're not really insights. They're not data points that are that don't have any real conclusions. So I guess what you're saying then is we may have talked about this a little bit in the pregame, but I think a lot of people get into your business. You would know better than I. But I think a lot of people get into your business having the core technical quip books in book keeping expertize. These are they're not they are technically business owners, but they don't think they understand sales and marketing. I don't think they've actually some of them I'm generalizing, but some of them haven't actually run a business. Right. Right. And so I guess they're coming to the table, loading up on clients to just do the bits and bytes of it like you're describing without having the business discussions. And then when they get overloaded, they say, well, I need another bookkeeper to enter journal entries in due debits and credits and money in and money out in quick books. And then here's this is where we're at. Is that is that fair? [00:20:47][69.1]

[00:20:48] 100 percent. They their technicians, they're trained in their field in accounting, whether it's the tax side of the bookkeeping side. [00:20:56][8.4]

[00:20:57] But they and yes, they run the business to the extent that they rent an office and have some employees. But they really don't. In my opinion and again, I'm generalizing a bit, but it's mostly what you find to be true is they don't have the background to be able to think strategically, to think from a higher level about what might be good for the business or, you know, what options an owner might want to consider or just thinking about things from from the business case versus the accountant case. Just as one example all the time, you'll hear tax advisers, you know, go, OK, you've got these quarterly estimated payments I want you to make. Right. Last year, you made this much. Here's how much we think you'll make this year. So send in these quarterly payments and they go. [00:21:43][45.6]

[00:21:43] You have to they say like you have to pay this map, right. And as a business owner, we even before long before I got into this, I go, well, what if I took that money? And instead I bought some more inventory invested in marketing and I grew the business. What happens next is a chapter that you've got to pay. Well, what what happens? Well, there'll be a small, fine, small. Fine. OK. So I could give an interest free loan to the government or I could keep my own money, use it to grow the business. Maybe I get, you know, 150 percent growth and then I pay a small fine as a cost. Like, why aren't you telling me I have these? You know what's funny about that story? [00:22:16][33.3]

[00:22:17] You this resonates with me because when a company, especially small businesses and we own small businesses, we don't just grow like three percent month over month. And everything is just that's the way you do it. This story is funny because at one point in our agency history, we took a revenue hit in our quarterly tax payments, which at the time were about a were about a quarter of a million dollars or two hundred twenty five thousand dollars a quarter for a quarterly tax payments. And I knew we had taken a revenue hit, but I was like, don't these need to be adjusted? Well, like what? Why are we? And furthermore, I think the business, like throughout the course of the next two quarters is probably going to be somewhat flat. So is someone going to re-estimate these quarterly payments? I say here's what we're gonna do. We're going to make the quarterly payments. And there was like. Gasps What are you talking about? You're not gonna make the quarterly payments to the IRS. And I did what you did. I said, what the fuck are they going to do? You're going to ask us for the money at the end of the year when I know how much money I owe them. I'm not going to pay in advance for money that I don't know that I need to pay. Right now, one way to do that is obviously just to pay like half or whatever as you'll get stuck with a big tax bill. But to your point. You've got to start asking questions and you got in to your point also, you have to have the right firm that understands business enough to say, why are you making the quarterly tax payments? I'm not suggesting you don't make quarterly tax payments, but I am suggesting you have to work with someone that's a little more strategic than just saying here's what it's always been right not to do your deal. Right. [00:23:59][102.1]

[00:24:00] They don't. They don't think outside their own box. So it doesn't even occur to them that there could be other options or that somebody might want to hear what the pros and cons are. Right. What the consequences would be. What if I don't make it? [00:24:12][12.2]

[00:24:12] What are you going to put Aleena my house, or is it going to be a small fine? No. And I and I weigh that, you know. As entrepreneurs, we're constantly kind of looking at the return on investment. [00:24:25][12.9]

[00:24:25] If I do this, what what do I expect to happen if I do that? What do I expect to happen? I'm going to look at all my options and figure out what's the best plan for me. The problem with a lot of these accounting, they just they don't look at it that way. They just give you this one siloed set of choices. You don't do it or don't do it. That's it. And and they're not looking at the big picture. And that, I think, is one of our big differentiators. And again, because I'm not I don't come with that baggage of of technical accounting for 20 years where that's all I know. And that's all I'm that that's the only tool in my tool set, is these accounting tools. So I think that's a big difference for us and for me, you know, coming into it, wanting to grow this firm. [00:25:06][40.2]

[00:25:06] My goal, like I was saying from day one, was to see how big I can get this thing and not sort of just what can I personally handle or all, you know, two or three peoples, all I know how to manage. It's all I'm comfortable managing, which a lot of accountants, again, they're they're not good with people. So them growing this firm beyond two or three assistants is kind of that that's too much that I don't want to I can't handle. [00:25:27][21.2]

[00:25:27] Will you make a you make a great point. There's builders and there's sellers. And I would argue that there's not been a lot of people, well-known people anyway. I'm sure just regular people that aren't in the press all day, every day are both like I look at someone like Elon Musk and he's he was a builder and he's made the transition a seller. Obviously, he's done some amazing things. Bill Gates, same way, started his career as a builder, transitioned into seller Larry Ellison. The guys at Google, the guys at Facebook have as have transitioned. But I would argue that's a really difficult thing to do. Everything I've read and everything I've seen just suggests that, you know, if you're a builder, you're a builder. It's hard to make that. You have to have the will and you have to you have to have the desire to do that. Right. You know, there's also this notion of, you know, dreamers and doers and drivers in, you know, maybe I'm putting CPD and accountants into a box unnecessarily, but I see them in that doing box. Right. I don't see them in that dreaming box whatsoever. They're not going to go to Electronic Arts and start thinking about the next videogame. And although they might straddle driving, I think that's probably appropriate. But most of this work, it's like a software engineer. I don't think quick books is any different than kind of their bits and bytes. Their numbers. Go into Ledger. They come out through spreadsheets. Right. So I would argue that. Anyone in small business, entrepreneur or whatever. If you're only working with someone who has a doer mentality instead of a bit more of dreaming or a builder mentality as opposed to selling, I think you could be a problem. Let's talk about flight risk a little bit with some of these smaller firms, because I think that might be a pretty big differentiator as well. You hire someone, know, you find him on a quick books online. Maybe there's a group of people hanging out there in their marketplace. I don't know how it works, but these people stick around or do they churn? Or if you're a small business owner, can you wake up one day and you're your bookkeeper's gone? How does that. Do you hear a lot of that? [00:27:54][147.2]

[00:27:55] A lot of. Yeah. I mean, a lot of bookkeepers are very. [00:28:01][5.4]

[00:28:03] Inconsistent, I guess I don't know. They'll pick up two or three clients and then they'll get a full time job offer with benefits and drop the clients or they'll be, you know, married and their spouse gets relocated and they just kind of move on. It's I hear all the time, you know, in the last five years, I've been through four bookkeeper's and it's you know, they're OK, but they just don't seem to stick around or we're just not. So that's one of the great selling points of us, is that, you know, I'm a firm I have a staff. [00:28:29][25.8]

[00:28:30] Even if a person, A, that you're normally working with leaves or is on vacation or out sick or gets cold it or whatever. We've got a whole bunch of other people who can seamlessly fill in. So from your standpoint, there's no interruption in the work. You're still getting everything. You still have a single point of contact. You can always reach us. I think that's one of the big downsides of people who work with just individuals. As you're you know, you've got a single point of failure. And I always try really hard in our business not to ever have anything that's only in one person's head or one person's responsibility, because you never know. I mean, things can happen, right? So if you lose that person, you don't want to lose that piece of your business or those contacts or that knowledge base on how to get got ever done that they were doing. [00:29:12][41.9]

[00:29:13] You've got to have at least two, if not three or four, whatever. So it's the same thing for businesses, firms that hire an individual to do their bookkeeping. You know, you've got a single point of failure. And as soon as that person doesn't turn up one day, you've got to start over and saw someone new and you're gonna have a big gap in time between the last person in the next person. And inevitably the next person is going to tell you the last person did it all wrong and they want to redo it all. [00:29:37][24.3]

[00:29:38] Course, you know, the software engineers, lawyers, doctors would be tough. Like, it doesn't work. Your heart doesn't work. Why in the hell did that other guy do? Right. But I got to tell you famously, of course, your CPA is your bookkeepers, your software engineers, your lawyers. [00:29:59][21.4]

[00:30:01] When there's a little bit of gray area, they'll just be like those prior idiots, foreshore idiots. Oh, agencies. You hired those guys to do what you tell your whole business as fuck. Anyway, pardon my French. But no, that's that's still right. Let's talk about verticals. If you had to think about, like the verticals that you guys serve and then maybe let's talk a little bit about Cobbett and how that may have shifted. I know you guys do quite a bit of eCom in commerce for those of you out there. I don't know what eCom is. You're probably not be listening to this show if you don't know what eCom is. [00:30:39][38.6]

[00:30:40] Welcome from out from under that rock you just crawled through gladis through the front. [00:30:45][5.8]

[00:30:46] Both of you come here, please. Let's talk eCom. Let's talk about the verticals, because with 800 clients, I think is what you've mentioned and I know you guys are correct me if I'm wrong, one of the largest bookkeeping firms in the country. And you're a hundred percent remote, right? [00:31:02][16.2]

[00:31:03] Yes. Yeah. So, you know, again, all ninety nine percent of the people offering bookkeeping services out there are one man or one woman operation with anywhere from two to 10 clients. So even we were when we're at 100 or 200 clients, we were one of the biggest. But we just continue to to, you know, get bigger and bigger. There's a few firms out there with, you know, over a thousand. But we're definitely one of the biggest, focusing primarily on bookkeeping. And then we're growing our tax side, too. But as far as verticals, the biggest single vertical we're in is. Yeah, e-commerce. We have a ton of people who sell on Amazon and Shopify, Wal-Mart platforms like that, or a lot of them sell on multiple platforms. A lot of them are ordering product from overseas, you know, private labeling it or doing, you know, modifications, creating their own products, having them shipped over here to Amazon or other platforms and then selling them through. [00:31:58][54.8]

[00:31:58] And it's a it's a fantastic business model from the sense that we've got guys, you know, working out of a spare bedroom, doing ten million dollars a year in revenue. And they've got one part time employee. I look at that with my thirty employees and go, Matt. Yeah, yeah. It's a bit of a good model, you know what you're doing. [00:32:15][16.6]

[00:32:15] But it, you know, like any business, right. The grass is never, always greener. You can have all kinds of problems. You can have your Amazon account turned off on a whim because somebody complained about something. And, you know, certainly your revenue goes from, you know, two hundred thousand dollars a week to zero. But it's a it's been a good space for us. A lot of people come to us. You know, we're not even taking over from our prior bookkeeper. They literally have no bookkeeper or they do their stuff once a year and the next cell thing and then they send that to their CPA and then they wonder why they get these giant tax bill. [00:32:46][30.5]

[00:32:46] Is that the real is that the real selling opportunity is I think about this in quadrupeds and I think about, you know, small businesses, medium businesses, large businesses kind of on one axis. And then you look at just kind of the. Activities are the pain points throughout that on the bottom, maybe. And I would have thought probably unrealistically. Based on your comment that you're always trying to take business away from, you know, maybe a one or two shop bookkeeper. But candidly, would it kind of feels like he's given the explosion of eCom in the do it yourself economy in the globalization of everything? There's more demand like in in. [00:33:31][45.0]

[00:33:32] Let me ask you another question. So so you're basically getting new folks. So they haven't had their bad experience yet. They've had their bad experience with themselves. They wake up really and they say, me, this job sucks. Call in math. Right. But so you're not really taking business. I mean, in some cases you probably are. But let's talk about the supply, though. Do you feel like there's enough supply of legitimate firms like yourselves to accommodate that demand, or is there a big gap in the marketplace for your services there? [00:34:07][35.0]

[00:34:07] There is a big gap in the marketplace for competent services. Yeah, I agree. There is. There's a lot of people who are doing it themselves. I just haven't gotten around to it yet. There's a lot of people who imagine that they can go on to, you know, five or Upworthy and pay somebody 20 bucks or 100 bucks not do it. And we see the results of that all the time. And fix that last year. And then there's a lot of people like in the e-commerce space, you know, yes, it's bookkeeping, but there's definitely some nuances to e-commerce bookkeeping that's different than if you're a gas station or a law firm. Right. So they'll find the Gladis or whoever who do the books the way they did it, as if it was a gas station. And they're missing big chunks and they don't know what they don't know because it's the only one they've done, whereas we've got 500 e-commerce clients. So I immediately know all the dark corners to go look in and make sure that everything got covered and the other people are not that they're bad. They just haven't had that experience that, you know, at the 10000 hours thing. Right. They haven't had the experience to know what they're missing or how they could be doing it better, more efficient, get getting better results for the client. So there is a big gap in competence. [00:35:15][68.3]

[00:35:17] There's a lot of bookkeeper's out there who can get that job halfway done, but they they don't get it to the finish line because they don't know how. They don't know that that's where the finish line should be. Right. They thought it was a lot earlier. They thought they were running a half marathon. Really, it's a marathon. And they they dipped out early. So. [00:35:33][16.8]

[00:35:35] All right. But the bottleneck for us honestly is good staff. It I don't have a market problem. I can get as many clients as I want. [00:35:43][8.9]

[00:35:44] I have to cap that growth based on having staff here who can do the job. So we don't over promise and under deliver and our customer service doesn't fall off and people don't get mad at us because we're not meeting our deadlines. If I can't do that, then I can't take the clients. [00:36:00][15.4]

[00:36:00] But the client finding clients and onboarding clients is not that's not our problem. It's it's the staff side that is, you know, and we're working on that. We have in-house training and we have benefits and we have you know, we try to make it an attractive place to work, but that is what is holding us back. We could be five times bigger than we are now if I could magically find five extra staff that I have today. [00:36:22][21.6]

[00:36:22] Where would you what do you get your staff? You allow because one thing I kind of learned, because I think all services business is very similar to ours where there is some technical competency that you have to have. Right. Like Kingwell by Google AdWords or Amazon e-commerce paid marketing campaigns or Facebook campaigns. Like you can't just be some schmo that just shows up one day, starts pushing buttons. You can't get in quick books, can't do it on Google, can't do it on Amazon. [00:36:54][31.6]

[00:36:55] So how do you find. How do you find talented people if that's the biggest problem? I think we've got some ideas around this, too. But how do you find talented people? How do you get these people? [00:37:06][11.2]

[00:37:07] Because I would argue to the old thinking around having a job has changed completely. Right. Like here, drive to my office, put on your suit and tie or, you know, let me go through your resumé as you sit there and answer a bunch of questions that, you know, the interviewers a lot of times aren't even good. [00:37:28][21.2]

[00:37:29] You don't even know sometimes what the hell you're doing because you're not a professional interviewer. Neither am I. Right. So it's basically just you might get lucky like 30 percent of the time. And I think that's the number. But how do you find good people, man, and how do you retain them? [00:37:42][13.2]

[00:37:43] That's a great question and that's a struggle. I mean, one thing we do is we try to blanket as many places as we can. You know, we go on indeed. [00:37:50][7.2]

[00:37:51] We're on zip recruiter on Craigslist for on LinkedIn, where, you know, try and get the word out as far and wide as I can on Facebook so that we get as many applicants and as possible. So then you have a better chance of finding the good one. The bigger the pool, right, the better the chances. Another thing I do is I always write my wanted ads, my job ads, like as if you and I are having a conversation, like, here's who would be a great person to work with us. It's not H.R. speak. It's not bullet points of peno first. Right. It's one hundred percent. It's a cool place to work. We have a lot of opportunities, a lot of challenges, OK? You know, you can grow here. We've got benefits. You got all that stuff. But bottom line, it's a fun place to work. And if you're interested and not a boring job or you just do the same thing over and over for the next 30 years, come check it out. So we try to I try to sell them on applying because again, the bigger the pool of applicants I have, the better the chance I can find some good people if I only get five applicants, even if I pick the best one. Chances are they're not going to be that great. They get 100 applicants. [00:38:49][57.8]

[00:38:49] You know, now I've started to have a better chance of finding some good people because I'm we to hire everybody full time, because if they're part time and in a full time opportunity comes up, I'm afraid they're going to leave for that. So I'd rather just take somebody who wants to be full time committed here. And then, you know, we try hard to vet them early days. I want to know by the end of your first day if you're gonna be a good fit. [00:39:17][27.2]

[00:39:17] I don't want to give you a month, you know, on my dime. And at the end of a month ago, I problem. I can work out. Well, that's a wasted month of time. I mean, money. Yes, but time more so. Right. If I have to wait a month to figure out if you're any good. I've killed a lot of time that I can't get back. So we have some things that we do. Kind of some things we we specifically do and some things that we don't specifically say. Like one of the big things we've noticed in our business anyway. If somebody day one, when you sit them down to say, okay, I'm going to start showing you just some basic stuff. If they have a note pad and they're taking notes. [00:39:53][36.3]

[00:39:54] Yeah. Good sign. Yeah. If they're sitting there with their hands in their lap just staring. Don't ask a single question. Don't ask a question. And don't write anything down. Come on. If I tell you how to do this and you don't write it down and then you ask me tomorrow what I told you today. Tomorrow is your last day. Game over game. You're not a fit. You're not who I want. [00:40:14][19.7]

[00:40:14] Yeah, no, that's great advice. And I tell people a lot, too. I don't know if we've lost sight of what the word being a professional means, but these are blocking and tackling things that I really wish they would teach in high school and in college. You know, I've had folks come to the agency and not know how to use a word, you know, application. Right. Word, Microsoft Word. And I understand that you've been using Google Docs. I get it. I'm okay with that. But I got to tell you right now, if you don't know how to put, you know, do a word count or change the layout or, you know, you open up a crack, open a PowerPoint and put a few slides together, in my mind, I'm kind of wondering, like, what? I can't get you to where you need to be if you don't come with the fundamentals. Are are colleges universities in these places? Maybe they're getting hit to this. But a lot of folks, especially the younger folks that we've interviewed, we've seen, they need a lot of fundamental help. Right. [00:41:13][58.4]

[00:41:14] It's ridiculous. I've got literally and I can't even believe I'm saying this, more than one person was fired on their first day because they came late their first day and they're always shocked. They walk in, you know, they're supposed to be here at nine. They walk in at nine. The double, triple latte, whatever. Yeah. And I go, no thanks, but no thanks. This isn't going to work for us. You know, you're done. Oh, well, I have my kids in this. I was just like, look, literally your only job. Day one was to come on time and you're already screwed that up. So why am I going to change on anything else? You're already a hundred percent fail on the one thing that you had to do today. [00:41:52][38.3]

[00:41:52] One thing and you know, it's, you know, what is good about this conversation that we're having? And I tell my clients this, too. Do you want to hire that team and manage that team, or do you want Matt to take care of this stuff for you? Because when that email leaves your fingertips and it goes to Matt's team, that Cap Forge, Matt is making people show up on time. Matt is making sure they know how to use the goddamn tools. Matt is making sure they're capable, incompetent. And you know what? If it costs a little bit more money than fiber or up work or some other you know, I got one the other day. I don't know. I'm not going to call him out, so I'm not going to go look for the email. We had people for five bucks an hour. That's the latest. That's the latest. OK. I'm like, are you serious? Are you serious? Right. So go ahead. Take the route. Take the fiber route. Take the what you're buying is you're buying all the management responsibilities, all the strategy, all the planning, all the accountability. All the follow up and all the follow through. You are. You are only buying. Fingers on keyboards, execution. All right. You are owning all the other stuff I just mentioned, which is stuff like like. That's what Matt and I do. So if you do want to pay for that, that's fine. You'll probably have to learn the hard way. But showing up for work on time, having communication skills, these are all the things that good entrepreneurs and founders vet for. All right. So I just hope our audience understands, like, please stop going to the rate. Right. And look at the founders of these companies like Matt. There's a lot of great founders out there. And just say, wait a second. You know, organizationally, organizations run from the top down. You're buying, Matt. But there is a little bitty piece of Matt and every single one of his people. They know and they know what they should be doing. So, you know, that's what you're buying. So that's great. Let's talk about in a little bit. How did that impact the business? You know, maybe both good and bad. [00:44:07][134.4]

[00:44:08] So fortunately for us, because we were already set up to be virtual, already set up to be remote and cloud based. It really didn't hit us our business very hard because we already have a lot of people who would work part time from home or full time from home or, you know. So our organization was already well suited to that. Now, we did have clients. We have clients who are restaurants, clients or yoga studios, clients or event planners. Those poor folks, you know, they were hit. And as a result, some of them canceled services with us or paused or whatever. And I mean, I can't blame them. [00:44:43][34.9]

[00:44:43] How did you help with the PDP loans? And we did a ton of, ah, our CPA or our CPA or bookkeeper did a great job pivoting in that. And I'm thankful. Super thankful. So I'm glad you guys. So, yeah, that was a big one. Right. [00:44:59][15.3]

[00:44:59] So yes, we did a ton of peepee and so for our business. But fortunately, again, with having such a big concentration in the online e-commerce space, a lot of those folks are having their best year ever. Because, you know, nobody people are shopping online, obviously. But now you can't go to the mall. You can't go out and buy stuff. And so people are sitting home while I was going to get it delivered. And so a lot of those folks actually had a much better year than they were even anticipating. So and that translated into more work for us, more clients and so on. So I'm very thankful I wasn't I can't claim any brilliance in anticipating a pandemic. And so, yeah, we'll position on that. But it just fortunate for us, our client base and our business model already worked well to deal with that situation. [00:45:46][46.7]

[00:45:47] All be happy with my. Better to be lucky than good line. I know you just come in, you sit at that goddamn desk every day and as long as you're there and you're ready. [00:45:58][11.3]

[00:45:59] Something will happen. And you know, anyone who thinks the only person I've really seen that, you know, at a high level anyway, like Elon Musk can legitimately see around corners like that, guys. [00:46:10][11.0]

[00:46:11] Oh, that's amazing. Yes. [00:46:12][1.4]

[00:46:13] He knows what's up. Jeff Bezos legitimately can see around corners. There's very few of us that are you know, they're really, really good like that. Right. But you gotta sit at the desk and you got to do the work. Let's talk about your Amazon sellers and your e-commerce business a little bit. [00:46:30][16.6]

[00:46:32] How big are these businesses or these two million dollar businesses a year? [00:46:36][3.7]

[00:46:36] These two hundred thousand dollar businesses a year are these 20 million dollar businesses a year? I mean, all of the above. We've got people who are still, you know, just figuring it out. They've got one product. They're five, six thousand dollars a month revenue to kick off. Also, our biggest client is over 100 hundred million dollars a year in revenue. [00:46:52][16.2]

[00:46:53] And I'd say the sweet spot is probably one million to five million. And that's where a lot of people kind of land. And honestly, it's not that they couldn't keep growing. But what a lot of them will do is they'll sell at that point. They'll cash out because of them. The Amazon business, although they're profitable, they're constantly reinvesting cash back into buying more inventory to fuel the growth. So although they're profitable businesses, they're not they're not funding lavish lifestyles. They're not pulling a lot of cash out. So the way to take the cash off the table for these businesses is actually to sell. [00:47:25][31.4]

[00:47:26] Now, you get a big payday and almost all of them put some you know, they'll buy rental real estate, they'll put it in stocks or whatever, and then they'll take some and seed the next one and they'll grow that second one twice as fast as they did the first one. And they're looking at exit. And then meantime, all these private equity firms are ready to help these things up because they buy them at three X right through the Amazon businesses over, you know, over a startup size typically sell for three times annual profit. So these private equity guys will buy an Amazon business at three X. They'll roll a whole bunch of them together. But now, if you're at the 100 million dollar range, they're selling for five or six X. So it's kind of instant equity by packaging all these together, all these little guys into one big umbrella business. [00:48:11][45.3]

[00:48:12] Yeah, there was a company. I can't remember the name of it. I think it starts with a P.. It's got a weird, like science name, but one of the fastest, most profitable companies. I don't know if they're gonna SPAC or IPO. That's what they do. They buy these Amazon businesses and then they triple them. Right. Or whatever it is they do. How do you feel about this? Because my advice to founders, especially in a very finicky consumer world that we live in with with shitloads of competition. My advice to those folks is sell it and just sell it and get out. My that's my advice. What's your advice when working with these folks? I mean, a 10 million dollar e-commerce business running 30 to 50 percent margins. That's a 15 million dollar payday after, you know, the government gets a hold of it. It's a seven and happy guy. How depressing is that? But what's your what's your advice to these guys? Because you've probably seen it all. Don't sell and crash, sell and just kind of walk away and start something new and then not have to worry so much the rest of your life. [00:49:16][64.4]

[00:49:17] It definitely I think if you get to a size where an exit makes sense, take the money off the table because it's very hard to build a moat around these businesses. [00:49:27][9.9]

[00:49:28] I agree. No, it's competition comes in. As soon as they see you're getting success, they'll come in with knockoff products or literally the same product. I mean, story after story of, you know, Chinese factories producing a product for somebody who's now and they see how much orders the orders are going up, they'll put the same literally, literally the same product with a slightly different spelling of the name right next to you, head to head for half the cost. So if you get to the point where you've built it up, you've got a good thing going and you want to sell. [00:49:55][27.5]

[00:49:56] I would 100 percent say at certain points in the process, take the money off the table, diversify and buy some rental real estate by, you know, put some money in equities and you want to start another one. Great. You already have all the tools. You're just swapping out one product for a different product. But, you know, go back to it, build another one. But expecting that these are going to be like legacy businesses like our fathers and grandfathers had where they started as a family business. And 100 years later, it's still got no happen. [00:50:23][26.9]

[00:50:23] Any game over, bro. That doesn't happen. You're not going to be there. No going back. No lifetime employment. You're gone. [00:50:30][6.9]

[00:50:31] Yeah, you're gone. And by the way, Amazon Essentials frickin watch out for those guys, by the way. They own the data, right? [00:50:38][7.1]

[00:50:38] It's not like they know. They know exactly what sells and how much and how fast. So they're not making dumb decisions. They're looking at the data and saying, oh, we can own this spot. We can own that spot, you know, stay on the plan. People get mad. Well, how can they do that? They're going, hey, it's that that's their platform. They all want to sell. [00:50:56][17.8]

[00:50:56] Like we have some Amazon clients. We do marketing. We have some e-commerce clients that sell on Amazon and we do marketing for them on Amazon. And I can tell you for sure, the minute we started moving our clients to Amazon away from Google and Facebook, and you do have to have a multi kind of stage and multi-channel strategy. And I say stage first because it depends on the stage your business. But they've got a metric in Amazon called a cause average cost of sale. And it is not it is not infrequent that. Many, many, many of our products with many of our clients there, a cause is like 10 percent, 15 percent. [00:51:39][42.6]

[00:51:40] 20 percent in some cases is high. But you really have to think about that. If you have an average order value of one hundred bucks, you're paying ten dollars to sell your product. Are you fucking kidding me? Like, you can't get that deal anywhere. You can not get distribution, customer acquisition. Brandy, you can't get that deal on a single place unless you go to Mars. ELong, we'll take you there. So, I mean, you got it. You got to go do that. Right. But that also means that everybody else can go do that, right? [00:52:16][35.3]

[00:52:17] Well, that's I mean, there's no mo there. You can't defend that because anybody else can come in and compete with you. If they've got a deeper pocket, they can go higher. You know, they can outbid you, get the get the traffic. [00:52:27][10.0]

[00:52:28] You have to you know, do you have to have a strategy just like, you know, the whole idea of sit on a beach with a laptop and make millions of dollars a month with it? There isn't one like that. There's no business. And e-commerce is no different. It's a business. It's a grind. You've got to know your data. You got to know your numbers. You've got to know what you're doing. You can't fall asleep at the wheel. It's not you know, somebody will come along and eat your lunch. If you're not paying attention, you can do well. [00:52:51][23.1]

[00:52:51] If you're strategic about it, you put in the effort just like anything else. But it's not you know, it's not easy riches despite there's a million courses out there telling you it is. Give me 10 grand. And I'll tell you how to make a million dollars on Amazon in your sleep. Now you'll be 10 grand poorer. That's the only thing I guarantee you out of that course. [00:53:08][16.2]

[00:53:08] There's you know, I tell people all the time, you know, and it's it's kind of cliche. But sometimes when I talk to clients, I'm like, well, gee, if I'd if I could just come in here in three months, every dollar you give me give you 10 back, I'd have my own private island. Like I mean, honestly, it's really naive to think that you can just hire someone that you think has some kind of superpower. [00:53:29][20.5]

[00:53:30] You need to invest in people and you need to invest in teams that, you know, we're gonna be honest and try to solve the problems and they're gonna grind away until they figure it out or they're gonna grind away until they come back and tell you based on data, you're not a good business and you don't have product market fit or you do have product market fit, which means 20 other people have product market fit. You're not doing anything unique or disruptive. And so. I can see the line chart right now. Race to the bottom. Get the fuck out. Right. Right. So, you know, it's. [00:54:04][33.3]

[00:54:06] If you had to advise on maybe one or two or three things that e-commerce folks should really be looking at from a finance standpoint as they look at their books. I mean, I'd mentioned a cause that's a little bit tactical, but are there some things either strategic or tactical, you would say to these e-commerce companies that you're like, bingo? I'd seen this 500 times. I know exactly what you should be doing. Here are the three things you need to do. If you don't want to do it, piss off because you're gonna fail or. All right. That's all right. Do this and you'll win. OK. What are they? [00:54:39][33.3]

[00:54:39] Yeah. So, I mean, one of the biggest things we see over and over again is people losing sight of the individual performance of the product. So the less you know, you start out with one SKU, you watch it like a hawk. You know exactly what your margins are. Great. You're you're good with that. And then you add a second one to the third one. And before you know it, you're selling 50 or 100 products. And you look at your bottom line and go, I'm profitable. So I'm okay. I love that you said it. It turns out that 30 of your hundred or fifty of your 100 are break even or actually losing money and you're just covering that loss. What they have 100, Reynie. [00:55:12][32.4]

[00:55:12] A cause which. [00:55:14][1.5]

[00:55:15] Yeah. I mean, no joke that happens. And they lose sight of keeping an eye on each product that they're selling and really individually monitoring the data and and keeping a hands on perspective of it. And I look at them and I go, look, if you if you got rid of two thirds of your inventory, you'd be twice as profitable. They go, no. Oh, no, no way. But my sales would go down. It's not about sales. It's about profit. How much influence thing? [00:55:40][25.0]

[00:55:40] You know what's funny about what you just said, and I've seen this with my clients as well. They get locked into their brand. And the reason why digital works better. I mean, I would argue that putting a TV ad out or putting a billboard out, I would argue that it does work. You just don't know to what degree that it works. Right. If you pulled that billboard down, you might lose some organic or earned impressions or whatever. But the reason why digital is so powerful and you can't fight this trend is because when you see data that tells you that your brand team created a shitty product or a shitty brand. Do you find a lot of the times because you have five hundred of these clients. I only have five. Do you ever find that the founders of the owners are just unwilling to believe that after they spent two hundred thousand dollars building this brand is unwilling to believe that these numbers are true and that they're not going to stop spending into it? In their classic moneymakers, in high profit brands are getting sucked. These new brands that are not working or these new products that are not working are sucking the life out of their top line and bottom line legacy brands. You see that? [00:56:52][71.7]

[00:56:53] It does. It happens. And it's it's a depressing conversation because you point out, you know, like I'm nice. [00:57:00][6.9]

[00:57:00] This isn't my opinion that it's working or not. Data is the data. Here's the numbers. I mean, this is black and white. You want to check my sources? You want to check our numbers. Go ahead. You're gonna get the same answer and you can't make it up on volume in the show. Well, we just need to sell more. No, you're losing five dollars on every sale. Selling more is not. Yeah. So some you know, we try to educate clients. [00:57:24][24.1]

[00:57:24] We try to. Look, I'm not trying to rain on your parade, but I want you to understand what I'm seeing and how you can use it to make good decisions. And some of them get it and they really appreciate it. Oh, man, I didn't realize this, but thank you for pointing this out. This is why we work with you were super happy and other people go the other way. Now, I don't believe it. No, that's not true. No, we're not going to change what we. Your motivation. [00:57:45][20.4]

[00:57:46] Right. I mean, your your motivation is to keep your clients in business so you can stay in business 30. So you're aligned 100 percent yet no pony in this race. Other than looking at the data and make sure your client's financial well-being is taken care of in their healthy businesses. [00:58:03][17.2]

[00:58:04] Right. I am not taking kickbacks from Amazon to keep them listing products that they're losing. I like that. It's not how it works. You and Jeff go way back on. [00:58:13][9.2]

[00:58:16] Well, so that was an interesting thing. So so the the conversation started. And I love to take things off track. So my apologies. But look at your skews to the product level. And that is that is greeted by Cizre. Is there anything else these these folks should be looking at? [00:58:31][14.8]

[00:58:32] I mean, as as crazy as it sounds for all the ones out there listening to this right now that don't have any bookkeeping? Well, I mean, I don't care if you hire me or someone else but get books. I mean, that's how you keep score. That's how, you know, if you're winning or not. Right. Why would you get into a game, play that hard, invest that much, spend the time and then not keep score. You got it. You've got to have data because without the data, you're not going to make good decisions to the point where just exactly sad. [00:58:58][26.3]

[00:58:58] So make sure you're getting that done by somebody who knows what they're doing in the space. Is there a revenue? [00:59:05][6.3]

[00:59:06] Is there a revenue or a growth level or a company maturity level that you're like, OK. Look, you really need to stop doing this on your own. Is there some target that you have for folks? Like, if I came to you and I was making two thousand dollars a month writing a blog on sub stack and I was like, whatever, I was trying to, you know, tell us what the good spot is for you guys to have a client. [00:59:31][25.9]

[00:59:33] I would say anybody that's got revenue, you know, from ten thousand up yet. That may sound small to some people. That may sound like a lot to some people. I don't know where. It depends what your perspective is. But if you're 10 thousand revenue a month, you're over 100k a year, you're going to have 30, 40 thousand dollars depending on profit that's going to be taxed your debt. [00:59:54][20.8]

[00:59:54] That's enough money. You don't wanna screw it up, right? They're selling a thousand bucks a month. You're probably losing money. Well, you're not going only tax whatever, but you get to ten thousand or end up at that point, it's time to put on the big boy pants and get into business the right way. And for us, if you're real small, our prices are really low because we're not doing a lot of work. Talk about that's. [01:00:16][21.3]

[01:00:17] A book about how it works. So that's great advice. Think about 100 grand. Right. And I don't know why in life, everything feels like it works in tens. Right. But I've noticed that across a lot of businesses. But let's talk about how it works. So I call you. I'm like Matt. You've got a five million dollar a year business or whatever it is. Here's all the stuff that's going on in my business. How do you determine how much to charge in? What kind of support do we get? Right. And how is that support delivered? Are we doing Zoome calls or are we doing emails? So tell me how it works and how the pricing in the structure works. [01:00:58][41.4]

[01:00:59] Sure. So what we do, every single client we talk to is a custom quote because every business is a little different than next. But from a baseline will look at, you know, how many accounts do you have? How many bank accounts? How many credit cards? How many plot? If you're an e-commerce seller, how many platforms are you selling on Amazon, Walmart, Shopify? [01:01:16][17.1]

[01:01:17] Are you overseas or are you doing Amazon UK and he you. Is there a multi-currency aspect to it? And then how many Skewes do you have? Well, you know, one guy could do a million dollars in revenue to SKUs and another guy has five thousand skewes. And obviously that changes the workload on us, even though the revenue is the same. So we'll look at all those factors. And then also look at scope of work. Are we just talking about bookkeeping? Do you also need payroll? Do you need help with your sales tax filing? Do you need help with your income tax filing? We'll put all that together and then we'll come up with a quote. And it can be literally on the low end under 200 bucks a month for the real small sellers who just need their books done right. So then their taxes can be done right up to, you know, well over a thousand bucks a month for somebody who needs a complete package of services and is a bigger business or even higher than that. Most of our clients probably fall in the 300 to 500 dollar a month range for what they need then, plus the income tax service at your end. But every single client is different. We quote them as such. You know, a lot of people just want to have a gold, silver, bronze plan. And you're like, well, I need some of what's in gold, but I'm really bronze size or, you know, the stuff doesn't work and we recognize that. So I want to talk to you about your business, find out what you need, what you want, and then I'll give you a quote accordingly. And then, yeah. If you start out at two million dollars a year and by the end of the year, you're doing five million dollars a year. Sure. We're gonna talk about adjusting the rate because the work went up. But, hey, if your business went up by two and a half ex, well, it makes sense. Your fees are a little too. But, you know, as a percentage of your revenue, it's tiny. It's a tiny, tiny investor. [01:02:53][95.9]

[01:02:53] You know, the number the number I heard one time, I think, I don't know, between one and four percent. Does that number sound right? Yeah, yeah. Yeah. And in. So here's my other here's my other two questions. It sounds like you guys do tax, right? So you're a bookkeeping firm that feels like you're growing into tax. So are there some specific tax implications for Internet businesses or online businesses that make that expertize unique? [01:03:25][32.2]

[01:03:27] Definitely. I mean, we had a client who he went to. He had his books done by against, you know, somebody off five or something. Right. Then he went to his local CPA. And then before then he came to us and we fixed his books. [01:03:41][14.6]

[01:03:42] But in the meantime, he got a letter from the IRS. The IRS said, we think you owe another seventy five thousand dollars. Oh, my God. He took it to a CPA and the CPA said, yeah, I guess you should pay it. And then he stopped taking his calls. So this client comes to us and he goes, I know you're doing my books. Can you look at this tax return? No problem. So we look at the tax return. Not only did he not owe seventy five thousand dollars, we got him a seventy two thousand dollar refund because the CPA didn't know what he was doing, layered on top of books that were a disaster. So had this client just gone along with the CPA, his advice, he would've paid an extra seventy five thousand one hundred and fifty thousand dollars in the hole. So, yeah. This this Nitsch this this vertical has some nuance to it that a lot of people just don't understand. [01:04:29][47.5]

[01:04:30] They get it wrong. They just haven't seen it as much as we have and they make mistakes. So that's something we can help out with. But step one is the books have to be right. There's no chance of getting the tax return right. If the books are a mess. So we always tell clients we're happy to do your books. If you also want help on your taxes, we can do that. But we can't do your taxes with somebody else's books or your own books or are Aunt Suze books or whoever you do them, because chances are they're not going to be right. And then we can't defend you if there's a problem because we didn't source the numbers. So we'll do the bookkeeping and then we'll add in tax for those that want it. And yeah, there's a lot of there. [01:05:05][35.0]

[01:05:06] Just for one example, Amazon, when they send you the ten ninety nine at the end of the year in that amount that they tell the IRS that you got. They don't take out refunds. They don't take out discounts. They don't take out promos. So you're getting this number reported to the IRS. That's not even close to what you got. Especially bad. Like if you sell clothes, you know how many people buy different things and return five. Right. So they spend 300 with you and you end up refunding two hundred and forty. Well, Amazon tells the IRS you've got 300 bucks. So if you don't understand that and you're not accounting for it, you're going to way overpay your taxes as an Amazon seller. [01:05:49][43.1]

[01:05:50] Yeah, let me our CPA doesn't, you know, isn't familiar with that. [01:05:53][3.5]

[01:05:54] Well, let me ask you another question. You know, we're we're bumping up against time. I think we've got a couple extra minutes here, though, because I think these these last two questions are a little important. In smaller businesses, you know, we don't have the ability to have like a controller, a CFO. An army of bookkeepers and a team that just does invoicing and a team that just does, you know, F.P. N.A, which for those of you who don't know what that is, it's financial planning and analysis. That's a whole thing. Right? Right. Different people. So I'm just I'm kind of throwing this out there. So if you think about the foundation starting in the bookkeeping category. And then you go straight to CPA, I believe what's missing in the middle is that financial planning and analysis component. Right. How do you guys support that? Do you support that? How do you bridge the gaps? I mean, because you're not going to have all the CPA work, right? Obviously, you're going to have all the bookkeeping work. You're not always gonna have the CPA work. Is there a way you can bleed into F.P. and a little bit? Or how do you support clients? Because bookkeeper's in general, not all of them. My opinion. Probably not. The people you want doing financial strategy and planning. [01:07:19][85.0]

[01:07:20] Oh, 100 percent. That is not a bookkeeping role. And and the bookkeepers, even our bookkeepers are not set up, educated and trained in that. It's not an OK. It's just a fact. It's just what it is. You know, you don't go to your eye doctor for dental surgery and vice versa. Right. Not everybody is good at all things. But the single fastest growing segment of our business is our advisory service. [01:07:41][20.6]

[01:07:41] And that's exactly what that is. That's the piece after the books are done and not focused as on the tax piece, but focus on all the rest. Looking at your business, how how fast is your revenue growing? Where your expenses going? What are you projecting? What KPI should you be looking at every month? What are the things? What are what are your perceived challenges in your business? What do I look at and see in your business? And let's talk about that and let's come up with a plan and let's set some goals and then let's measure those goals and see how we're doing and continuously improve the business to whatever your end game is. Some people want to get big and exit. Some people are, you know, just looking for cash flow to support a lifestyle, whatever the case. Let's talk about that. Let's make sure we're on point for that. And we're tracking it. And we're not just saying at the end of the month. Here's your income statement. Here's your balance sheet. Know, good luck with that. We're saying here's how to read that. Here's what this means. And here's how you can use it to make meaningful decisions about your business. So that advisory service piece, which honestly I used to just give away for free, I would just get on the phone with clients and say, you know, hey, have you noticed this? Have you thought about that? Or they'd call me. Hey, can we talk business for a minute? That to me, it's fun. So that is helpful. People have had to remind me, hey, you should really be happy, but we've become more formal about it. More. More strategic on our side to say, look, this is an actual service offering that we've put together. Again, we scope it to what you need if you don't care about forecasting, but you want to talk about other stuff. Great. If you're all about cash flow and you know, you wanted to cash flow projections, we can do that. But we're happy to have that conversation with you, get you on a monthly plan or whatever makes sense for your business. And we have now staff here dedicated to providing that service, people who have the experience and the wherewithal to give good advice there. But we've found that clients love that. I mean, that's that's really the missing piece that they were looking for all along. It's great that the books are done. I'm glad my taxes are as low as they can be. But this advice thing, that's what I'm excited about. [01:09:45][124.0]

[01:09:46] Yeah, no, that's great. In does I'm assuming you guys I'll just throw out a number like seventy five percent of all your clients are on quick books right now. Ninety five percent. [01:09:58][11.7]

[01:09:58] Yeah. Maybe you do zero or maybe you do some other stuff. Right. But a lot of these it's best to get the efficiencies, you know, for scale with one platform. And I think candidly, I think quick books is the best they can pay me to say that. But the reason why I'm saying these things is because I think quick books, as they'll come out with a lot of really great tools, budgeting tools, forecasting tools, charts. Can you talk about your. Are they doing that? Are they useful in you know. Do you need a professional to institute these things? [01:10:32][34.0]

[01:10:33] It's they do have a pretty good app ecosystem and we lean on quick books the most just because it's easier for me to have everybody trained on a single system than have people that need to be flexible and switch between two or three systems, depending on what clients on the phone. But yeah, they have a great app ecosystem and a lot of these apps are helpful. But again, it's only as useful as the user knows how to make use of the tool. Right. If you've never used a hammer before. I can give you a hammer, but you're probably going to hit your thumb more than you hit the nail so we can look at the tools and help you make sense of that. And then if you can take that and run with it and you don't need us anymore. Great. But, you know, the tools help. And what it does is now I don't have to charge you for time for us to prepare the reports. [01:11:19][45.9]

[01:11:20] We can spend all the time just talking about the report size offer kicked out insights, the observations versus the insights or the data versus the insight. That is the key. And that's what a lot of people don't understand. And if you don't have the experience, you can't. Create the insights. So if you have someone fresh out of college with an MBA that has no business experience, which could have been us, you know, twenty five years ago, hustlin. Right. You like gray. I mean, maybe you want to give people a chance. But I got to tell you, you are not going to get good business insights from someone who has not walked the walk the path. All right. Well, I got to tell you, we could do this. We could do this all day. I have so many questions. But you've been super helpful, Matt. I think, you know, for me. And then also for our audience. Matt Ramsey is the founder of CapForge, a virtual bookkeeping firm headquartered in San Diego, California. [01:12:18][58.3]

[01:12:20] Matt started CapForge with 500 bucks. 500 bucks. What, 20 years ago? [01:12:25][5.3]

[01:12:26] Yeah, not even, but. Yeah, yeah. [01:12:28][2.2]

[01:12:28] So he probably knows how to help your company go from not 500 bucks, probably, you know, hundreds of thousands of dollars a year in revenue. He has a firm undoubtedly that's in the millions with, you know, dozens of employees that he knows, you know, how to manage, hire, take care of. So, you know, thanks for being on the show, Matt. And I can't wait to hear this. Get this episode published in your life. [01:12:51][23.2]

[01:12:52] Oh, thanks for having me. It's been fun talking. I love to talk to other entrepreneurs. That really that's the best part of my day is is just chatting with other people who've been through the trenches and have good information and good advice to share that we can all benefit from. So I appreciate your having me on. [01:13:07][14.9]

[01:13:08] Absolutely. You have a great day, Matt. You too. Bye bye. [01:13:08][0.0]

[4269.6]

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089 | Back to (Bookkeeping) Basics with Matt Remuzzi

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Matt Remuzzi

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105 | Alternative Assets Investments with George Leimer

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