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Gerri Detweiler on Business Unveiled

How to Manage Your Money as an Entrepreneur

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How to Manage Your Money as an Entrepreneur

GERRI DETWEILER ON BUSINESS UNVEILED

How to Manage Your Money as an Entrepreneur

If you’re a small business owner or if you’re thinking about opening a small business, understanding financing and credit are so important. It is crucial that you understand what you are doing when you are running or thinking of running a small business. Our guest today, Gerri Detweiler, is an absolute expert on all of the things that you need to know. Even though these are the not-so-fun things about running a business, Gerri actually makes it fun and enjoyable to talk about them. She and I are talking about some of the things you need to know about credit and financing. 

If you’re in need of financing, there’s a few things you should know. 2020, crazy year that it was, changed a lot about financing. The usual processes are taking much longer, and lenders are much stricter with their requirements. They are asking for higher credit scores, higher revenue levels, and more time in business than they did previously. You should know that they will look at your business credit scores, and in some cases, your personal credit scores too. Be aware of these things and make decisions with them in mind. 

So many of you have wonderful dreams, and you give up so much for them. When you want to fund these dreams, there are other ways to go about it besides second mortgaging your house. Before you do anything crazy, make sure you have a business mentor that you can talk to about your ideas! An easy thing you can try is crowdfunding. There are a lot of other options too, and you should definitely look at all of them before acting. 

When handling your finances, you need to keep them clean and organized. Get a separate business bank account and credit card and do not ever use them for things other than business. Keep your personal and business finances separate. Trust me, it will save you from huge headaches. Also, try not to use your account overdrafts. Lenders may look at your accounts and see overdraft usages as risky behavior. 

You should try to look at your finances at least once a month. Take time to reconcile, or ensure that your records are accurate, every month. Checking your accounts every month is super beneficial because it helps you learn a lot about your business and what has happened to it on the financial side. If you don’t take time to look at it, you could miss lots of opportunities or problems. All of this stuff is so important, so I hope you take time to listen to the podcast to learn even more! 

MAIN TOPICS
  • What to expect when applying for financing
  • Ways to fund your business
  • How to position your business for financial success
  • Things you should look at consistently
KEY TAKEAWAYS

As soon as possible, you want to set up the systems so that you can build credit and use credit in the name of your business and move away from the personal financing of your business.

I never try to shame people because you don’t always know what you don’t know.

I recommend that business owners make sure that they stay on top of both their business and personal credit.

MORE ABOUT OUR GUEST

Gerri Detweiler has been involved in the credit world for years. After college, she worked in an ethicacy group in Washington D.C. that helped create the legislation that gave consumers free credit reports. She eventually pivoted a bit and started helping small businesses find financing. Today, she is the education director at Nav and the author/coauthor of 6 books. 

LINKS MENTIONED
  • Check out Gerri's podcast HERE
  • Book: Debt Collectors Answers HERE
EPISODE TRANSCRIBED

I'm back for another episode of business unveiled. And today is a very, very, very important episode because we are having a guest that has been here before Gerri Detweiler, she's going to be talking with us today about credit. And it is the most important thing that you really want to take a step back and understand. Because if you're a small business owner, or if you're thinking about opening a small business, understanding the financing in the opportunities, and to make sure that you keep your personal credit and your business credit, separate, those are all those not so fun things. But it is crucial that you understand what you're doing when you are running or thinking of running a small business.

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And so Jerry is an absolute, I mean, she's an expert. It's like she knows all these things that she's got a few books to, that we all need to know. And like she actually makes it like fun and enjoyable to like talk about these things. And so if you think you know what you're doing, which I thought I knew what I was doing. And then Jerry and I talked on our previous episode, which I'll have to link that in the show notes, so you guys can listen to our previous episode. But today we're going to talk about specifically where to find financing for your small business now, because things have changed. So Jerry, welcome back to the show. Oh, thank
you so much. It's great to be back and you make it a lot of fun to be here with you.
We always have fun. Well, for those who haven't heard our first episode together, can you give us a little bit of background? Where you started? And how did you get so interested in helping small businesses understand their credit?
Yeah, I've been involved in credit the credit world for a long, long time, several decades, I fell into a job after college working in Washington, DC. And in that job, it was for an advocacy group and I got to work on the legislation that gave consumers free credit reports for the first time. And the legislation that has that box that tells you what the credit card is gonna cost before you apply. So I get to do some really interesting things ended up writing the first mass market book, back in the day that talked about FICO scores. And I've been involved in that, you know, world ever since. But I would say a decade now. ago, I met Garrett Sutton, who's a rich dad advisor and small business attorney works with clients all over the world. And he said, You know, a lot of my small business clients are struggling with this whole thing of business credit and financing. And so I got to pivot a little bit and dig into that world. And then I wrote my book, finding your own business and and ended up at NAB, five years ago now. So I've come full circle, but I think the one thing that I really emphasize is that when you're an entrepreneur, you know, there's often a lot of blurring between personal finance and business finance, right because you sometimes use your personal credit cards, or maybe you commingle funds, or maybe use a personal loan to get your business off the ground. But as soon as possible, you want to set up the systems so that you can build credit and use credit in the name of your business and move away from you know, the the personal financing of your business as soon as you can. And for some businesses, it's going to take longer than others. But if you do that, then you're going to have more financing options available and hopefully be more successful in building your business.
So before we jump into some of the questions, ones that I know that you've been getting asked a lot. And surprisingly, we've been getting a few questions, especially with what 2020 has dished out to small business owners. But before we jump off, I just want to ask you, because I know for me, we have worked with some small business owners specific, specifically women. And they did not know to separate their business and their personal, they went through a divorce. And now they're in a mess with their small business because of that divorce. And so can you tell us one of the craziest stories where there was a small business owner, and they they genuinely did not understand the difference and why it was so important to keep things separate?
Well, I think what we saw what I saw this year, and I talked to a lot of business owners in this situation with the PPP and idle programs. So those were the two federal programs designed to provide COVID financial relief to small businesses, right, the paycheck Protection Program loan and the economic injury, disaster loan. And I talked to so many business owners who were using their personal account, they couldn't figure out how much they could qualify for. They couldn't separate it. And one kind of crazy story, I remember hearing, and I never tried to shame people, right? Because you do you learn, you don't always know what you don't know. Right? So it's not a shaming thing. But a lot of business owners would say, Well, I have, you know, 610 99 employees. And I'd say, Well, 1099 is a contractor. It's not an employee. And that was a big, big deal with PvP, because they couldn't get money based on contractors just on employees. And that puts them in a bind. But I remember one who said, Well, I have a tax preparation business. I have 610 99 employees, and I pay them in cash, but I keep a good written record. Yeah, and this is one of the tax business. Oh, my god, that was shocking.
Oh, yeah. That the other day, my brother, we were out to lunch. And he It was his turn to pay because we, you know, take turns and when we're talking about business, and he like throws cash down, and I don't I'm like, why are you paying cash? Like, don't you want to write all every penny off that you gain and use your business credit card? And he's like, Oh, yeah, I wasn't thinking. He's like, this was a business lunch,
not a family lunch. I'm
like, Yeah, dude, like, come on. You know, sometimes we just forget all the time. But the biggest question right now that I have, and I know probably a lot of people listening this year with 2020. And you've already mentioned a few of the things but what has changed? Because it's it's it's really different now from small business financing. And so if you can tell us some of the things that you'll give us the cliffnotes of what we need to know.
Yes, yes. So if your business was impacted by COVID-19, this year, I can empathize completely at NAB, we help match small business owners to lending options, and in March, the lender stopped lending. So we, you know, we experienced many of the same things that many of the small business owners that we help, you know, experience with the lenders just were not lending and there are some that have disappeared, never to come back again. And then others that are starting to lend again. So that happened in roughly March right where it was like the brakes just hit everybody stopped lending, even credit card issuers stopped marketing, their business credit cards online, and we do a lot of matching business owners to business credit cards. So that was, of course, you know, a definite impact our business as well. But then pppn idol came out. So that was the SBA loan, the economic injury, disaster loan, and the paycheck Protection Program loan. And that created just so many questions for small business owners who were trying to take advantage of that funding. And I don't know if you remember Angela, but it quickly the first round quickly ran out a lot of smaller small businesses didn't get a penny because their banks couldn't help them. And then they reopened it. And then the second time fintechs like nav got involved, we help match borrowers, different companies making those loans. Round two went better and it actually ended with money leftover that wasn't tapped. So that was interesting, and the Ei deal closed and then opened up again. But now the grant is gone. So the money you don't have to pay back with Ei dl that's no longer available, but the loan is still available on that still open. So it's been a crazy year. So then come I would say the end of summer, beginning of fall, we started to see some lenders coming back. But what we have seen is that often their requirements have been tightened up so where they may have said okay, we can lend to businesses with six months in small bit in business as long as they need This credit score requirement and have X amount of revenues. Now it might be two years in business as opposed to six months, okay, or the credit score requirement may have been raised or the revenue requirement may have been raised. So we are seeing some stricter requirements from certain lenders. And that's making it more challenging for business owners to find financing. It's out there, but it definitely is a more challenging environment.
So what I'm hearing is that the first thing is, if you have to 90 nines, do not pay them with cash, and correct. So what what I've always been told is they need to send you an invoice and then you pay an invoice right through QuickBooks, is that the right way to do it? Yes. And then if someone needs to apply, because he idea on PB like all the money ran out? Did would they could they go to nav to fill out an application?
Absolutely. So we're a marketplace, we're not a lender. And we'll help match borrowers to options that are out there. So they can set up a free NAB account. And with that account, we will show them lending options and also talk to them on the phone, if they want some guidance. We don't sell that information to lenders. So it's not one of those models where you're going to sign up and then suddenly get bombarded with phone calls from different lenders will will actually show you what's out there that matches the profile of your business.
So guys, so anybody listening, really understand they're matching you, they're not a lender. And then the most important thing of what you just said, I don't know if you guys have ever been like looking for a house or looking for real estate, for a commercial building for a new business, or you're looking at venues for events. And all of a sudden you fill out one form, and then this spam floodgates open. Or you're like shopping for a car online. Like I have learned, I literally have like a junk. I call it a fake account. I mean, it's a real account, but it's a junk account. And like a junk number, because I don't want all that stuff. So it's so refreshing to know that you all don't sell that. So y'all Listen, if you're listening, you want to go to this website, we'll link it in the show notes. If you want to be matched to a lender, that would be good for you. So I know there's some other things that lenders are going to look for. So if someone does go to nab, and they do set up an account, and they want to be matched with a lender, can you tell us like the top three things that lenders are looking for? And for small business financing?
Yes, absolutely. So one is going to be your timing business. And one is going to be your revenues. And I'll delve into that. And then third is going to be your credit now and the time in business. What happens sometimes is a business will start sort of on the side, maybe you start providing a service and you start a business but you don't officially start a business, right? You don't form a business entity, you don't go out and get a business license, you don't necessarily take those steps. I love it when a business starts a legal entity LLC S corp or C Corp. That's great. I know that in some states like California, it's very expensive to do that. I think their fee is like $800 to have a filing, although I did read that they've waived it for the first year because of COVID. So that's kind of cool. Wow, that's Yeah, yeah. So it can be expensive. So not everybody does that redway. So what you do want to do though, if you're going to start without a legal entity, is go ahead and get a fictitious name for your business. So in most states, you can go online and file what's called a doing business as DBA or a fictitious name with the state. In Florida where I am, I think it's 50 bucks for three years to do that. And that can put you on record, you know, as as this is the name of my business, you know, this is where we're operating. And then also go to irs.gov and get an employer identification number Ei and this is sort of like your social security number for your business. Not all businesses legally have to have one according to IRS guidelines. Some do, some don't. But I think you should, because then you also have this letter from the IRS saying, you know, here's your Ei n for your business. Now you've got this fictitious name, you have an official start for that business. It's not like you're just growing it completely organically. So then when you fill out a credit application, you can put that date on the application, use it consistently. And even if you're just starting the business on the side, you could have a year or two in business before you decide to go full time with your small business and that could be an advantage in terms of getting financing in the future.
So That's a great tip. Because time in business, even like, like you're saying, if you're not totally like, ready, but you have filed it and you have fallen name, there are some things like I know, in Tennessee, we actually work with people and I actually have found an online business in Delaware. Because it's, it's a different. It's a different set of laws. And so for online businesses versus like a brick and mortar, you know, look into your options, because like, like you were saying, if you live in California, you could fall somewhere else. Now it is a little bit more to keep up with, but for online businesses, when you actually if you're building them to sell them, which a lot of online businesses are think about that as well and where you're going to file. I recently learned that from doing some business with some investors that have invested in several online businesses. And the other thing that you said as far as credit, and checking their credit, so if you if you are setting yourself up to keep your personal credit and your business credit separate, and obviously you're filing a new business, do they go off of your personal credit?
Yes, that's a great question. So your business can have its own credit reports and credit scores, Experian, Equifax, and Dun and Bradstreet are the three major bureaus that do commercial, you know, credit reporting, and you do have to build this. So it's not something that happens automatically overnight. We do at NAB help business owners do that, even with a free NAB account, you can access all those tools to build your business credit. But I recommend that business owners make sure that they stay on top of both their business and personal credit, because some lenders are going to check personal credit. So
we're going to check business
credit, some
we're gonna check boats, and we're going to do a soft check on the personal credit sides, they're really just looking for red flags, they're not that interested in the score, but they're, you know, they want to know if you're in a bankruptcy, for example. So it runs across the spectrum and fed research by the Federal Reserve has confirmed that you know, about 60% of business owners use either business credit or a combination of business and personal credit to get financing. So both are important. And I would not ignore one or the other.
So the entrepreneurs that have a dream, and you hear you hear these stories, at least I do I hear all the time, where it's like, we second mortgaged our home, and we sold all of our cars, and we we needed money, you know, for a startup. And do you suggest people do like, is that a good investment to go second mortgage, your your home, when that's pulling from your personal credit to start a business? Now? Wow, that's
such a tough
time? Well, that's because there aren't that many great options for startup businesses, right? So. So startup businesses do have to get more creative. And often they do tap their own, you know, personal funding. First of all, if you're going to do that, I would not do that unless you have a business mentor. So I would have an experienced business mentor who's gonna you're gonna bounce that off of and really talk through the scenarios and what, you know, what, what risk your family's willing to take, of course, making sure the family's on board if they're, you know, if they could become, you know, like, what, like the shits Creek story, right? Not bad eggs, maybe not that extreme. But, yes, I would have a business mentor to run all that by and then look at all the options that are out there. One option, Angela, I don't think we talked about last time that I'm really bullish on is crowdfunding. And a lot of people are familiar with maybe GoFundMe, which is the donation based crowdfunding. But there's been some amazing results in the small business space in crowdfunding, including rewards crowdfunding, which is like your Kickstarter, where someone will back your campaign and you give them you know, something, some the early version of your product or some other reward, and also equity crowdfunding. So I talked to a lot of business owners who want to get investors like Angel, money or venture capital. And I have to tell them, the odds are far far, far not in your favor there. Right? Very, very, very few businesses successfully navigate that. But equity crowdfunding is an opportunity to get investors and these platforms facilitate that and you can actually get up to $1.07 million for a business with an equity crowdfunding platform. Now you can have a really, really good campaign. There's some costs associated with it. But it's certainly an option for some businesses, too. Consider if they're really looking at a business that they think is going to scale like your online business or something like that.
Yeah. So if someone wanted to do the equity crowdfunding, and I know are there, is there like a one go to platform? Or is that something that nav would match someone to the best platform, we do have
a couple of crowdfunding platforms in our marketplace. But I will give a quick shout out to score which is the, the volunteer organization funded by the SBA to provide help to business owners on the score website, which is just score.org. If you just search equity crowdfunding, there's a fantastic webinar there on equity crowdfunding, and it actually goes into the the five major different types of crowdfunding. So I think that webinars one of the best places to start if you want to learn about crowdfunding, so it's just it's score.org
absolutely love score. They're actually the first organization that I reached out to when I started my first company. And it was all like a God thing my mom had me serving at her Catholic Church, they go once a month, and serve food to the to the homeless at the homeless shelter. And she'd asked me to come along and help. I mean, this was like two decades ago. And it always made me so sad to go. So I really didn't want to go secretly, it just makes me so sad to see that. See people like that. And these are people that are like with kids trying to get back up into the the job market. But you know, they need a little help. And so she like conned me into going. And so we go downtown, and this man who was from another church, who was also helping us serve food, we're just making small talk while we're like, serving food to people on the line. And he's like, so what do you do? And my mom would used to answer for me, and she's like, Oh, she works at the hospital, but she helps our church do weddings on the side. And she's so good at decorating. And I'm like, Thanks, Mom. I got it. But I remember he told me he's like, Oh, my daughter is a wedding photographer. If you'd like her information, I can, you know, share that with you. Which y'all back then there was no Facebook, there was no social media wasn't like, hey, let me dm her, you know, says literally, he wrote her number down on a napkin. And I called her and it was Danielle, I reached out to her. And she was like, are you sure you want to be a planner, and it was like designer in the wedding industry. Like, it's such a luxury thing. And again, this was way back then. And, but I ended up meeting up with her, there was a small organization that she had told me about, and she's like, this is a great organization, it's totally free. And they can help you and it was score. And my mentor at the time he was in his 80s he owned all these nursing homes. And you know, as a as a young woman, I'm like, What is this old man gonna teach me about wedding planning. And now, you know, fast forward two decades later, I so get it I so under everything he was saying it's not about the industry you're in. And it's not about all of separate separating like the industries of like a service base versus a product base. It's all about we all have the same challenges as small business owners, it's all about hiring the right people and making sure that you have the right messaging. Now, again, this was all before social media, but this 80 something year old man was trying to teach me. And I had to kind of go through it to really start to understand it and appreciate it. But I can't say enough good things about score. And if you go there, and they match you with a mentor, and you're wondering, like, How the hell is this person going to help me Just trust me? Just listen, be open to listening, and be open to taking their information? Because Listen, they've been doing something right. They've been doing something way longer than you have. why reinvent the wheel? So that's Yes. I'm glad that you mentioned score, I'm actually going to go watch that webinar soon.
This
awesome.
Um, so going back to businesses and what they should and shouldn't do, so to position their business for financial success for next year. And again, you know, we have people that go back and listen to our podcast, that they'll go and started episode one and binge, which was like, almost five years ago, which is crazy. So think, think about is this like something specific that businesses should possess, position themselves for 2021? Or is this something you need to do in 2021 and continue to do it going forward? So how can they position their business to make sure they're setting themselves up for financial success? Yes.
The other thing I really want to emphasize and I talked about this in the past, Angela, but I wasn't as pushy about it, now, I'm gonna get pushy about it. And that is that you have to have a business bank account. And you should have a business credit card. And you and I have talked about the whole credit versus debit card, so we can go into that thing. But the business bank account, this is so essential. And what I would like you to do, is to only pay business expenses out of that account. And if you need to write a check for a personal expense, you pay yourself, and then you personally pay for those expenses. This is so crucial. We saw this is such a hurdle for business owners during this whole, you know, COVID relief loan period, where their finances were so mixed up that they couldn't even tell what was business and what was personal. And it was creating problems. And what we're seeing on the lending side with the lenders that we work with at NAB is very often they're going to ask for your most recent bank statements, they're going to scrutinize and analyze those bank statements. And sometimes they'll even ask to link to your business bank account just so they can read the information in that account to analyze it, you know, for their financing purposes. And when you start mixing the business and personal, it creates a nightmare for one thing. And it also doesn't give an accurate picture of the health of your financial business. So what we have, what we see with lender requirements is some of them are going to look at the number of deposits. And this is not you transferring your own money into the account, it's deposits from clients that you're working with our customers. And some of them want to see eight to 10 deposits every month. Because if you're let's say a contractor who just has one or two clients, one of those clients goes away, you know, you don't have a business. So they want to see multiple deposits going into that bank account. And, again, you want to have that separate business bank account. So that's one of the most important things that I can recommend. And then the other thing I'll add to that is if you can try not to dip below, say, if you can maybe $500, set the threshold or $1,000. Try to keep that balance in there because they will look at low balance days. And so what does happen sometimes as a business owner gets busy, they don't get around to depositing you know, some funds. And it's easier to do now, because most banks have mobile deposit as well. But if you have to go to the bank to deposit cash, you're going to have to go to the bank to deposit cash, right. So they will, they'll procrastinate. And then they'll dip into their overdraft line of credit saying why now I've got the money, I can pay it back. But then to the lender that looks risky, because it looks like they don't have enough funds coming in. And so they're dipping into their overdraft. And that could be a factor in terms of the financing that you get approved for. So try to stay on top of that, and not dip not dip too low into that business bank account, if at all possible.
So if you are, again, if you're just starting a small business, there's a few software's that you're going to want to budget for each month, that will save you so much headache. And I had QuickBooks for a few years, I didn't really run it or understand anything my accountant did, and help me with all that. And then I had some really unfortunate things that happened. And Jerry knows this, if you listened to our previous episode, I brought it up like, Oh my gosh, so I was in a hurry. And I did have my business card, because I've given it to one of my team members, which by the way, they all have their own cards now and they all have like a low credit limit. So if someone steals their card, they can't go put a bunch of shit on it. And I had my personal card which I never use at the gas station, I'll like get gas and then I start getting all these text messages from the bank but I had a client in the car and I was driving so I just like ignored it, you know to be safe and we were trying to get to a meeting on time. And so when I got home that night because it was like an all day meeting, my business account my my personal account was like freaking drained. And so I learned a few things from that. I mean, I sometimes I'm glad these things happened to me because it helps me be a better smarter business owner and that I can also help people from where you make sure this doesn't happen to you. And so we've gotten a little psycho with it now where not only do we only carry like my business credit card, that is like an everyday card right so it's like gas if we're going out to breakfast, lunch, dinner, whatever. Anything that I'm using for the business goes on like the everyday card. Now. The everyday car Jerry since I've talked to you and the whole gas thing, I was parking for a meeting and I had to pay to park and there was a skimmer on that freakin parking mission. Job. Yeah, but this job when I got the text message from Southwest, it was like my Southwest chase card. This time I stopped in the parking lot, I clicked the little text. And I'm like, No, that wasn't me cancel my card, send me another one, it was all done through text, which I just have to stop and pay attention. And if I had not had that gas card thing happened to me, I probably wouldn't have stopped, you know, to do it. I'm like, I'll get it, I'll get to it later. And then they could have like charged 1000s of dollars worth of stuff. And so like that happens, but now we separately we have another business credit cards specifically for every automatic payment that comes out of our account every month for all of our software's. And we have a lot. So in that card, like literally, it's cut up. It's a real card number, but I don't take the card anywhere. Because if we had to go and redo that auto stuff, which I had to do it with another card in the past that got stolen, it's like a two day process of filling out all the shit online. And then some of the auto I mean, they're even old school where they're like, we have to mail you a form and you have to fill it out. And I'm like, what,
what, what
age are you living it like there's not an online thing. So it's just super annoying. And then the other credit card account we have is a travel account, so that when we're traveling, we use a specific card, because when you're traveling, your card is more susceptible to being stolen. Just by being swiped on a skimmer machine. It's crazy. It's like every single time my card has been stolen. I have the card physically with me. Like in my hand. I'm like, how is this happening? every freaking where, and something that Jerry taught me and, and in our last podcast. And you know, I've learned this the hard way is like, you don't get your personal money back when it's stolen like that quickly. Like it took me over a month. But if it's a business credit card, they'll give you the money right back, you know, you do have to fill out some paperwork. So you're not like lon or something. But it's it's a freaking mess. And so just take it from us. I know it may seem a lot to like, map your business finances to like different areas. But if you take the time to set it up appropriately, and my gosh, I would just take one day to like say, okay, we're gonna use this for this, this for this, this for this, pay your stuff off every month. In fact, mine's all hooked up to auto payments, and it's hooked to our business account. Then QuickBooks goes in, and you set up a rule, and it automatically matches all of those things. And so once I really got to understand QuickBooks, and again, I had to take a step back last year, and really start to understand how all this stuff was mapped. So I didn't create a bigger mess for myself. And also, we were launching some more companies. And I wanted to make sure that I understood, like how I needed to map things in the beginning. So just start with a software. Jerry, are there software's other than QuickBooks that you all recommend to people when they're starting a business?
Yeah, a couple of options. So first of all, if you're going to choose QuickBooks, they have different levels. So you can choose I think it's QuickBooks. So low is the beginning level of QuickBooks. So that might be something that will save you a little bit of money to start out with. Also, freshbooks is very popular with a lot of freelancers. And, and then 0x er o zero is another popular software program. And then there's one more option that you might consider bench and what bench does is they match you to a bookkeeping professionals. So if you don't really have one, they're going to have someone who's going to take care of the bookkeeping, bookkeeping aspect. And what I like about even that service in any of these is the idea that you your books are up to date every single month, because once you start falling behind, that's when it becomes difficult even from the financing standpoint. Some lenders, you're going for an SBA loan, when at which it can be a great loan for your business, they're probably gonna want to see a you know, up to date p&l statement, so someone's got to have your books up to date, whether it's you or your bookkeeper. So they can produce that financial statement to provide to the lender and you don't want to hold up the loan because you're back. You know, you're six months behind on your bookkeeping, trust me, I was self employed for 10 years. Taxes are the bane of my existence. I hate bookkeeping and I hate dealing with all that stuff. But I you know, learn to make peace with it like you did, because you you really have to when you're a business owner.
So again, I learned this the hard way where I thought I was paying my accountant to do this one thing every month, which is a magical word called reconcile. And I didn't realize that it wasn't happening until my brother because my brother owns a business too. And so you know, we were constantly helping each other. He's like looking over my shoulder, one day when I happen to be in QuickBooks. And he's like, what is that number over that number in the top left hand corner? And I'm like, I don't know, what does that mean? And he goes, it looks like your books aren't reconciled. He's like, when's the last time you did that? I'm like, what does that mean? And I'm like, Oh, my gosh, I'm like, let me get back on it. And something fell through the cracks. I don't really know. Again, I'm glad these things happened to me. But that account in QuickBooks had not been reconciled in three years. It's how,
yeah,
it's so I didn't understand that like panels that were being sent to me, which you really need to look at it monthly. Don't do what I would look at it quarterly. And then and then I still didn't understand it. And I'm like, we're just working and grind in. And money's always in the bank. And I Everything is fine. But really exactly what you just said, like when you try to go get an SBA loan, or like, we've been looking for real estate, because we're about to build a GSD house where people can come and get shit done. It's like, thank God, I had a really good bookkeeper and a really good accountant. And I learned all these things the hard way. Otherwise, I think that the bank would laugh at me, or the investors that we send a pitch deck to would laugh because I didn't have my shit together. I thought I did, or I thought it was outsourcing it. So you still want to be in tune with what's going on? And so when you say, Take care of your books every month, do you mean like reconcile? And is there anything else that people need to be doing? monthly? Yeah,
yeah. So that means that all the all the expenses and income has to be accounted for and that it reconcile. So reconciling just basically means that everything's adding up, right? There's not something that's off that says, Oh, well, you took it an extra $200. Where'd that come from? We don't, you know, we don't see it in your records where that came from? Or have you had $631 in expenses that are not accounted for? You know, it doesn't, it doesn't balance it like balancing your checkbook back in the day when we used to do that in our checkbook. So yes, so that's, that's essentially important. And then you're also trying to figure out, Okay, what insights can I get from this, I interviewed this young woman, just a fantastic entrepreneur who, who has a candle company and tea Candle Company, and she started like, $100, in candle making supplies, like five years ago, she has 26 employees now ships Oh, yeah, wonderful business. And she learned the same thing, like how to make peace with her accounting software. And so she looks at her QuickBooks accounts every single week. And she says, what it teaches me, what it tells me are things like, Oh, my shipping has suddenly increased what's happened. And she said, she has to switch shipping companies fairly frequently, because they'll do that, you know, it's sort of like the, the internet company or the cell phone company, they get you in, and then they just keep raising the prices, right? You have to switch to somebody else or your insurance company. So that's one thing that she learned that may make some material difference in the margins, you know, in her business is how much it's costing to ship all these items. So it depends on your business, what those insights are going to be. But you're going to see, for example, oh, I'm paying a lot more for this expense than I used to be what's going on? Or Oh, I forgot about that subscription that I'm paying every month, am I really using that software anymore? Or should I look for something else? Or maybe I can just drop it. So there's all kinds of things that this, this can tell you that can bring money into your business?
And the other important thing is that, okay, if you do get one of the software services to utilize all of your business accounts, like if you have those different card, business cards, and your business banking account, like you've got to pull all that in to the the the platform or the software. And that's something else that recently I was working with a client. And again, we all get so flippin busy. And then we think that the people that we're outsourcing to are they they're doing what they know to do. But then I, he asked me some questions. I'm like, Well, I'd have to see your QuickBooks. And so we got in there. And I could see all the invoices that they were sending now, but I was like, Where's your bank account? And how are you paying these invoices? And don't you have business credit cards? And you know, I had so many questions and that his accountant, no one ever told her or asked her it's not that she didn't know how to do it. He never asked her to do it, because he didn't know to ask her to do it. And so to me, it's like, I'm the kind of person that if you asked me to do something, but you don't know the full scope of it, that's like someone saying, can you run a Facebook ad? And I'm like, well, we can but there's a few things that do you have a landing page? Do you have a funnel built? Has it been tested? What what's your lead magnet? I mean, there's like 50 things that I'm going to ask you before we're even going to talk about running an ad and nine times out of 10 these people that are asking these things they have no clue what any of that is for, like, we have a website. I'm like, yeah, your website is it doesn't have e commerce, it's not responsive, it can't take money. It's kind of outdated. Let's look at the mobile phone load time. So there's all these things that otherwise Yeah, we could take your money and run an ad, and then your results are gonna suck, and you're gonna lose money, and then you're gonna be pissed. And so there's a lot of strategy that goes in behind the scenes. And so I was just so confused. And so he put me in touch with his accountant. And then I ended up putting her in touch with my accountant. Because, you know, she sets all that stuff up. Something that I do monthly, though, is I have a zoom with my accountant for one hour every month, just to touch base, just to look at things, she explains things to me. And she makes sure that I understand, like how we're doing here and how we're doing there. And where some things is the best money that I've ever spent. You know, some people think like my brother, he's like, Can you just learn QuickBooks and like, learn it inside out? I'm like, No, and I'm not a numbers person, like you are. He looks at his QuickBooks every single day, I'm pretty sure. But he loves those types of software. And for creatives, like myself, I would rather I mean, once a month is enough, like, I'm good. Yeah, like, I like to be doing other things. And so depending on your personality, and the psychology of your personality, just know, it's okay to get help. Like, you don't need to know all these things. But there are, there is a basic foundation that you're gonna want to know. Because you don't want anything to happen to you like it, you know, it has to me. So Jerry, you have two books, you have debt collection answers, and finance your own business. Where can people go and get those books if they're interested?
Yes, I've actually written five books, but decades, since Yeah, but Dec likes, those are my most recent and the ones that are widely available. So debt collection answers is a free Kindle ebook. And that's for people who are dealing with debt collectors. So that's a very specific scenario. But if you're dealing with a debt collector, know your rights before you've talked to them, because I don't know, Angela, with all your stories, you probably have some story you could share about something crazy that happened to you. But crazy things happened when people you know, end up with debt collection, even for things like medical bills, where you're still fighting with the insurance company. And then next thing you know, it's with a debt collector, and it's affecting your credit score. So definitely check that out on Amazon. It's a free Kindle ebook, and then finding your own business is my most recent book. And that was the book that led led me to now because I interviewed the CEO of NAB for the book, thought they might want to buy some books, and I'm working there full time. So Oh, my gosh, yeah, yes, it's my book about financing and business credit. And written with Garrett Sutton, the Small Business attorney I mentioned.
So just from a previous business, and a crazy story share is that you want to make sure before you get married, that you know who you're marrying, and ask about previous status. And you don't want them to get deployed. And then you have debt collectors, literally calling five times a day. Because it can make a really uncomfortable conversation when your spouse returns from being deployed. And so just take it from my experience, and planning lots and lots and lots of weddings over the years that you really do need to get into that conversation, especially if you're a business owner, you've got to protect what you started and you've got to protect your assets moving forward. And then that gets you into prenup sometimes, which that's a whole different conversation for another episode. But before we wrap up, Jerry, this has been so helpful. Thank you so so much. Before we wrap up, where can people go? What's the best way if people want to connect directly to you? What is the best way for them to connect with you?
or you can email me if you want to email me my email is Jerry g e r r i at nav n ey v.com happy to take credit questions. I love answering credit questions. And we also have a landing page NAB comm slash podcast and that has our build, build business credit checklist. So if you heard me mentioned business credit and like I have no idea what she's talking about. I don't know what my business credit is. There's actually a checklist there you can download You don't even have to give us an email address and and get started on on building your business credit so you can hopefully eventually move away from using your personal credit your business.
I love it. That's awesome. We have so many good links for you guys that we'll put all in the show notes. And you know, just take a little bit of time and block some time on your calendar to work on the business. And not in it all the time. Again, this is just it least if you take a few hours every single month to sit down and work on these things, and you might be like doing a side hustle right now, but just trust me, because I did it for so many years. And then those years fly by and then before you know it, you're into a full time business. And you don't know what you don't know until these things start to happen. So set yourself up for success for your personal credit your business credit. So when you go to do something bigger, you're ready to launch and you don't have to learn all this stuff the hard way. So Jerry, thank you so much, and everybody that's listening. Thank you so much for your time today. We got tons of nuggets. And be sure to tune in next week to another episode of business unveiled. Have a great day. Bye. That's it for this week's episode of business unveiled. Now that you have all the tools that you need to conquer the world and GSD get shit done. Would you share this with your friends and fellow business leaders? One thing that would really really help us and help new listeners is for you to rate the show and leave a comment and Apple podcast, Spotify, Stitcher, or wherever you tune in and listen to business unveiled. You can check out the show notes at Angela proffitt.com slash podcast and link up with us on social media so you can share your biggest insights. And I want to know your aha moments. Until next week, remember, the profitable shifts and structures you're creating in your business, help you be more present in your life. So get out there and GSD

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Published: April 6, 2021

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