Ep. #1190 - How to Master Your Monthly Bookkeeping
In today’s episode of Startup Hustle, Andrew Morgans and Nathan Hirsch, Co-Founder of EcomBalance, talk about how to master your monthly bookkeeping. Hear Andrew and Nathan discuss the difficulties in bookkeeping with an e-commerce company. They also talk about why it is essential to have clean, clear, and accurate monthly bookkeeping and to keep the lines of communication open.
Covered In This Episode
Most would agree that the most crucial and tedious aspects of a business are human resources and accounting. EcomBalance takes over bookkeeping tasks for eCommerce and digital businesses, so owners don’t have to.
The duo discusses Nathan’s backstory and eCommerce owners’ struggle with bookkeeping. Nathan explains his motivation for creating EcomBalance: good monthly bookkeeping is the lifeblood of any company. You need good data to make sound business decisions, and EcomBalance helps keep the standard chart of accounts in order.
Andrew and Nathan agree that the quality of your books speaks volumes about your business. Simpler is the best when it comes to bookkeeping services, even with international clients. Nathan gives a shout-out to business partner Conor Gilligan and segues to TrioSEO and making a basement gym.
Bookkeeping headaches can be a thing of the past for your business. Join the conversation in this Startup Hustle episode now.
- Nathan’s background story (1:29)
- Why Nathan created EcomBalance (12:27)
- You need good data to make good business decisions (15:19)
- The pain of doing Ecom business bookkeeping (18:01)
- The importance of communicating your needs to your bookkeeper (20:08)
- Have your standard chart of accounts in order (22:35)
- Simpler is the best when it comes to bookkeeping services (31:32)
- Bookkeeping with international clients (33:16)
- Keep your communication line open (34:13)
- Good monthly bookkeeping is the lifeblood of your business (36:44)
- The quality of your books speaks volumes about your business (38:03)
- Conor Gilligan, TrioSEO, and making a basement gym (40:16)
- Where to contact Nathan (42:52)
Monthly books make taxes a lot less stressful. But the real reason to do bookkeeping is the decision-making. You don’t just make decisions off of, like, some dream you had or guts or because you see money going into your bank account. You make it based on what your reports and actual numbers are saying every single month, and that’s how you run a business.– Nathan Hirsch
The goal of being a good leader or a CEO is making as many good decisions as possible and making them quickly. By having data and metrics to help you make the right decisions, you shouldn’t have to be going by the gut. I think so many times when your books aren’t right, you can have great instincts, but you’re making gut decisions. And that can only go so long. You can make better decisions using your gut and data.– Andrew Morgans
The time to clean up your books and get on a good monthly process is now, and down the line, at six months, whatever it is, you’re gonna be really happy you did it. And once you get into that good monthly process where you know the month ends, and you’re about to get reports on how that month went and make decisions off of it. You wonder how you ever lived without it because that’s really the lifeblood of everything that you’re doing.– Nathan Hirsch
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Following is an auto-generated text transcript of this episode. Apologies for any errors!
Andrew Morgans 0:00
Hey, what’s up, Hustlers? Welcome back. It’s Andrew Morgans, founder of Marknology, here as today’s host of Startup Hustle, covering all things E-com, entrepreneurship, startups, DTC, Amazon, marketplaces, you name it. This is our spot to have these conversations and share value with you guys each and every week. Today we’re going to be talking about how to master your monthly bookkeeping. And I have an old friend and colleague and E-com expert himself in the space. Before making an intro, today’s episode of Startup Hustle is powered by FullScale.io. Hiring software developers is difficult. Full Scale can help you build a software team quickly and affordably. It has the platform to help you manage that team. Visit FullScale.io to learn more. Nathan Hersh, welcome to the show.
Nathan Hirsch 0:42
Andrew, thanks for having me. I told you before I have a kid due next week. This is my last podcast before for a few months until I learned how to keep a baby alive, but it kind of blows my mind that people listening to this. I might be a dad in the future. So it’s, it’s wild.
Andrew Morgans 0:58
Yeah, it’s gonna be beautiful. I was taken a few minutes before the show to just tell Nathan I think it’s one of the most natural callings of a man is to be a father. And I think it’s beautiful. So thanks for being on the show and giving us a little, a little bit of your time before you don’t have any time to share. I know it’ll, it’ll be a little bit of a whirlwind. But we’ll keep the mother-in-law at bay and hopefully bring some Startup Hustle listeners some value today.
Nathan Hirsch 1:24
Sounds like a plan.
Andrew Morgans 1:26
Well, I love starting the show traditionally, getting to know a little bit about Nathan, and letting the listeners kind of know your background before we get into EcomBalance, and just like, you know, bookkeeping in your business and how to line that stuff out. How did you get to where you are today? You know, has it been multiple startups? Did you know from a kid you wanted to be an entrepreneur? You wanted to be in business? You know, where’s your story began? I know you just recently moved to Colorado so the location is as well. You’ve had some moves and changes. Where’s your story begin?
Nathan Hirsch 1:59
Yeah, I mean, growing up, my parents were both teachers. And I grew up middle class, not poor, not rich. And I went to school with a lot of very wealthy friends. They had parents who were doctors, lawyers, dentists, and my parents, from a young age, always made me get a job and work for everything that I wanted. I probably wanted a video game, a bike, and eventually a car I had to pay for myself. And I think that gave me a strong work ethic. And I learned a lot of skills like sales and customer service. But I also learned that I just hated working for other people. And I saw entrepreneurship as a way to be the boss and take ownership and kind of control my own destiny. So I ended up going to college, got a degree, and met my business partner there, but I never really used it. I started an Amazon business out of my college dorm room, buying and selling textbooks, and got a cease and desist letter from my college telling me to knock it off and stop competing with their bookstore. And that was my first glimpse into being an entrepreneur. And I started experimenting, this was 2008 2009, and Amazon was just becoming more than a bookstore. And I was drop shipping years before I even knew it was called Drop Shipping. That word didn’t even exist. I built all these relationships with hundreds of manufacturers in the US. They didn’t understand e-commerce. They didn’t know they could just go and sell it themselves. And I would sell the product, send them an email where to ship the product, they’d have my credit card on file and charge me, and I’d make the markup my partner Connor and I, we sold $25 million, from about 2008 to 2016. And the early Wild, Wild West of Amazon where where you can do anything and there wasn’t that much competition. Now, growing that business, we struggled to hire. College kids were super unreliable, and we were 20. We didn’t think we could hire adults. So that brought us to the world of virtual assistants. And as Amazon became more competitive, and keep in mind at the beginning, we thought we’re going to take down Amazon and be the next ecommerce giant. We started to offer these VAs and freelancers to other Amazon sellers, and also the networking and conferences and Facebook groups became a thing. And we turn that into our own marketplace to compete with Upwork and Fiber, called FreeUp and FreeUp was a lot of fun. It was our first b2b business. We got to learn marketing and podcasts and partnerships and SEO and all the stuff that goes into it. And controlling our own website and not being dependent on Amazon. And we scaled that business from a $5,000 investment to doing about $12 million dollars a year before we’re acquired in 2019, which is a whole another story we can dive into if you want to and bookkeeping was a big part of that. And the original plan after we exited was to travel the world and take a year off but we sold in November 2019 and COVID hit a few months later. So we’re in a super weird spot with no company and all we had done with for years was brainstorm on FreeUp. We had no business ideas and a buddy I think you know Nate McAllister, he gave us the idea for Outsource School where we would teach people our hiring process. How we interview onboard, train and manage. Give people all of our SOPs that they could just plug into their business. And we’ve been running Outsource School for years and have a great community of entrepreneurs that we we teach to hire better and to reduce turnover. And that bought us even more time to just brainstorm ideas over the next few years. And we have a goal now of building a portfolio of what we call boring businesses, things that people don’t necessarily like like hiring, like bookkeeping, we have two bookkeeping brands, EcomBalance and AccountsBalance, one for E commerce sellers, one for for agencies. We’re working on a content SEO, high-end service because we put out a ton of content. And we’re pretty good at that. So we’re always beta testing new ideas and building there. But that’s the long short story of how I became an entrepreneur. And what we’ve been working on
Andrew Morgans 5:48
Serial entrepreneur is, I think, the word Nathan, you’re a serial entrepreneur. And I was just thinking about those wild west days. You could put almost anything up, but it was like in regards to being able to just sell anything and brands not understanding what was happening with wholesaling and reselling, and drop shipping. There was also no one that had done it before. So there was no like roadmap to that, you know, and you’re just, it was so fun. I remember even being in like a car dealership, taking photos of car parts, and you know, creating bundles. Bundles weren’t even a thing yet. And I was like doing bundles of like a trailer hitch a bomb out, you know, the wiring harness and being like, this is the fit for your truck or your van or whatever. In the wild west of Amazon of eBay of E commerce in general. Just being a ton of fun. I mean, honestly, I think PPC for Amazon didn’t even come out till 2015. So you know, you got you had an eight year run there. I think before people even became aware, and it’s very rare, honestly, that I meet people that got into E commerce, or Amazon before me. So you’ve got me beat by a few years. I think. For me, it was 2012. So you’ve got me beat there. But you know, it just did start with books. I remember reselling my books, actually, I was buying use books from a website before Amazon. So that was very new to be buying a book from a website online, you know, a used textbook, but I was paying my own way through school. So it was like yeah, I’ll try this weird new thing, you know that that’s happening, it was a lot of fun. And free up all the way to so I actually got my start in the Amazon world because of Upwork got top 10 in the world on Upwork when they bought Elance. So very just familiar with like, you know, finding finding work in you know that that whole process, which is just interesting, and then and outsource school helping people with the VAs and I love how you turned all of them instead of just like putting this all inward and keeping it all inward to build something massive turning each one into a turnkey solution for others to help others. I think that’s absolutely amazing. And I’ve been talking about specifically, I think like, you know, knowing your numbers, bookkeeping, like econ balance, which we’re going to talk about today is just so so so so important. Like I’m writing content for LinkedIn, and Twitter, and YouTube and webinars and everything on my mind is is profitability and looking to educate owners and brand owners around you have to know your numbers. Taking two seconds on this, so I want to lay the groundwork a little bit for what we’re going to talk about in 2020. Before the pandemic, I was part of a Goldman Sachs, called the 10k SP Program at Babson College in Boston. And you know, you have to be a business with a, you know, I think 10 employees, at least three years old, a certain amount of revenue, maybe a million in revenue or something to be in the program. So it wasn’t like an incubator from scratch, but it was very much like a an incubator accelerator, a business accelerator. And I went in there and as a business owner, a lot of times you don’t get a lot of validation on if you’re doing the right thing or not. Should I be focused on sales? Shall be working focused on process? Should be focused on, you know, training and scaling my team? Should I be focused on Facebook or should it be Tik Tok? Or should it be Instagram or should it be Google ads? You know, no one’s really validating your moves other than the results, you know, and it can be a thankless job. Well, for me, the accelerator was a huge validation thing, just like okay, I’m doing the right things in digital marketing. Okay, I’m doing the right things in inbound marketing. Okay, I’m doing the right things in scaling my team. Okay, I’m doing the right things in, but one area I had a lot of insecurity with was finance. And it wasn’t that I didn’t know how to manage a budget or my business wasn’t doing well. It was that I was insecure around terminology vernacular, like, how tech speak, so to speak, like how to speak to some of those things. I had, had a partner that started the business with me. I bought her out, like, a couple years into the business, but she had helped me get everything kind of started. And so whenever I bought the business from her to take complete ownership, I just kind of took over what she had been doing in the books, like, and didn’t want to change anything, didn’t want to mess anything up. I’m just like, Let’s keep it going. But that was and this is I’m an agency. So this wasn’t as an econ brand, right? This is as an agency. But going to that Babson College, the 10k SP, the Goldman Sachs program, I left feeling empowered to ask my bookkeepers, my CPAs, the people, like, you know, that were helping me my business. The questions I need to ask, I didn’t know how to ask, you know, and I just felt empowered to be like, look, I don’t have to know everything to come in and say, Hey, I wish this look like this. Hey, I wish that this was grouped together with this so that I can get a good perspective of my warehouse costs. Oh, I wish that there was a way I could see revenue per brand that I’m working with, or, you know, revenue per employee, or these different things I wish I knew, but that I didn’t know how to ask. And so I was insecure to do so and so was holding my business back. And I just remember the moment, like, I mean, that time period has been I came back from that. And I believe Marknology changed in a great way for the better. I mean, my books or my books are amazing. I actually got audited last year, and they owed me $41. So it’s not a lot, but it was more of a moral victory, you know, in a lot of ways, but you know, in your feeling not great about your books, or like just being iron tight, and being able to make the decisions for your business. It’s all the difference in the world, as a leader. So I know it took me a second, but I just wanted to say, like, you know, how valuable I really, really, really feel like this conversation is, and in how like, as a leader, there’s no way you can direct your business if you don’t really understand what’s happening inside your business. And so, so many brands would come to me and say, Hey, Andrew, we’re not making money on Amazon or we’re not profitable. Or I got my bookkeeper, like, you know, my bookkeeper sent me her statement, how can this be possible? We’re doing 50,000 in sales, like, how are we negative? And I need to be able to say, Okay, I hear what you were told, or I hear what you’re saying, let’s get into the numbers, let’s look at profitability. Let’s look at the books together, and really see what area of the business needs our attention. I’m sure it was running your own your own brands that really brought this idea kind of to life and seeing what people like, you know, understanding VAs, how they were helping you with different things and other things and how you do that. Talk to me about just the birth of EcomBalance, like, you know, with you and your partner, and what was kind of the driving force at the beginning for creating it?
Nathan Hirsch 12:27
Yeah, I mean, to kind of take a step back. So like a lot of entrepreneurs when I when I started bookkeeping, what was the last thing on my mind and with the the Amazon business. I was doing books myself eventually, and just wasting time every single month, and I didn’t do it correctly. So my CPA just had to redo everything and charge me to do that at the end of every year. Then I tried hiring college kids, my business partner, Connor, his first job was doing QuickBooks and he wasn’t a bookkeeper either. So I just wasted time and money there and again, had to pay someone to fix it all at the end of the year. Then I tried just not doing it and dumping on my CPA at the end of every year and didn’t really know how my business was doing it until the end. Then I tried quarterly and hiring a bookkeeper quarterly, and I realized it was too late to make any decisions. By the time I learned anything, three months had passed. And then finally I said, Okay, I need a good monthly bookkeeping process where after the month ends, by the 15th, I get my books, I review them and I make decisions on them. And that really helped us scale our Amazon business. Fast forward ahead. When we started free up, we said we are hiring a bookkeeper from day one, we are not making that mistake again. And we hired a great bookkeeper mark is one of the best bookkeepers I’ve ever our best hires I’ve ever made. And that alone was one of the best business decisions we ever made. Because even before we were super profitable, or making a lot of money, we are super profitable or growing. I should say. We knew what the numbers were we could make decisions Hey, we need more PPC freelancers on the platform we need more customer service VAs like fixed price is working better than hourly, whatever. So we every single month we were making good decisions and that helped us scale from 5000 to $1,005,000 investment to a million to 5 million to 9 million to 12 million. And then when we went to sell the company we had four years of Immaculate books going back to the first day and that helped us pass due diligence earn a lot of trust with the buyers obviously have a life changing exit. So that was just a lesson that we learned so down the line when we’re brainstorming business ideas we kept going back to Hey, like we love the finance space with Connor and I like like personal finance a lot. We like business finance a lot but we just know how important bookkeeping was and if you’re being honest, like, most business owners don’t sell their company. Most business owners don’t get funding, they don’t get investment. Yes, like, monthly books makes taxes a lot less stressful. But the real reason to do bookkeeping is the decision-making. You don’t just make decisions off off like some dream you had or guts or because you see money going into your bank account. You make it based on what your reports and actual numbers are saying every single month and, and that’s how you run a business. So Connor, and I kind of learned that the hard way, like a lot of entrepreneurs, and we’re kind of on a mission to help people not do that and have clean books going forward. So they know how their business is doing and can make decisions off of that.
Andrew Morgans 15:19
It’s so so, so, so important. And it’s crazy how the more important something is, or the more we avoid it, sometimes if we don’t know exactly how to tackle it, you know, and what, what could be more important than your cash flow, you know, understanding your cash flow understanding, you know, if you’ve got a great DTC brand, you know, off Amazon, there’s so much data you can get, essentially to understand what’s my conversion rate, what’s my AOV? What’s my customer lifetime value? What you know, these are like ecommerce KPIs. But from getting all that data, you can then predict, okay, if we do two emails a month, and we do four guest posts, and we do two podcast interviews, and we do, you know, spend 1500 in Google ads and this, we know that we get this return, on average, like if you if you’ve been in business long enough. And so from there, you can then predict, okay, we need to have this much supplies, we need to have this much product on hand, we need to, you know, we need to create, we need this many content creators, we need, you know, etc, etc. And so I think the goal of being a good leader or a CEO is making as many good decisions as possible, the right decisions, right? Not right or wrong, but good decisions. And that’s making them quickly. And by having data and metrics to help you make the right decisions, you shouldn’t have to be going by gut, I think so many times when your books aren’t right, you can be great and have great instincts, but you’re making gut decisions. And that can only go so long, you can make better decisions, using your gut and data, you know. And so, for me, I’m speaking to the choir, because I’m telling you, I wanted to start with my story of just being insecure about like, you know, talking about these subjects, I could sit in a room and understand what’s going on, if they broke it down to me into plain English, if they were talking like, you know, all the abbreviations and ARR or our MMR and, you know, I’m like, What is this? I was just, you know, insecure about it. But knowing it and feeling confident about it, it’s funny how that then becomes something that you’re very passionate about, because you understood what kind of change that made for you and your business. I know for a lot of bookkeepers, ecom is difficulty level high for for bookkeepers and accountants just in comparison to like, let’s say, an agency or a service based business where, you know, we might have a couple 100 transactions a month in an agency, you know, I don’t know 1000. But you could have 20,000, and an ecom business or 100,000. Let’s talk a little bit about what some of those differences are. And like some of the pain points of I guess, solving for ecom, for me, it comes to like the two week payouts and you know, some of that stuff. What are the some of the main problems I guess, that you guys have helped solve for when econ brands are coming in and asking for hope?
Nathan Hirsch 18:00
Yeah, I mean, it starts with marketplaces, right? Walmart’s different than eBay different than Amazon. And what we’ve learned is you can’t really connect from the marketplaces to QuickBooks or Xero, which are the only two bookkeeping software’s you should use. But you need a connecting tool, link my books a to x, those are the tool that to that we use, and you have to be able to break down all the different fees that come in a lot of bookkeepers that don’t understand ecommerce, the top line of your income statement is the deposit that goes into your bank account. That’s not correct. There’s sales refunds returns all the different fees in there before the net, that’s a pause in your bank account. So step one is sorting that out, and making sure that you are counting for each marketplaces, fees, mappings, all that kind of stuff. And that’s a great way to just understand if your bookkeeper actually understands ecommerce, so search with that and then you get into accrual versus cash most most ecommerce businesses need to be on under accrual even though you should talk to your CPA about that don’t make that decision yourself. But if you think about it, like if you buy $50,000 worth it with inventory, January’s gonna look pretty bad if all that’s showing up on January but you’re selling it over the next six months. If you’re doing an accrual base, those sales are going to go with the actual are those purchases are going to go when you actually sell it and you’re gonna have a much more accurate idea of how much money you’re making every single month. Now, most ecommerce sellers just need to accrue sales and cost of goods sold and they don’t have enough expenses in there to justify accruing those. But even just accruing sales and Cost of Goods Sold gives you a much better picture. And not all bookkeepers are designed to do that. And the last thing I’ll kind of say there is just segmenting your books you want to know are you making more money on Walmart or on eBay, if you’re selling on Amazon UK is not a waste of time or something you should be doing and there are a lot of sellers who are on marketplaces and spending a lot of time energy and resources that aren’t worth those returns. So that’s it important thing to keep in mind as well, just like if you’re running an agency, and you are selling PPC services and SEO services, you want to know which one is more profitable.
Andrew Morgans 20:08
Yeah, let’s talk about that a second, as I’m an agency and I own brands, I’m kind of fitting in both shoes. And, you know, it’s definitely not easy to get to, if you don’t know how to communicate this to your bookkeeper, even what you want, or what you need, they might not have any calm background or an agency background, they’re not going to know what data you need to see or what KPIs matter for your business unless you tell them. And if you’re insecure like I was, you don’t know where to start and beginning to have those conversations, I spent more time trying to understand what was already there in QuickBooks from the person set up before me and like what I should be learning about this or that or why they, why they organize it this way or that way. Instead of being like, I can get this arranged in a way that makes sense to me so that I can make actionable decisions in my business. That sounds so easy. That was like a huge roadblock for me, simply understanding how to communicate those needs, because I wasn’t with a bookkeeper or a CPA that already understood it and knew what I needed ahead of time. So I don’t think everybody’s going to be like, Okay, I’m just gonna switch my bookkeeper and my CPA to EcomBalance because they know everything about e commerce agency, and that’s gonna solve all my problems because those moves are big because people are loyal, whatever, but you either have to figure out how to get your bookkeeper or CPA on board and on the same page as what you need. Or, and that has to be through communication, being able to explain what those things are and having the knowledge or you need to go find a partner who already knows these things that can help you get to where you need to be. It’s been a probably a three year journey for me to get to the level of detail that I’d like to be at in my business, which is segmenting the warehouse. You know, first it starts out with warehouse income warehouse expenses, when you start a new venture, you know, and then it’s okay, packing supplies, and now I’m getting my labor down there. And now I’m getting, you know, if I’ve got any referrals or software fees broken down, now, she’s not just software fees, but software fees broken down by department, so I can assign those to the different ones to see, okay, we only have these software’s in my agency, because of the old warehouse need or because of a PVC need, or because of whatever, I want to sign those costs to those those divisions, so to speak. And you know, it starts out it starts out very generic and gets granular. But you’re talking about ways that you’re working with ecom businesses, what are some of the things that you think are a lot of agencies that you guys are working with, like, really struggle to dial in without an agency bookkeeper?
Nathan Hirsch 22:35
Yeah, so let’s kind of take a step back for a second. First of all, you should have a monthly finance meeting on your calendar every single month, and you don’t miss that meeting for any reason. It’s the most important meeting you have every month because that’s the meeting that you’re making decisions at. So you should have a good process where the month ends, by the 10th or the 15th. You get your books, income statement, balance sheet, cash flow, and you have this meeting on your calendar with your partner, your team leader, your CPA, whoever you want to go through with you go through income statement, balance sheet, cash flow, line by line, and if anyone wants my agenda, you can go to ecombalanced.com/agenda. And it’s the same meeting Connor and I have had for six years. You’re looking at this month, you’re comparing it to last month, you’re comparing it to the same month last year, you’re looking at certain margins, like, profit margin were, what trend are, what direction are these going, are your margins going up over time or down over time. And that’s where you’re making decision on your business. So that’s a big key there. And then the other side of it before you even get started is that proper setup, we talked about having like a to x or Lincoln iBooks. If you’re an E-commerce seller, if you’re a business owner, in general, you need QuickBooks Online or Xero. You don’t want to use like GoDaddys of the world, you’re just going to outgrow them and have to move all your data later. And you’re going to struggle to fire find bookkeepers that actually use those softwares if you ever want to switch. And you want to be careful of like the Benches in the Final Loops to the world because not to bash my competitors, but they’re the only ones that use that software. So if you ever want to get off of them, no one else uses those software. And again, you’re gonna have to pay all your for all your data to be moved or you have all your data in two separate places. So QuickBooks Online or Xero, pick one or the other. Everyone has their pros and cons. But those are the only two you should consider. And we live in 2023. So QuickBooks on desktop, not not a great option unless you’re really gonna have a bookkeeper go in your office and do the work for the rest of your life. And then it goes into the bank accounts and credit cards. I’m not a huge fan of Profit First, I’ve never had an issue like holding money for taxes. In my opinion, simpler is better. You don’t need 12 bank accounts to run your business, especially early on. So keep it to one or two bank accounts. One or two credit cards make it easy like for ecommerce, one credit card is all inventory, one credit card has everything else makes it pretty easy for everyone and you don’t have to go through stuff every month. And make sure you’re not intermingling personal and business. Hopefully, people listening know that you’ll get in a lot of trouble with the IRS and lose all the protection from your liability. But you also don’t want personal cards that are just used for business because that doesn’t allow view only access for your bookkeeper. So you want to have a business credit card, business checking account, business savings account, whatever you set up. And you need to make sure those banks have a view only access feature to your bookkeeper. You don’t want to give your bookkeeper full access to your bank account. Just like you don’t want your bookkeeper to own your QuickBooks Online account. You want to be the owner to protect yourself. So
Andrew Morgans 25:32
This would be I want to I want to interrupt right there just for a second because I think there’s some learnings there, I think it can matter to if you’re got a local bookkeeper, right, or you’ve got an overseas bookkeeper not saying there’s not pros and cons to one, but like I can go down to my bookkeepers office. And they’re going to be there like, you know, if they’re in my bank accounts, doing crazy stuff, or different things like that. We can sit down if you’re working remote or virtually, I think even better reason to be like extra secure, maybe creating separate emails for these types of things. And just creating some separation between something super important, like a bank account or information, it took me a year and a half, you’re talking about setup. And I think this is really great. You’re talking about it because I’m in a sales course, just to relate, I mean a sales course. And no one really talks about all the technical integrations that really go into a great outbound sales team. It’s actually like pretty integrated from like getting your domains all set up, you know, in mastering clouded and like getting your automation set up in your integrations with LinkedIn, nav, and Apollo. And everyone’s just like your sales is talking about sales and like, well, there’s this whole integration piece, if this isn’t set up at first, nothing else will matter. Like, kind of a racecar, everyone just thinks about the race. And I like the car being built that makes the race you know thing. So back to what you’re talking about, about just like the setup, the tech stack, making sure that everything’s in line, so that it’s like almost like if you’re going to ask for help make it easy for someone to help you and like, Don’t get yourself you know, in a bind in that way. I think that’s just like super great on the Amazon side, we would do exactly the same. You know, you’re creating unique email addresses that aren’t getting cross contaminated, you’re making sure that you own it. Marknology has always been, we’re not going to like buy the inventory and sell it for you kind of like an older model. I wanted to work as a brand under their account, because I knew is the best thing for them. You know, we’re building this brand, its your account, and we have viewer, you know, access in that way. Okay. So you’re talking you back, you were talking about just like making sure you’re with a bank that has the right type of permissions. It took me a year and a half to switch from a bank, like a local bank that was like, just really friendly to me when I was starting my business to a different local bank, but a bigger one that had basically all the online features that I needed. Like, I could wire transfer, good ACH automation, I could like do everything online, get great reports online. It took me a year and a half to move over. I wish I had just started with picking the right bank or picking the right partner.
Nathan Hirsch 28:01
Yeah, absolutely. And it’s one of those things, it’s a pain to switch banks. But in six months, you’re going to be happy that you did. And the real reason for view only access is you want you don’t want to have to download statements every month and send it to your bookkeeper, you want your bookkeeper to have the only access to your banks and credit cards. And it’s one less thing you have to do every single month. And if you go on vacation, let’s say an early in the month, your books aren’t delayed because you are there to send statements. So the proper setup is important. It’s going to save save everyone time. So really focus on that. And I mean, if you’re an agency, we kind of already talked about segmentation, like, really break down your services and make sure your bookkeeper is clear of what the different things you offer. If you start a new service, you’re telling your bookkeeper so that they can segment and have the right chart of accounts. And we have sample reports too. If you go to ecombalance.com/report, or accountsbalance.com/report, you can see what a good report looks like income statement, balance sheet cash flow, but more importantly, the actual chart of accounts. Because if you think of a chart of account as like every line item you have in your business, like a poor chart of account could be too small, right? All expenses put together, that doesn’t tell you anything. Tough to make decisions on that, or too many expenses where you could group everything into office supplies, instead of having 10 Different kinds of office supplies, because you don’t want your income statement to be 20 pages long. So keeping that even if you’re not going to use my service, take a look at those reports. And that’s a great way to be like Hey, I like this or I want to move this line up here because that tells me something different, but have a good standard for an agency or for an E-ommerce seller where you know what you’re looking for every single month.
Andrew Morgans 29:41
I think that’s amazing. And we’ll have to get the guide back in the show notes. I’m gonna have to follow up with you just those two links that you suggested over. Because if anyone’s like me, and they don’t know, they don’t maybe they don’t have a bookkeeper internally and they’re still doing their books. I wanted to know where my budget was and my money was like every single day so for a long time I had a lot a hard time handing it completely off. Because that’s where my business was, we didn’t have that type of surplus in our bank account, right? I just really needed to know. You have a hard time handing that off? Well, having knowing what good looks like, is a great starting point to be like, You know what, mine doesn’t look like this. I know that much. And so that can be a starting point to say, Okay, what do I need to do to get to this to this, so thank you for offering that. We’ll list it one more time in the show notes for anyone listening. Before I go into the next part, Nathan, shout out again to our sponsor, FullScale.io. Finding expert software developers doesn’t have to be difficult, especially when you visit FullScale.io, where you can build a software team quickly and affordably. Use the Full Scale platform to define your technical needs and see what available developers testers and leaders are ready to join your team. Visit FullScale.io to learn more. Okay, back to you. We were talking essentially, about being able to segment out those things, what came to my mind was every single month, I get a breakdown of Amazon expenses. Okay, so Amazon doesn’t give a lot of clarity into what those those purchases are. But I do a lot of my business spending on Amazon. So I’ve got, you know, $501 here, $240 here, $33 here, not everything is in these chunks. And some of it is office supplies, some of its warehouse supplies. Some of its, you know, photography equipment, some of its cleaning supplies. It’s all different kinds of stuff, you know, even if it’s just for the business, and I’m not mingling, then how, how granular do you need it broken down to? Right, you know?
Nathan Hirsch 31:32
Yeah, I mean, that can depend, I’m always a big fan of simpler is best. So that’s something that like a good bookkeeping service. And hopefully ours falls in there, like you have a kickoff call with our team. So we have our standard chart of accounts that we use for agencies use for commerce we use for real estate, whatever. And then we go through your business and make tweaks based on, one what makes sense and two what’s important, the client, what do they want to see every single month? What do they want to keep track of? And, what are like the unique characteristics of your business? So that’s a good great conversation to have with your bookkeeper. I feel like a lot of bookkeepers skip a step, they get all the access they need. And they get started with the bookkeeping and they show you it once it’s done. It’s way better to get on the same page up front and have an example of a chart of accounts and make any tweaks before you really get into it. Because it’s a pain to kind of go backwards and fix everything.
Andrew Morgans 32:23
I love it. I love it. Talk to me about the importance this is might be a wild card for you. I don’t know if you’ve heard this in a while. But one challenge I’ve had this year is working with more international brands. And a couple of them are very large brands. In some cases, like a conglomerate of Indonesia, of food brands. I’ve had to go through more paperwork than I knew of and education around that. And there’s there’s an expense involved in that, right? So I’m losing money on that client by having to have my bookkeeper and all these people, you know, it was like a certificate of residency and just some different things. It was right at the end of the year. So it was like, did it for 2022 happened to do it for 2023, each and every year. Just some things that were unknown. What are some of the things do you have international clients, I guess on either end? And what are some of the challenges that that you’ve seen or that are common or that you know that that that revolve?
Nathan Hirsch 33:16
Yeah, keep in mind, we don’t do tax. You should have a local tax professional in any country that you’re selling on. But bookkeeping is bookkeeping. It’s generally accepted accounting principles. We have clients all over the world. Now, we work directly with their tax person. And that’s super important because if the tax person has a certain thing they need done or certain thing that we need to be aware of, we need to have those communication channels open. So yeah, that’s kind of my advice is to make sure you have a separate bookkeeper and CPA. Your CPA focuses on on tax and you should have a tax person and any country you’re in and make sure your bookkeeper and CPA are in communication. It blows my mind sometimes where the CPA doesn’t talk to the bookkeeper until the end of the year. They should be CC’ed on emails like clients give their CPA access to our client portal, we upload everything if there’s something we need to change or something we need to be aware of. Because obviously, we’re not experts in like Germany, tax law, it’s usually pretty simple as long as we get the information from that tax person.
Andrew Morgans 34:11
I love it. And you know, most most advisors and mentors would tell you like having a CPA on your board of advisors or something in finance on your board of advisors is critical. So having them, you know, you’ve got your legal. You’ve got your like, you know, tax and finance, maybe you’ve got, you know, any other number of PR, whoever you’ve got on your board of advisors if you go that route. I have an unofficial board of advisors, but you know, super super important that they’re talking and I can tell you I love my my CPA. She’s been with me since the beginning like she’s helped me do my book since the beginning. But they had no idea about ecom. We’ve grown together they didn’t know crap about it. Didn’t understand agency life either. You know they work with roofing company. Even lawyer companies and, you know, service based companies are pretty straightforward. So it was a definitely a learning curve, I can speak from experience, like there weren’t ecom, EconBalance wasn’t a thing, you know, as an option. And she’s helped me through a bunch. But we had issues like being on QuickBooks Desktop at the beginning. And then moving to QuickBooks Online, because that didn’t make any sense. And every now and then I’ve got to be, you know, reach out and be, like, hey, guys, is this is this communication happening? Like, I have to be proactive about it, and make sure that all my teams are talking. Because, you know, they’re business owners to taking trips, you know, losses in the family, or birth in the family or family events like that. And it’s just super, super critical that they’re talking so that you can make the best decisions possible. If you’re making, you know, database, data-driven decisions off of inaccurate data, because certain teams aren’t talking. You know, it can be the difference in, you know, thousands of dollars for your business at the end of the year. And, you know, having that advice where your books are current, you’re coming into November, December, you know, if you don’t know exactly where you’re at, you’re not going to be able to say, Hey, we should be, we maybe we need to make these big purchases before the end of the year. So they can be tax deductible, or different things like that just gives you so much ammunition that you don’t even really know about until, until you know about it, you know, you don’t know what you don’t know. And it’s a it’s a constant learning. For me, I just bought two more tax books off of bigger pockets. Just because there’s so much to learn. I’ve been doing business, I’ve been in business as an entrepreneur nine years. I’m in an M&A class, I’m trying to learn about exits and, and all that kind of stuff. And every single conversation revolves around your books.
Nathan Hirsch 36:43
Absolutely, I mean, it’s a quarter of your business. And just like hiring without your school, like, if you want to be an entrepreneur, you got to learn how to hire. There’s no way around it. There’s very few solo seven figure entrepreneurs out there. Same thing with bookkeeping, like, you can scramble and kind of makeshift it for a little bit. But at some point, you’re going to outgrow that, and it’s going to seriously hurt you. And you don’t want to get to the end of the year and hire someone to go back 12 months. No one is doing that in two weeks, it’s going to take them months to do it, we sold the company, it was the most stressful six months of my life. And that’s with clean, immaculate books, there are people that get to the end, they want to sell their company, and then they have to hire a bookkeeper to go back and do three years again, that’s going to take months and months and only add to it and you’re going to lose a lot of trust with the buyer. So the time to clean up your books and get on a good monthly process is now and down the line at six months, whatever it is, you’re gonna be really happy you did it. And once you get into that good monthly process where you know the month ends, and you’re about to get reports on how that month went and make decisions off of it. You you wonder how you ever lived without it because that’s really the lifeblood of everything that you’re doing. As a business owner, you’re busting it all month, you’re hiring people, you’re training people, and then you’re seeing the fruits of the labor in those monthly reports and, and also deciding how much to pay yourself, what to invest back in the company, if you want to invest more in hiring, whatever it is.
Andrew Morgans 38:03
Who deserves raises, right? Instead of just like Zafir got, you’ve got you can tie revenue to certain employees, or certain brands. And you know, you could have a small brand be like, let’s get rid of the small brands as an agency and be making more per brand on those and you aren’t some of the big ones. And if you’re not, you just don’t have your bookkeeping correct. There’s no way of knowing that, you know, it’s a good Well, this one’s 8000 a month and this one’s 1500 a month, well, maybe that 1500 a month is on cruise control. Right. And, you know, you have a highly efficient worker on that brand. They’re not having to do much else, they take a couple calls, make a couple changes in PPC, you know, relatively low your tracking hours, and you know, Hey, man, we’re making the $1,500 We’re clear and, you know, 700 bucks. And an $8,000 a month one, you’re not even noticing that it’s taken eight employees time and staying over time and their quality of life is going down. And you know, you just can’t make those decisions if you’re just really looking at at the end of the day, 8000 versus 1500. So, it, it affects everything. And if you’re going to go get money because you know, if you’re going to the bank to go get financing or, or anything like that, and your business to the quality of your books, really speaks volumes for you as a business.
Nathan Hirsch 39:19
Absolutely. Yeah. I mean, you mentioned like if you’ve if you have if you have loans or anything like that the banks are going to ask for things on a yearly basis and you have to be able to deliver and you don’t want to lie to the bank or give them inaccurate information that’s gonna crush you. So yeah, I mean, there’s there’s tons of reasons to just have a good monthly process with a reliable bookkeeper that, you know, you’re gonna get it on time each month and it’s gonna really help your business.
Andrew Morgans 39:42
I love it. Nathan, this has been amazing. As we kind of wrap up on the episode, let’s finish with just two questions. I’d love to ask: one, what’s something you’re working on in the business or or a different business that you’re excited about? Just something like as you know, we’re in the second half of the year. Something in your personal life, you’re excited about outside of fatherhood? Okay, so I’m gonna make you work for this one. Something in your personal life, whether it’s fitness, travel music, guitar, you know, what’s something that you’re you’re moving toward that’s, that’s new that you’re that you’re pumped about.
Nathan Hirsch 40:15
Yeah. So business wise, if anyone here is following Conor Gilligan on LinkedIn, my business partner, if you’re not go do it. He’s an SEO Wiz, he handles that part of the business. He’s been crushing SEO for all of our companies for years and years. And we’ve, we’ve been just brainstorming about launching an SEO business where we will put out 10 to 30 has super high quality keyboard heavy blog articles every single month for larger businesses. And we’ve just been waiting for the right person to run the business. We want someone who can run option knows SEO, who can manage that company. And we finally found someone ironically, right before I was about to have a kid. So we hired that person. And we’re launching it. It’s called TrioSEO, if anyone wants to get on the waitlist on our site, and we’re excited to do the same thing we’ve done for all of our brands, for for other companies out there and looking for some beta clients. Now, I don’t know if we’ll already have that by the time people listening, but we’re with any company, we’re a big fan of minimum viable product, get it out there, prove the concept and then and then grow from there. So that’s exciting from a business side. From a personal side, I’m a big just proponent of working out and doing HIIT workouts. I do one hour intense HIIT workouts pretty much every day. And it’s always been a dream of mine to have my own gym. So I mentioned to you, we’re redoing our basement, that’s towards the end of it. It’s kind of a race against the clock basement versus baby right now. But I will have a gym in my basement that I’ll be able to work in, workout in and I have a bunch of friends that are into it as well. And it’s a lot better than just, I don’t know, I used to live in a condo, and I’d like workout in the kitchen. So I’ve kind of been through it all. It’ll be nice to have my own space.
Andrew Morgans 41:52
No, that’ll be amazing. And if I come to Denver, you’ll have to run me through a workout. I’ll try not to die. Where were you at before Denver.
Nathan Hirsch 41:59
So I grew up in Massachusetts, and I then moved to Florida after college and we ran our we were on FreeUp in Florida. We thought real estate was cheap. And it was easy to live and it was good place for a startup is a great place to exit a company without state taxes and all that. And then after we sold it, COVID hit, we were kind of stuck there with no business and my partner had moved to Colorado and I convinced my wife to do it. And then my whole family followed. So now we’re all in Colorado.
Andrew Morgans 42:27
I love it. I love it. I was just saying Colorado is gonna be a good spot to work out. There’s a lot of different options, you know, from biking to hiking to all the above. So it’s super amazing. I really appreciate your time, Nathan, it’s been awesome having you on the show one last time. Where can people get in contact with you? I know we’ve talked about a lot of businesses, you got a lot going on. You and your partner, where can they follow you on LinkedIn? Where can they follow you, your websites? What’s your go to?
Nathan Hirsch 42:52
Yeah, Nathan Hersha on LinkedIn, if anyone wants to just check out a bunch of free resource I having go to outsourceschool.com/nathan and we have a bunch of stuff there for you that you can grab and Yeah, appreciate you guys listening. If I can help you in any way that has nothing to do with hiring or bookkeeping. Feel free to hit me up.
Andrew Morgans 43:09
Okay, and lastly, one last thing on AccountsBalance.com and EcomBalance, where were those links for people to get a free checklist or what a good example of report look like?
Nathan Hirsch 43:22
Yeah, so if you go to ecombalanced.com/report or accountsbalance.com/report. The AccountsBalance one is an agency report, EcomBalance is for an E-commerce report. And then agenda, either one AccountsBalance.com/agenda or EcomBalanced.com/agenda.
Andrew Morgans 43:37
I love it. Thank you, Nathan. Thanks again to our sponsor. FullScale.io. Do you need to hire software engineers, testers, and leaders? Let Full Scale help the other people in the platform to help you build and manage a team of experts when you visit FullScale.io. All you need to do is answer a few questions and let the platform match you up with fully vetted, high experienced team of software engineers, testers and leaders Full Scale they specialize in building long term teams that work only for you learn more when you visit FullScale.io Thanks again to Full Scale our sponsors making this these podcasts possible. I love giving you guys value. Nathan delivered today. Thanks again for being on the show. And congratulations on the new one.
Nathan Hirsch 44:14
Thanks, man. I appreciate it. And I’ll see you in Denver soon.
Andrew Morgans 44:17
All right, guys. See you next time Hustlers.