Debt as Leverage: Scaling Without Running Dry

Running a business is statistically a bad idea, yet entrepreneurs dive in anyway because of a necessary, often dangerous level of optimism. This optimism is a double-edged sword: it provides the drive to start but can blind a founder to the mathematical reality of their financial health. In this episode, we sit down with Levi King, founder of NAV and Lendio, to discuss why most businesses fail at the financing stage and how to bridge the gap between where you are and where a lender needs you to be.

We get into the tactical substance of business credit bureaus and how to leverage trade credit to keep your operations fluid. Levi shares his boots-on-the-ground perspective on navigating Equifax, Experian, and Dun & Bradstreet, explaining why a Paydex score can make or break your ability to land massive contracts. We sit down to analyze the "financial readiness layer," exploring how cash flow data and bank connections provide the ground truth that manual bookkeeping often misses. A key takeaway is Levi’s unique philosophy on "ideas as liabilities"—the reality that a concept is worth less than zero until it stops eating cash and starts generating profit.

The unglamorous truth is that most founders wait until they are desperate to look for money, which is exactly when they are least likely to get it. We tackle the mental hurdle of debt aversion, showing how avoiding loans can actually lead to a lower return on equity and stagnant growth. You will walk away with a clear system for auditing your own creditworthiness and a warning against the "enamored founder" syndrome that leads to cashing out 401ks for unproven concepts.

If you care about scaling your operations, mastering business credit, and moving from survival to true leverage, you’ll get a lot from this. Please Subscribe and Share this episode with a fellow founder who is currently "too busy" to look at their P&L.

Subscribe and tune in for new episodes of Big Talk About Small Business with Mark Zweig and Eric Howerton. Each week we focus on practical insights and real-world strategies to grow your business!

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Episode Transcript

SPEAKER_02 (00:00):
This is true for everyone listening.
It's a bad idea to start abusiness.
Statistics just thinkstatistically and
mathematically, no matter howgood your idea, it's a bad idea
to try to turn it into abusiness because the majority
fail.
What does that mean?
That means entrepreneurs areoptimists.
Because if not, you look at themath and say, nope, I'm going to

(00:20):
keep working for somebody else.

SPEAKER_00 (00:31):
So here we are.
It's another episode of Big Talkabout small business.
All right, and we back againwith Levi King.

SPEAKER_03 (00:42):
Man, we had such a good episode the last time.
I mean, I think that what'sinteresting, like when you and I
talk and we meet with guestslike Levi, like the value that
they bring for a like if you arestarting out a business or if
you're bidding one, like it'sjust nothing but problems, like
we talked about.
But folks like Levi can givesome really good insight if we

(01:03):
would just actually listen alittle bit, right?
And kind of knowing how tonavigate this financial world.
Because I mean what Levi does,you know, like we've talked
about financing, like gettingloans versus getting VC versus
getting angel versus juststrapping it out, getting your
getting your credit cards maxedup, man.

SPEAKER_00 (01:23):
Making nothing.

SPEAKER_03 (01:25):
Whatever it takes, man.
Yeah.
Whatever it takes.
And so Levi's got a wealth ofinformation from the last show,
and we wanted to make sure wegot some more time to kind of go
a little bit deeper in the weedsabout what this loan financing
economy is really like.

SPEAKER_00 (01:39):
Before we get into all that, I just want Levi to
tell everybody once again,because not everybody maybe
heard the first episode a littlebit about his business and what
they do with his platform.

SPEAKER_02 (01:51):
Love it.
Yeah, you bet.
And uh the the idea of NAV was,and by the way, thanks for
having me on again.
Um, the idea for NAV was born uhfrom Lendio, the first tech
company I started.
Lendio is a late-stageprofitable tech company that
helps small business owners geta loan.
And that's true if they need aloan now or if they want to come
back in six months later, butit's really a snapshot of a

(02:14):
moment in time.
Your credit and financial healthis a small business, it's what
it looks like today is areflection of all the decisions
you made over the previousyears.
And at that moment in time, it'stough to do anything to make
those options better.
They are what they are.
And so after seeing, you know,the majority of applicants, and
this was true when I was out inthe new, still true today, the

(02:35):
majority of applicants actuallydon't get approved for anything.
And then of those that do getapproved, the vast majority
don't love the option.
They think they're, you know, Igot a solid business.
What the heck?
Like I'm profitable, whatever,whatever their mindset is.
And they go, why am are is mybest option half the money I
need for this project or a lotmore expensive than I
anticipated, or the paybackterm's too short.

(02:58):
I need to stretch out the youknow the return on the
investment wherever I'minvesting in my business is
slower than in the payback termfor the loan.
And you know, we had tons ofthem asking us, well, what can I
do to get in a better spot?
So that was the idea for NAV.
And so NAV is a financialreadiness layer.
So we help you understand yourpersonal credit, your business
credit, and the cash flows ofthe business through the lens of

(03:18):
how is a lender looking at you.
And when I say lender, it's notjust for a business loan, it's
for a business credit card orfor trade credit, which is
oftentimes overlooked andunder-leveraged by small
business owners.
So that's just net 30, net 60payment terms that you get with
your vendors and suppliers.
So you don't have to pay at themoment that you get the supplies
and the services.
And and our software helps youunderstand from all those

(03:41):
different views where am Ibuttoned up?
Where do I need to makeimprovements so that my options
improve over time?
And so that was kind of theinspiration for NAV is let's get
ahead of financing events andmake sure you're buttoned up.
And if you don't like youroptions, you know, now you have
very clear information andinstruction on what to do to get
in a better spot for financingin the future, so you get better

(04:02):
terms and such.
So that was the inspiration.
We've got over a million users,active users, and across all
industries, time of business,geography, credit risk.
So we're not built for you knowthese seven industries.
It's our software works nomatter what you're working on
and and where you're trying tomove your business forward, no

(04:23):
matter what stage of life you'reat in the business.

SPEAKER_03 (04:26):
It's fantastic.
I got a real quick question.
So I'm sure a lot everybody'skind of filling around with the
Duns and Bradstreet number,right, or some other type of B
credit, right?
Yeah, all that.
Does that still come in?
Is that still a big factor inthe credit readiness for
business?

SPEAKER_02 (04:42):
Indeed.
So Dunner Bradstreetspecifically and the and the
Dunn's number, when I mentionedtrade credit, the net 30, net 60
terms, sometimes more you canget up to that, net 180
depending on the project anddepending on the supplier, but
that world is largely powered byDun and Bradstreet credit
reports and scores.
And so that's another thingthat's a bit confusing about
business credit is Equifaxexperience at Dun and Brad

(05:04):
Street are the big three on thebusiness side, but they kind of
specialize in and dominate indifferent uh sectors of the
economy.
So if you're getting a telecomaccount, uh things like that,
that's usually Equifax or theequipment leasing and financing
world, that's usually an Equifaxreport that's going to matter
more than Dun and Bradstreet.
But then there's alwaysexceptions.

(05:24):
So that's there's no absolutes.
So that's true of Equifax, butDun and Brad Street and expert
also have some business in thoseverticals.
And so, yeah, the Dunn's numberis about as close to a monopoly
on it, on like a string ofnumbers as you could have and
importance for a business,because it's not just for trade
credit.
If you want to do business witha Fortune 1000, any type of

(05:47):
government, municipality,federal, state, typically local,
county, city, you've got to havea paydex score above 80.
Whether that's you're gonna dosnow removal for Walmart, if
they're parking lots in the GOyou live, or you want to have a
product on their shelves.
You got a minimum businesscredit score.
And that's that's all driven bythe the Dunce number ecosystem.

(06:08):
You know, um I'm sorry.

SPEAKER_03 (06:10):
Well, I was just real quick on that.
Does your software show whereyou're at with that if I was a
user, right?
What that number is and then howto fix it, basically.

SPEAKER_02 (06:19):
Yeah, and if you if you don't have one, how do you
get one?
And and then, of course, how doyou get credit established
around that DUNS number?

SPEAKER_00 (06:26):
Well, you know, that's funny.
I I was in the managementconsulting business for many,
many years, and we had onecompetitor that was our primary
competitor, and our secondlargest um uh revenue line was
strategy.
First was MA, but I used to sayto my clients, we'd be talking
to them about um a new clientabout us doing this um strategy

(06:50):
consulting for him, and I alwayssaid, if you run a D B credit
worthiness rating on, and they'dsay they were talking with the
other guys.
I'd say if you run a DB, uhchecked out their D B credit
worthiness rating.
Is that who you want advisingyou on how to run your business?
My God, okay, because they'rethey're they rated them
unstable.

(07:12):
Okay.
And it's like, that's who youwant telling you how to run your
business?
Okay.
Just thought maybe you shouldcheck that up.
That's right.
But you know, um, back on the umvendor credit you mentioned, um,
I don't know what yourexperience has been with this,
Levi, but I actually learnedsomething from a textbook I had
in my entrepreneurship classesyears ago.

(07:33):
I don't use one now, but it wasuh it was called uh it was all
about using what they calledvendor statements.
And basically the idea is thatonce a year, sort of toward the
end of the year, let's sayNovember 15, November 30, you
send out a vendor statement toall of your vendors where you
say, We anticip this year weanticipate we're gonna do

(07:56):
400,000 worth of business withyou.
Next year it looks like it'sgonna be five to six hundred or
whatever the numbers are.
Um, what kind of a discount willyou give us and and payment
terms?
And um basically um it's a it'sjust to me, it's the most
brilliant idea.
You send that out to all yourvendors and they assume that

(08:18):
you're going out getting bidsfrom everybody.
Right.
And they basically you may notbe sending it to any of their
competitors, but they'rebasically bidding against
themselves to give you the bestcredit deal they can.
And it's a great tool.
Have you ever heard of that?

SPEAKER_02 (08:33):
Yeah, definitely.
That's a I mean, that's adefinitely a best practice, is
an annual function, but you canalso do it in real time
throughout the year.
I I learned this by practice.
My first company before I gotinto tech was an electric sign
manufacturing installation andservicing business.
And so I had 10 or 12 vendorsthat I had credit terms with.
And you know, let's let's sayI'd win a job, I'd get 50% down

(08:56):
on the job, but my cost basiswas going to be 80 to 90
percent.
So it's this weird relationshipwhere the customer's the
creditor at first, because theyused to write me a check for 50%
down, they've got nothing.
They're taking a risk on me.
Once I invest more than 50% inthe job, now I'm a creditor to
them.
And uh a lot of these jobs, likeit was a really stable, large

(09:16):
company, but that I knew wasreally slow to pay, I'm still
gonna take the work, even thoughI'm not, I know I'm gonna get
paid late.
I know they're good for themoney.
And so, you know, you're talkingabout end of year, which is good
practice, but even in real time,then I'd get on the phone with
all my suppliers and say, hey, Ineed net one eight one, you
know, whatever, more than net30, net 60 on this job for this

(09:37):
order.
I need you to say yes, or I'mbuying it from your competitor.
And they all have a competitor.
That's the nice thing.
And even in Boise, Idaho, asmall geo, there were two
wholesale electric sciencesupply companies uh in town.
And so you I could there's onlytwo you could play against each
other, but they played ball.
They wanted the order.
And and so, yeah, it's it's notjust something you should do
once a year, but then remember,like, you got flexibility.

(09:59):
Even when they they say, like,okay, here's the terms for the
next year, they're usuallypretty friendly.
Like they have to be in thebusiness of extending credit or
they won't be competitive.
And so a lot of times you canpay them late.
You just got to really makesure, and that's another mistake
small business owners make, isthey'll call the supplier and
say, Hey, I don't, I know thiswas net 30, I haven't got paid
yet.
Can you just give me another 30days?
It's it's usually a veryfriendly ecosystem, right?

(10:22):
Because you you got it.
It's like you're my customer,you didn't get paid.
Kind of makes sense, you can'tpay me yet.
But then the mistake thathappens is they don't adjust
that payment.
There's whatever softwarethey're using to track stuff to
report to to Dunner Bradstreetand sometimes all the Bureau's.
So even though they gave youpermission to late payment, if
they give permission to paylate, it's not late, right?
They they changed the terms ofrepayment.

(10:42):
And so I learned this anotherthing I learned the hard way
once I started to understand allthis at the manufacturing
company was I'd have to remindthem like, hey, don't report me
late though.
You're giving me permission.
So I need you to not report melate because it's gonna start to
hammer my credit.
And so, yeah, it's something youcan do all the time as far as
real in a dealing with creditterms with your vendors.

SPEAKER_03 (11:03):
100%.
What do you see like out of uhfolks that are using your
software?
I mean, I'm sure you got data onit, but what's like the maybe
the top two reasons that abusiness is not credit worthy?
Right?
Or hits that score.

SPEAKER_02 (11:18):
So speaking specifically of credit
worthiness, you know, you youdon't just automatically know
there's such a thing as businesscredit.
And so it's usually in yourjourney as a small business
owner, at some point you stubyour toe.
Look, like I every single, allthree of the commercial business
credit bureaus, I discovered bystubbing my toe somewhere.
And I remember, I still rememberthat when I found out Equifax

(11:38):
had, when I was like severalyears in business, I'm like, how
the hell did I not know Equifaxhad a business credit report?
But the most the most commonthing that trips people up is
either something negative, youknow, they didn't know it was
there.
So it's usually just a lack ofawareness or something
inaccurate.
And because in the in theconsumer space, for something to
show up on your credit report,you've got to have a perfect
match but of three of the fourof social address, date of

(12:01):
birth, and name.
And in business credit, it it'sjust tying your zip code slash
address to your business name.
There's lots of other businessesthat might have a name that's
really similar to yours.
And so it's really common justto get business credit reports
crossed with some otherbusiness, and and so you just
don't know there's somethingnegative, then you got to go
through a bit of a process withDunbras Street to get that

(12:24):
ironed out.
But all the beers want accuratedata, they're not against small
business, they want to haveaccurate data, and so if there's
errors, you can get them fixed.
It just usually takes a littlebit of heavy lifting.

SPEAKER_03 (12:36):
Is that process kind of daunting?
Like if you were mixed up, Imean, to get it fixed, is I know
if I have a on the personalcredit, there's something wrong,
it's so brutal, it's brutal,right?
But I mean, how's it on thebusiness side?
Is it just as bad?

SPEAKER_02 (12:49):
It's not too bad because business credit's not
regulated by the FCRA, so yousaid it's brutal on consumer,
but it but at least they gottafollow the law and respond
within certain timelines, and inand the creditors got to prove
that it's accurate, timely, andverifiable.
If one of those three they can'tprove, then they gotta take it
off your credit report.
The commercial bureaus, eventhough they're not covered by

(13:10):
the FCRA, they have processes inplace that basically basically
mirror app is the consumerspace.
So it's less about that it's youjust got to have documentation.
They're not just gonna trustyou.
So if you know you've got toshow your Secretary of State,
probably pull the record of someother business, their Secretary
of State, and and submit apackage.
It's like, look, no, these thisis my information, that's their

(13:31):
information, you need tountangle this.
But interesting.
But they're not there to fightjobs.
Yeah.

SPEAKER_00 (13:38):
Right.
Can can we take this just aslightly different direction for
a minute?
Yeah, sure.
Um, you know, I I what uh here'sanother problem, Levi, um, is
companies that are so debtaverse that they don't use debt
when they should.
My students have to do a projectevery semester where they work

(13:59):
with an area business toincrease revenue, increase
profitability, reduce risk forthe owner, and increase the
value of the business.
And just last night we had one.
It was really interesting.
So the business was doing sixmillion dollars a year, it had a
three million dollar plus bookvalue, a million in cash sitting
in the bank, and it was put upas a canon of good management,

(14:25):
as an example of goodmanagement.
And it only made a 3% margin onsales, by the way.
Okay?
Wow.
Right.
So it was like$200K on sixmillion in revenue, but three
million in net worth plus.
And I guess, you know, I pointedit out to the student.
I'm like, you know, I appreciatethat the owner of this business

(14:46):
is very conservative, and youknow, they're they they have a
business that has a real lowrisk profile.
However, their return on equitysucks.
Do they need that kind of bookvalue in that business?
And wouldn't they be better toextract a bunch of that cash
out, do something different,borrow some of the money, and

(15:07):
jack up their return on investedcapital?
I mean, i and and go use theirtheir money for something else.
I I think a lot of people don'treally think like that though.
They just think all debt's bad.
Yeah.
And, you know, in some casesthat that results in them using
up all their working capital.
That's the first, that's a morecommon problem I see with small

(15:28):
business owners.
They want to buy and pay foreverything and then they run out
of working capital.
But the second problem is thisissue of just being so debt
averse and not reallyunderstanding um the you know uh
the relationship between the theuh profits the business
generates and how much isinvested in it.

SPEAKER_02 (15:49):
Yeah.
Yeah, that's a I mean, that's uhthat applies to me in my
experience.
So I was raised, my my dad, debtwas bad.
He he sold like a part of hisfarm to pay off the rest of the
farm in the 70s, like before Iwas born.
So my whole life, it was allabout don't use debt for
anything, pay cash for yourcars.
I had no personal credit when Istarted my first business, and I
thought debt was bad.

(16:10):
Like that was indoctrinated intome at the deepest level.
And and I had to have severalexperiences to realize, like,
wait, no, debt is leverage forme to get ahead faster in this
business.
And all that matters is ifyou're using debt, you need to
make sure that whatever the theproject or however you're
calculating return oninvestment, that there's you're

(16:30):
making more than what the debtcosts you, and obviously the
more the merrier.
But uh one of those experienceswas I didn't have a like a
20-ton boom truck, and sometimesI would win a job where I had to
rent one, and my boom truck onlywent 60 feet in there.
So whether it was I needed moreheight or I needed more weight
capacity, I would have to rentequipment that I didn't own.
And so I I looked at a usedpiece of boom truck, 20-ton,

(16:55):
120-foot reach, and I'd I lookedback at all the the uh rentals
that I'd had to rent the yearbefore for jobs where I needed a
truck that big, and then I gotthe equipment lease numbers, and
you know, they say there's nointerest rate, and I figured out
how to calculate well, what'sthe effective interest rate?
It was like 14%.
It wasn't great, but it wassimple math.

(17:15):
The math was I was gonna pickup, I would start to, you know,
with a$1 buyout, I'm spending ona lease against an asset that
I'll eventually have.
And, you know, I'd spent like 40grand the year before on renting
equipment, renting boom trucks,and the lease expense was gonna
be like 20 grand, whatever itwas, it was like black and white
math.
But then it also meant like Ididn't have to wait for the boom

(17:36):
truck to show up on a job.
I could, I could then bid alittle lower because I was
spending less, right?
So I could have more competitivebids.
But but experiences like thatstarted to break that mindset.
But like, you know, I was proud,like I can afford to pay cash
for all my rentals.
I don't need to financeanything.
It's like, no, that was silly.
That was costing me 20 grand ayear or whatever it was, that
mindset, and not having thefull-time utility of the boom

(17:59):
truck.

SPEAKER_03 (18:01):
You know, and speaking of that, is it, and
then even to your comment, Mark,in that story, is it better to I
mean, what what I imagine issmall business, they they want
to be able to get a loan forfixed assets or for assets
versus operating capital,working capital, right?
Or like a line of credit, you'resaying against AR.

(18:22):
Yeah, yeah, yeah.

SPEAKER_00 (18:23):
Sure.

SPEAKER_03 (18:24):
Yeah, because like uh well, I mean, but okay, so if
I took out a loan, even if I hadAR, so I would take out we got a
little noise going on.
Okay, we're good.
Uh if I took out a loan, I Iguess what I'm trying to say is
if I'm a small business owner,what's the what's the the best

(18:44):
way to use to acquire debt andfor what purpose?
And what's the no-go way to tryto acquire debt, right?
So let's say uh my credit healthis doing great, and I've got
that fixed through Levi's systemnow, and now I'm gonna go
approach and try to get get somedebt capital.
If I was an entrepreneur and I'mand I'm going about it one of

(19:07):
two ways, like what's the wrongway to go about that, and for
what reason am I trying to getthat capital versus what's the
right reason to get thatcapital?

SPEAKER_02 (19:14):
Yeah, and so I would just simply flip the question.
So you need money for something,and then there's going to be an
idea loan type or financing typethat maps to that decision that
you want to make.
And so that's why trade creditis so useful.
You're you're not buying goodson credit unless you already got
a job.
So that's like dropped it,obvious, but it's also kind of a

(19:35):
pain because in aggregate youmay have like 200,000 in credit
limits, but that's across thedozen vendors.
Ah, it'd be way easier if I justhad a$200,000 line of credit.
The trade credit it not only isit usually free, like there's no
charge for the net 30, net 60terms.
Um, it's also flexible.
Bank's not going to be flexibleon the repayment.

(19:56):
Um, but but a line of credit,like if you're paying your for
goods attached to a job, itdrives more discipline in your
business.
If you've got a line of credit,you could get a little bit
sloppier in your your cashmanagement, managing your
expenses, and mapping yourexpenses to an outcome that's
going to drive profits in thebusiness.
And so I think it's really justwhat are you trying to

(20:16):
accomplish?
And you've you've really got todo the math and make sure that
that whatever it is you want todo, it pencils out.
Sometimes it's easy.
If you're a retailer going intothe holiday season, the hot
things, X, Y, Z toy, you'regoing to borrow expensive money
that you're paying back threemonths later, but you got a 300%
margin on that hot toy.
Oh well, if it's expensivefinancing.

(20:38):
But a lot of times projects arepretty skinny on the math.
But even then, like I there wastimes I would use financing as a
small business owner to win ajob that I'd break even on
because I knew it would thenturn into a repeat customer.
So that's a different calculus.
I was betting on future profits,I wasn't willing to lose money
on a job, but I was willing tobreak even on a job if it meant
you know bringing on a newcustomer.

(20:59):
And so it really just depends onthe project.
You know, if like you'll seesmall business owners get like a
10-year payback SBA loan forsomething that's like, good
hell, that should be able to payback in a year.
So that's the wrong product.
Because now you're for for thenext nine years, you're still
paying back something that wasgoing to drive a benefit in this
fiscal year.
And so it you really got to mapit to the the value that you're

(21:22):
trying to drive in the business.
Because connecting this commentback to what was just discussed,
I'm a big believer.
Like the business has got tostand on its own two feet, and
every year it should be kickingprofit to the owner that then
gets invested in personalassets.
So you you mentioned that theperson that had all the money
just sitting in the business,and and the business has got to
stand on its own two legs from adebt perspective.

(21:42):
Now, that's not sure when youstart, right?
You leverage all of yourpersonal assets and debt usually
to get started, but that that'slike I don't think you've made
it until the business stands onits own two feet and stands on
its own two feet is not justservicing everything in a fiscal
year, driving results in a year.
Obviously, you want to break.
Down by much shorter incrementsfrom how you measure your

(22:03):
business.
Um, but it also it's it's not ahealthy business unless it's
kicking profits back to theowner on top of the salary that
they're paying themselves out ofthe business.
You you sounds like you got youprobably have some experience on
the MA side.
Like, how many times does abusiness owner go to sell their
business?
They're running their boatpayment and all this creative
stuff through on the cost side.

SPEAKER_00 (22:24):
So it looks like they got so much coming, like
yeah, so it looks like they gotno profits.

SPEAKER_02 (22:28):
It's like, well, yeah, that that works for taxes
this year.
When you try to sell this, itlooks like you're barely getting
by.
And I I learned that when Ibought a hotel because I I
knocked doors on every hotel inthe Treasure Valley where Boise,
Idaho is located, and andseveral times it got to the
books.
It was the same damn thing everytime.
They pull out a set of books andanother set of books and say,

(22:48):
like, here's what I pay my taxeson, but here's the real numbers.
I say, I don't give a shit aboutyour made-up books.
Like, I all I can trust is whatyou told the government.
I'm not giving you any value inthis thing for these this
handwritten notebook whereyou're tracking your real
profits.

SPEAKER_00 (23:04):
That's so right.
Eli, I'll tell you a story wherea hotel I looked at, and it was
a deal where they were trying toshow that they made so much
money every year.
But what there was zero dollarsin labor.
Zero, zero owner pay, but zeroin labor.
And you know why?
It was owned by an Indian guy,and all the labor was provided

(23:27):
by family members that hebrought over and gave rooms to
live in and stuff.
They did all the cleaning, theydid the yard maintenance, they
manned the desk.
I'm like, this is not a realpicture of how I can run this
business.

SPEAKER_03 (23:39):
Okay, like you have to come up with your own
performance now based on whatyou're saying.

SPEAKER_00 (23:44):
This thing makes nothing here at all.
But yeah, that's a that's areally good point.
It is very common with smallbusinesses, and I always
discourage that is all theco-mingling.
You know, Eric and I, I don't,we never ran our businesses like
that.
I mean, I never took my wife outto dinner even once on a company
credit card.

SPEAKER_03 (24:02):
Same.
I mean, well, it's just likebusiness is already complicated
enough.
Yeah, exactly.
There's no way, there's no wayin the world that you're gonna
keep all those things straight,you know, or and if you are,
then it's probably not evenworth your time and it's really
not worth the payout of it.
Because I mean, you want to makesure that you're showing the
value in the business, and it'sgot to be an accurate picture of
that.

SPEAKER_00 (24:22):
But we're entrepreneurs, we're thinking
about value building in thebusiness instead of just what we
extract from it every year.
And you know, that's thedifference in small business and
entrepreneurship.
Is that value building?
I I'll give you another storyfor just from last night's big
presentations that you guys willappreciate.
Here was a business doing$10million a year, it made about uh

(24:44):
$1.3 million real profit.
Okay.
Their marketing cost was 50% ofrevenue.
Dang.
5.0.
I've never seen anything likethat.
Now the business was was young,it was created in like 2019 or
something like that, okay?
So, of course, you know, the thethe students are like, well, you

(25:07):
know, they got their marketingcost is completely out of line
with the average firm in theirbusiness, and you know, they
gotta get that down or whatever.
And I said, no, wait a minute,you're looking at the because
the average firm in thisbusiness made would have made a
million eight on 10 instead of amillion three.
I go, you guys are looking atthis the wrong way.
Think about the value thesepeople have created.

(25:27):
This has gone from zero to tenmillion dollars in that amount
of time.
It is profitable.
Their projections when I put Isaid this thing's probably worth
three times revenue, okay?
Because they spend that amountof money on marketing and jack
that's a good thing.

SPEAKER_03 (25:42):
Oh, it's just gaining value and it's gonna be
perpetual.

SPEAKER_00 (25:45):
Right.
So where's the real pot of gold?
It's not the extra 500K I suckout of it, it's the fact it's
worth$20 million more than thenext guy.

SPEAKER_03 (25:53):
And I would say it's gonna be worth$50 million more
in a year.

SPEAKER_00 (25:57):
Yeah.
So how do we get small businessowners, though, to understand?
I mean, all of us, we've had apretty wide-ranging experience.
Eli certainly the most of any ofus here, right?
How do we get small businessowners to be just generally more
financially savvy than they are?

SPEAKER_03 (26:16):
I think it's dialogue and discussion like
this, right?
And I think that uh, you know,especially with Levi's
experience and seeing, you know,uh I think one of the best ways
is probably what exactly not todo.
Because those seem like whatwhat you should not do seems to
be a little bit you can hang ona little bit.
Because what you can do, kind ofLevi's point when I asked that
question earlier, well, itdepends on a lot of different

(26:38):
scenarios, right?
As to why you might apply andtry to get financing.
What kind of financing?
Yeah, what kind of finance youneed.
There's it's like a hundreddifferent reasons why.
But I think my question when Iwas like, what should we not do
though, is like, what's a worstcase scenario of which maybe
somebody, Levi, that came intonav or or that in your
experience that they're tryingto get their credit worthy

(27:01):
enough to get financing for areally bad idea for financing.
And you know, do you have any uhany suggestions on that?
Like, let's tell our audiencelike don't go and try to do
financing like this.
The first thing I can think ofis when you're desperate, is
like the one of the worst timesto try to get it.

SPEAKER_00 (27:17):
Yeah, you gotta get it when you don't need it,
obviously.
Right.

SPEAKER_02 (27:20):
Yeah, businesses tend to borrow money for only
one of two reasons.
Things are going good and I seean opportunity, or things are
going bad, and I gotta be ableto keep the lights on.
And and that's where the dangerlies.
A lot more danger lies in theI'm optimistic that I'm gonna
turn this around than youalready have a successful

(27:40):
company, you're optimisticyou're gonna make it better,
right?
Like that, that one, there'susually more reasons to believe.
And if you're you're wrong, it'susually more forgiving on the
downside.
And so that not seeing thereality of the situation you're
in.
So you lose a big customer,you're bleeding a little bit of
money, you're confident you'regonna win back another big
customer, you think I don't wantto lay anybody off, I don't want

(28:02):
to make any structural changesto my cost or changes
structurally to my costs,structure the business.
And so I'm gonna borrow money.
And then a lot of times, becauserevenues probably show they've
been declining or something'soff, uh, and and oftentimes now
your credit's a little beat upbecause it's been a little bit,
then you're you're also gettingqualified for the most expensive

(28:23):
financing there is.
So it's like doubly bad.
You're getting like a merchantcash advance with a huge factor
rate, which would translate tolike 80% interest if it if it
was that instead of the factorrate.
That's that's when most peoplestart to really start to sink.
Because if you're if you'realready trending down and you
pile some expensive debt on topof the business to keep it
afloat, it's not really keepingit afloat.

(28:43):
You're just you're at thatpoint, you're just spending
money you shouldn't be spending.
And so, you know, you always gotto do the math on does this pay
out?
That's a lot easier to do.
Like I said, when things aregoing well and you're looking to
capitalize on some extension ofopportunity from a revenue
perspective.
But the the the folks that aretoo slow to recognize and see
the writing on the wall and say,like, I've fundamentally got to

(29:04):
run this business at a lowercost basis until I would back
another big customer orwhatever.
That's the that's the worstmoment to be making big
financial decisions is whenyou're clouded by all the misery
misery that's surrounded you.

SPEAKER_00 (29:17):
Be in there.

SPEAKER_03 (29:18):
Yeah, and I mean yeah, for sure.
And it's and it's a veryoscillating scary feeling.
I mean, I think that we've haveall experienced, but I mean,
it's like, you know, at somepoint you're you know, it's
interesting, Levi, as you'retalking about that.
Like if you lose a big client,right, which no one wants to do,
but you have so much confidencebecause you're working in the

(29:41):
business, you're as an owner,you're in that business working
it, you're always campaigningand promoting, yep, that you
have confidence that the marketis going to respond.
You just need to knock on moredoors, you need to do it.
More time.

SPEAKER_00 (29:54):
Yeah, a little more time.
Yeah.

SPEAKER_03 (29:56):
You know, and I mean I've done that about a million
freaking times.
That's actually probably all Iever do now that I think about
it, is how do you buy that time?
Yeah, because you see the marketis is growing, right?
Um yeah, versus like I havealready known.
Yeah, I was like, you know, uh,versus like that other one where

(30:18):
you probably have had asustaining business and it is
doing well, then all of a suddenthe market shifts, or your
competitor comes in, and youkeep trying to do the same damn
thing over and over againbecause you don't a lot of times
I've seen people that are not inthe business enough to be aware
of what's happening, yeah.
A little by little.

SPEAKER_00 (30:37):
It just gets more and more isolated, yeah.
Yeah, they get a lot of money.
In the market and the people,yeah.

SPEAKER_03 (30:42):
Yeah, it's so true.
Yep, and then and then they'releft with this this this
scenario, and then they go getfinanced and bigger, bigger hoe,
right?

SPEAKER_02 (30:49):
Yeah, and and there's one other aspect of
being an entrepreneur.
This is true for us three.
This is true for everyonelistening.
It's a bad idea to start abusiness.
Statistic just speakingstatistically and
mathematically, no matter howgood your idea, it's a bad idea
to try to turn it into abusiness because the majority
fail.
What does that mean?

(31:10):
That means entrepreneurs areoptimists.
Because if not, you look at thepath and say, Nope, I'm gonna
keep working for somebody else.
That optimism does so much tomake you successful, but yes, it
also is the same thing that getsyou in trouble.

SPEAKER_00 (31:27):
That is so true.
It's like we uh we just got uhbefore the show a potential
guest posed to us who is a guywho deals with gambling
addiction.
Uh-huh.
Okay, and I said, What does thathave to do with business?
But then I started thinkingabout it, right?
Uh everything.

(31:48):
We may have to probably needsome therapy too.
We don't go to the casino inSiloem Springs or the whatever,
or the Indian, you know.
We're we we but we're stillgamblers, betting against the
odds.
Um that's a good point.
But you know, another I I tellyou, these these cases I see in
my class are just fascinating.
I had another one in the lastcouple days that I thought was

(32:11):
good.
And here's here it is.
The the story is basically thisguy starts a business to um sell
smoothies.
Okay.
Now they open up their shop,it's not a franchise.
They get discovered by some youknow influencer who's got like a
jillion freaking followers.
So the thing like takes off likea rocket, right?

(32:34):
They get they they have thesegreat revenues, okay.
Then over time it just slowlywinds down again to where now
nobody makes any money.
They got multiple owners,they're paying themselves zero,
okay?
They're they already weresignificantly higher, and
they're sitting there saying tothemselves, we're gonna be doing
better.

(32:54):
I mean, I I wonder, like myfirst thought was what do these
people think a freaking smoothiebusiness, how much money do they
really think that's gonnagenerate?
Do they ever do any likereasonable sort of capacity
analysis on that?
You know, like what's the realpotential?
Is this a$400,000 a yearbusiness?

(33:15):
Is this an$800,000 a yearbusiness?
Does anybody with one of theseand this size do$800,000 a year?
You know, it's like uh it justblows me away.
It's like sometimes I thinkpeople just don't even think
about what the business realpotential is the real scale that
it can get.
Yeah, exactly.
It's just they must be living inlike total fantasy land.

SPEAKER_02 (33:37):
They get so enamored with their idea.
I'll I'll give you two examplesthat I love to give.
When I had my electric signmanufacturing company, most of
my customers were smallbusinesses, and a lot of times
they were brand new.
We were building a sign that wasgoing to go on the building or
on the pole outside thebuilding.
And I was really young, I'm like21 when I started, and so I I
know there's a lot more that Idon't know than I do know at

(33:59):
this point in my life.
Let me just say it like that.
So this guy comes in and he'slike, hey, I want to I want to
open this soap slash cell phonestore.
And I'm like, okay.
And he starts to tell me aboutit.
He's like, I'm just into cellphones.
I cashed out my 401k at Micron.
Love cell phones, and my wifeloves specialty soaps.

(34:20):
And so can you imagine when youwalk in on the right side
there's cell phones, and on theleft side there's soap.
So if you want to buy soap,you're in there and you're like,
hey, you know what?
I could use a cell phone.
And if you're buying a cellphone, you're like, you know
what?
I can use more soap.
And I thought, man, this issounds like a dumb idea, but
honestly, I was objecting withmyself.
Like, and I thought, what whatdo I know?

(34:40):
Like, I'm I'm just some youngdude.
I don't know anything.
Guess what I was doing sixmonths later?
Getting paid to take down thesigns and put them in the gym in
my boneyard.
Exactly.
Anyway, I'll pause the one.
The other one's funny too, butthat that's the point is like he
got enamored with this idea, andhe like he had talked himself
into it.
And the other problem is whenwe're starting a business,
usually we tell our friends andfamily they're not gonna tell us

(35:03):
we're dumb.
Like, that sounds like a lovelyidea.
In fact, I'll come buy some soapfrom you.
I knew it.
I knew this was a great idea.
And so you you've really got toget advice from people who've
been around the block that arewilling to tell you, like, that
sounds really fucking stupid, oryou don't have enough money to
get that off the ground.

SPEAKER_00 (35:21):
I always encourage them to find an industry expert,
somebody that's not evenremotely a competitor, has been
far more successful in thatfield and just ask them.

SPEAKER_03 (35:31):
Yeah.

SPEAKER_00 (35:31):
They they're always glad to help.
I I can't ever say anybody'sever said no.

SPEAKER_03 (35:36):
No, you know, this dialogue is funny because I I
feel like that when you getentrepreneurs together like us
talking, like it's amazing to usabout some of the things I think
that we intrinsically already dojust as entrepreneurs to get us
through, right?
But I mean, Levi's pointing outthere that there are these
people that get enamored bytheir ideas.
That can be easily confused witha passion or a drive, right?

(36:00):
Like what we have drive andpassion, yeah.
But I would never say that I'menamored by some sort of idea
that was like driving me to likelike ignorance.
Yeah.
Because the other thing, theother layer I put on top of it
is I might be passionate aboutthis, but then I see the market
size, and I'm like, holy smokes,this thing's huge.

(36:20):
Then I think, how do I scale mybusiness?
Yeah.
Like it may not be today, but Ihave a scalable You take it a
few steps further down the road.
How do I multiply this thing?
Because if I had a smoothie shopand it was only doing$250,000 a
year, my immediate thought wouldbe, how do I franchise this and
get thousands of locations?

(36:41):
Because a thousand times ahundred thousand dollars profits
a hell of a lot of money.

SPEAKER_00 (36:45):
Right.

SPEAKER_03 (36:46):
So day one, I'm not thinking about one smoothie.
Exactly.
And I'm not thinking if I'mdoing the soap and cell phone
business, I'm like, you know, Idon't know, that one's a hard
one, Lee, but I'll let you know.

SPEAKER_00 (36:58):
I had one, I had two, uh one ex another similar
example to that.
I had a friend of mine, he ran aFirestone store, and he calls me
up one day.
He goes, you know what?
He goes, I'm tired of myshowroom.
It's got tires and shit in it.
He goes, I'm gonna start puttinguh I want to turn it into a golf
pro shop.

(37:19):
And I'm like, okay, um, they'regetting my tires fixed, and now
I'm gonna buy a new putter orwhatever.
I'm not a golfer, okay?
But I but I I I started doing alittle online research, and you
know what I found out?
69% of tire buyers are women.
What percentage of women aregolfers?

(37:40):
I said, dude, you'd be betteroff sticking greeting cards and
freaking magazines and stuff inthere, if that's what you want
to sell.
You know, it's like, but peopledo come up with these crazy
ideas, and you just like, whatare you a lot of times, Leva?

SPEAKER_03 (37:55):
I don't know if this is your experience, but if I
have an idea, like then I hateit when people say, Oh, Eric's
Eric has a lot of ideas.
I don't have freaking ideas.

SPEAKER_00 (38:03):
Exactly.
I like what I'm I'm sniffingsomething.

SPEAKER_03 (38:06):
Yeah.
I'm more of a sniffer than anidea person, right?
But like, like for that example,if with a little bit of thinking
about what is the market doing,yeah, and where's the problem in
the market, and am I competentand excited to go solve that
problem?
That to me is how you start abusiness.
Now I I like soaps and cellphones.

(38:26):
Yes.
Wouldn't you agree, Lady?

SPEAKER_02 (38:28):
Yeah, 100%.
I I love attacking ideas simplybecause all ideas are
liabilities.
And people have an idea, theythink it's worth something.
Like my cousin wanted me to signan NDA.
He he comes to me and asks formy advice and then asked me to
sign an NDA on this idea.
Like, first of all, I'm notgoing to sign it.
Never the dumbest shit.
I'm like, and it was he wouldhave to manufacture something.

(38:49):
I'm like, this is a liability.
Well, what do you mean?
You have to lose a bunch ofmoney before you ever make a
dollar of profit.
All ideas are liabilities.
Even in the venture-backedworld, when you have a pitch
deck and someone says it's worth$8 million, that just means it's
a huge fucking liability becauseit's actually worth less than
zero, but you're pretending it'sworth a lot of money.
So now you got a long way toclimb before it's actually worth

(39:10):
eight million, right?
It's all made up.
It's imaginary.
So I love it.
Yeah.

SPEAKER_00 (39:15):
I'm the same way.
I have had people come to me.
I want to tell you about my, Iwant feedback on my business
idea.
I want to have coffee.
You sit down with them.
It's like, now I need you tosign an NDA.
I'm like, I'm done.
Okay.
If you I said ideas are a dime adozen.
There's a zillion friggin'ideas, okay?
I am not gonna sign your NDA.
I always discuss, but you knowwhat?

(39:37):
They actually get advice fromattorneys to do that.
It's like, well, I call my momand dad have an attorney, and he
said that I should get this NDA.
Of course they sign.
I'm like, what do your mom anddad know about freaking
business?

SPEAKER_03 (39:48):
Well, and of course, an attorney's like, oh, you
absolutely need to pay me$300about you an NDA that I created
10 years ago.

SPEAKER_00 (39:56):
I've had attorneys tell my students they shouldn't
even discuss their idea withanyone because they could claim
that they had ownership in theidea if they ever create a
business and that they then areowed money.
That's taking it a little far,don't you think?

SPEAKER_03 (40:13):
And not to mention, like, an NDA to me is worthless
in a lot of ways, right?
Unless it's like once you getinto like selling a business or
you get into those like verytargeted circles of where like
there's a close caption ofpeople that are like in engaged,
and so you'll everybody's gonnasue the hell out of each other
if it blows up.

(40:34):
But from an from the beginning,NDA to me means nothing.
Like I don't want to sign one, Ialso don't want to ask for one.
If I don't trust thatenvironment, then I'm not gonna
talk.
Exactly.
Yeah because if like if I dofeel if I have something of a of
uh sniff something and I got aproduct and a business I'm
wanting to take, and I goanywhere where I think that

(40:56):
there's some vultures around,yeah, I'm not gonna go talk to
them.
Exactly.
I'm just or I'm gonna shut mymouth about a quarter of the way
through and give them justenough to see, you know, make
sure they don't walk out of theroom they know better than me.
You know?
So, you know, this is actuallytherapeutic.
I don't know about you guys, butI like it.

SPEAKER_00 (41:14):
It is well, that that's another thing though,
Elaine.
I don't know how much thisimpacts you and and and your
work with these small companies,but they seem to me as if they
guard their financialinformation like it's something
that's so sacred they can'tshare it with anybody.
And it it's it's ridiculous.

(41:34):
Okay, what are they gonna dowith your information if they
have it?
Yeah, you know what I mean?
So you if you need money, youneed input, you need investors,
you need advice, you you gottabe willing to sh open up the
books a little bit and letpeople take a peek under the
hood.
Yeah, what are they gonna dowith it?

(41:55):
I think the fear is it's eitherone of two things.
They either making a lot ofmoney and they think, oh,
somebody's gonna copy me, orthey're gonna think I'm greedy.
But more often than not, they'reembarrassed by how poorly the
thing performs.
That that's what I think.

SPEAKER_03 (42:10):
Do you experience that through nav?
Like, I mean, with folkshesitant to even get financing
because of their book, the waytheir books look.

SPEAKER_02 (42:18):
Uh less so with financing just because there's a
big enough motivation.
But you know, in our platform,you can attach your check-in
account to our software so wecan give you cash flow advice
and insights are under cashflow.
And if someone wants financingtoday, there's no hesitation.
A lot of times when people signup, they'll get the business

(42:38):
credit, personal credit, they'llskip that step because they're
like, well, I don't know aboutthat.
Like it's one thing I, you know,I gotta, I'm only gonna see my
credit if I do it through you,but I don't know about my cash
flows.
And so we farm up thoseconnections over time through
engagement where they get betterand better contacts because
we're connecting the dots.
Like, hey, you got slow pays inyour business credit, connect
your checking accounts and wegive you some advice on how to

(42:59):
better manage your cash flow soyou can stop getting late
payments.
But it it's certainly true thatbusiness owners hesitate.
I think it's less so when it's adigital environment, it doesn't
feel like really personal, youknow, like okay, well, this the
software, like nobody at Nav islike looking at someone's data
unless it's someone a customercharacter, someone called in and
said, Can you help me understandmy data?

(43:19):
Um, but it's it's also likewe're only there to give to help
you with your data.
But I I think it's what you saidthough, spot on.
And and and unfortunately, Ithink it's less often that I'm
making a lot of money and I wantI don't want somebody to know.
It's it's usually like I'membarrassed, but usually times
that even that's uninformedbecause you look at the
financials, you're like, you'reactually doing pretty good.

(43:39):
Jesus Christ, you've only beendoing this 18 months.
Like you should feel really goodabout this.
Yeah.

SPEAKER_03 (43:44):
Right.
Yeah, they don't even know that,right?
And then they're getting thatfeedback.
That's encouraging for a newbusiness owner for sure.
And then in the businessfinancing market, is it I mean,
a good comparable I think aboutis like lending tree, right?
Where you have one source and itcasts out.
Out to all these differentlenders, right?
Which is absolutely ferocious.
The worst idea that you can do.

SPEAKER_00 (44:05):
The insurance thing is even worse.
They just will not let go of thecase.
Oh no, God, it's just spam callsfor months.
Yeah, exactly.

SPEAKER_03 (44:12):
But I mean, does it work that way in the business
sector too?
To where, like, if I get mycredit worthiness, which is what
I'd be using nav for, what andthen I okay, so I'm ready,
right?
I'm ready to submit forfinancing.
A, do you offer that next step?
And B, how does that actuallyhappen?
Does it kind of get cast out oris it really highly procured?

(44:33):
How does that work?

SPEAKER_02 (44:34):
Yeah, and thanks for the question because I should
proactively voice that overearlier.
Because we're tied into thepersonal credit, all three
commercial bureau reports, andthe cash flows of the business,
that's 90% of any financingunderwriting scenario.
And so we we're alwaysconnecting the dots in real time
as we refresh the data to here'sa business credit card, here's

(44:55):
some net 30 accounts you're youyou're qualified for, here's a
business loan you could get.
And then again, it's very clearon like if you don't like that
option, here's the things thatyou need to work on so that a
better option shows up.
But because it's based on yourdata, you're it's not cluttered
up with stuff you're notqualified for.
It's just in the here and now,if you need financing, here's
your options, but here's whatyou could do to improve those

(45:16):
options over time.
And and even with one lender,and we're about to go live with
a second lender, it's it's it'sproactive approval.
So you don't actually even haveto apply for the loan if you're
qualified, it just shows up andlives and breathes as a loan
approval.
The amounts and terms may changeyour your data change for the
better or the worse on the onthe financing.
But we're trying to over time,as lenders gain more

(45:37):
sophistication on the technologyside to kind of flip that on its
head.
Like, if your data already liveshere and this is what somebody
needs to underwrite you, whymake you then go apply?
Like, why not just bring thatapproval proactively into the
system?

SPEAKER_00 (45:50):
Very cool.

SPEAKER_03 (45:51):
Yeah, I love that.
And let me ask you a question onthat.
So, okay, that sounds fantastic.
It does.
But like in all kinds ofcircumstances, and you you
probably have done a thousandthings to try to mitigate this,
Lib.
I now it's kind of like almostgoing in your business model
about how you help.
Okay, I have a business, I wantto do this, but what I'm

(46:12):
assuming is that there'sprobably quite a bit of work and
attention that I need to give ifI if I signed up with NAV, not
only in the beginning,obviously, but then even as I my
numbers update, right?
Because it's I'm talking likeour business numbers are not
updating obviously every month,at least at minimum, or you
know, throughout the room.
So somebody has to go in,continue to massage it, fix the

(46:34):
problems that you flagged,review all the different
financing approvals,pre-approvals that you've been
able to provide to me throughnav.
I mean, there's a there's somepretty good amount of work in
that, wouldn't you say?
And and if so, what about howmany hours do I need to
full-time staff this, part-timestaff it?
Is it mostly bookkeepers, or isit or is it the president, CEOs

(46:56):
that are that are in yoursystem?
How how does that look?

SPEAKER_02 (46:59):
By and large, it's the business owner themselves
because part of the view is yourpersonal credit.
Because no matter how good yourbusiness credit is and how butt
buttoned up your financials are,your personal credit will still
be considered in any type ofbusiness credit card or
favorable type of financing.
If the terms are favorable, yourpersonal credit's going to come
into play.
So that's why we incorporateconsumer credit data into our

(47:19):
user experience.
The the amount of work from areadiness perspective you you
need to do is highly dynamicindividual to individual
business based on, like I said,the decisions you made over the
previous years led to thismoment in time and what you look
like today.
For a lot of our users, likeit's a pleasant surprise.
They've never had a view totheir data, but they're there's
somebody who, as a consumer, wasreally buttoned up.

(47:41):
And so they just carried thosehabits into the business.
And so, guess what?
That the habits of being abuttoned-up consumer financially
are the same habits you need tobe a business that's buttoned up
financially and from a creditperspective.
So it's just highly dynamic, butit's usually the business owner
themselves that's in theaccount.
Um, and uh, you know, theengagement, like how often they

(48:01):
log in, how often they're doingthings, kind of directly
correlates to either how muchwork they have to do or am I
trying to get financing rightnow, or am I in the middle and
I'm just making sure I have goodoptions when I get there.
A lot of our best customers area little bit upset and forget.
Like they knew how hard it wasto build good business credit
and have solid personal creditand everything.
They just want to make sure itdoesn't go off the rails.

(48:23):
And so they're just watching thealerts to make sure, you know,
some random tax lien orsomething like that that doesn't
show up on their credit.
So it's up, it's all across thespectrum.
The highest engagement comesfrom the folks that are either
starting the business or theythey they've like made it, but
they've got so much fine-tuningto do to make sure it's
consistently profitable, liketake a paycheck, that kind of
stuff.

(48:43):
That's where you know people login every day, once, twice a
week.
Just depends on where you're atin your journey.

SPEAKER_03 (48:50):
And I know, I'm sorry, Mark, did you?
I know that you said you connectto bank accounts, but do you
also are you API connected withQuickBooks or uh any other types
of business softwares?

SPEAKER_02 (49:00):
Yeah, we're we're a lot more focused on the cash
flow just because very few smallbusiness owners keep their
QuickBooks or zero up to date.
And so, like even to underscorethis point, I point out to
people that Intuit has its ownbusiness loan product.
So they will give theircustomers loans.
They don't base that loan onQuickBooks data.

(49:21):
You're like, wait, what?
They have all the accountingdata.
They base it based on the bankconnection that's powering the
QuickBooks data because the bankaccount will always tell the
truth, period.
You may not like the truth, butit's going to tell the truth.
You can massage your books,right?
You can, oh, let's just deletethat loan that I got and make my

(49:41):
make my debt coverage read lookbetter.
But in the in the bank accountdata, there, oh, there's this
payment to XYZ lender.
Why is that not showing up onyour balance sheet?
Uh oh.

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SPEAKER_00 (50:07):
Yeah.
No, that's such a good point.
I mean, I think my personalfeeling about it, and Eric may
disagree with this, I don'tknow, but I think a lot of small
business owners divorcethemselves from the day-to-day
accounting too early.
I mean, I do think it'sessential.
At some point, you got to giveit up.
But I mean, I'm going to bedoing two, three million dollars

(50:30):
a year minimum, maybe five,before I'm going to pull myself.
I got to be in those booksconstantly to know what the hell
is going on.

SPEAKER_03 (50:39):
That's how I feel, at least.
I hey, look, I'll be the firstto submit.
We've talked about this.
I agree that that is absolutelysignificant.
My brain just not what you'dlike.

SPEAKER_00 (50:50):
It's not your orientation.

SPEAKER_03 (50:52):
I I just, it's, it's, I don't know.
I don't it's never my priorityin my mind.
Top line revenue is all youthink about.
It's all I think about.
All I think about.
I like that though.
I mean, it's covers a lot ofsins.
It does.
And I've but I would say too,I'm like so surprised.
But at the same time, I rerespect and recognize how

(51:13):
absolutely critical it is tohave a good books.
Like, like I I would say that Ilike, for example, with podcast
videos, the first hire I madewas a CFO.

SPEAKER_00 (51:24):
Yeah.

SPEAKER_03 (51:26):
And the first thing I did was get my QuickBooks set
up and my account set up.
And the first thing I'm doing ismaking sure that everything is
clean.
Build the processes so thatevery time something comes in,
it's being accounted for.
I have people watching the bankaccounts.
I have it like duplicated.
So I have bankers watching.
I have my bookkeepers watching.
I'm watching a little bit.
Right.
You got the processes down.

(51:47):
Yeah, it's very yeah.
And so when you say Levi, like alot of people don't even like
they look, they don't even havebooks.
I'm like, that blows my mind.
Like I would be very, I would besketched out if all I have was
just my bank account.
Like, how do you like it?
But it makes sense about thetruth being that.

SPEAKER_02 (52:04):
That's what I had.
My first year of business, theonly thing I knew for certain
was that more cash was coming inthat was going out.
Taxes was an absolute mess.
My wife and I were like allweekend long receipts spread
across the living room floor.
And I went into the accountantand he he told me, he said, buy
QuickBooks, and I don't believeyou're going to do anything with
it.
So if you don't buy QuickBooksand hire a bookkeeper, I'm not

(52:25):
going to need your taxes nextyear.
So went to Costco, wasn't onlineback then, bought it.
I hired Loretta.
She was also the office manager,made my first bookkeeping hire.
I logged into QuickBooks onetime and I was like, fuck, I
don't get this.
And then fast forward,QuickBooks moved to the cloud,
and I was like, wow, that'scool.
Now I'm in tech.
You know, this is the late2000s.
So I hit up Carly, mybookkeeper.

(52:46):
I'm like, give me a login.
I want to check out QuickBooksOnline.
I logged in one time and I'mlike, fuck, this is so hard to
understand.
Now I looked at the financialsevery month.
Like I was always looking at thePL.
But so so I still don't know howto.
Now our finances are too complexfor on NetSuite, but I I don't
even have a login to NetSuite,and I'm the CEO of the company.

SPEAKER_00 (53:07):
I love it.
You two guys are.
I gotta be in there constantly,okay, seeing what the hell is
going on.
Okay, all right.
Plus my daily cash flow reports,plus my daily sales reports,
plus my weekly summaries.
I mean, I just I can't operatelike that.

SPEAKER_03 (53:27):
I think that's that's fantastic, you know.
Well the results aren't verygood.
You can see it though.
He's spending too much time inthe QuickBooks instead of
dropping revenue.
I need you.
I need you.
I need you, bro.
Well that goes into thediscussion of partnership,
right?

SPEAKER_00 (53:47):
It does.
Oh, yeah.
I mean, people need to that'sthe other thing.
I mean, the the mm way too manybusiness partners are both
trying to do the same thing.

unknown (53:57):
Yeah.

SPEAKER_00 (53:57):
They they they go, oh, we're just alike.
We should be partners.
That's the worst part you everwant.
You want somebody that's good atwhat you don't do.

SPEAKER_03 (54:05):
Yep.

SPEAKER_00 (54:05):
100%.

SPEAKER_03 (54:07):
I I can't believe we're already at time.
I can believe I love theconversation with you, man.
Me too.
Like I'm it is therapeutic forme.
I'm gonna walk out going, I'mnot crazy, and things are great,
and let's keep doing what we'redoing, right?
And uh so we're gonna have tohave you on again.
Um what last piece of advicewould you give to a small
business owner in the financingworld, just in general, like top

(54:30):
level?
Like, what is the smartest thingto do?
What they could do to make surethey're ready for financing?

SPEAKER_02 (54:37):
Well, I mean, I'm super biased, but sign up for
Nap and see where you're at.
I mean, it's the it it it is ina shameless plug.
Like this business was fuckinghell to build because it we
offer a very robust free productthat we pay a lot of data costs
for you to have something forfree.
Um, but it's it's the only placeyou can get everything we're

(54:58):
talking about.
It's the only place.
Like I'll I'm one thing I'm veryproud of our our competitors all
failed.
Like they they didn't make it,and we did.
And so it's there's just notone, right?
It's like, well, if all you wantis trade credit, stay on top of
your business credit.
If all you need is an MCA, stayon top of your cash flow.
But guess what?
You're paying high costs, soit's just your financial

(55:18):
readiness.
The the challenge isopportunities will drop in your
lap, like good ones, right?
That then if you can't takeadvantage of them, it's just
it's just a shameless or ashameful miss.
Like you could have borrowedsome money and taking advantage
of something, and it's too latein the moment to then get to
work on everything and get thatloan so you can get that new
customer or whatever.

SPEAKER_03 (55:40):
Awesome.
So Levi King, again, it's nav.
And I remember last time I I wasjealous about your domain, it's
nav.com, right?
Yep.
And then Nav is in Victor.com.
Go check it out.
Sign up, get your businesshealth ready so that you can get
that financing before youreally, really, really need it.

SPEAKER_00 (56:02):
Yeah, don't get it when you're desperate.
Get it when you don't need it,and get it for growth.
Yes, not just survival.
Yes, right.

SPEAKER_03 (56:09):
And debt straight leverage.

SPEAKER_00 (56:11):
Yeah.

SPEAKER_03 (56:11):
Don't be afraid of that debt.
Yeah, go home get you some moreof that debt, right?
Yeah.
Take that gamble.

SPEAKER_00 (56:16):
That's right.
And if you work for us, get alot of debt if we really want
you to be hooked.

SPEAKER_03 (56:22):
Okay.
So you can't leave.
All right.
That's a fair point.
Levi, thanks again, man.
Let me do it again.
Thanks, guys.
My pleasure.
All right, everyone.
It's been another great episodeof the big talk about small
business.

SPEAKER_01 (56:42):
Thanks for tuning into this episode of Big Talk
About Small Business.
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(57:03):
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