August 12, 2024 • 41 mins
Ever struggled to understand the financial complexities of running a business? You're not alone. This week on Side Hustle City, we promise to unravel the mysteries of business financial management with Hurley Fox, founder of Fox and Partners. Learn how aligning financial strategies with your business goals can be the game-changer you've been searching for. Hurley shares his journey and expertise, illustrating the indispensable role of outsourced CFO services in bridging the gap between entrepreneurs and financial stability.
Imagine having a financial expert who turns raw data into actionable insights, just like a doctor interpreting medical tests. That's exactly what a skilled CFO can do for your business. Hurley underscores the importance of having competent accountants from the get-go and the pitfalls of relying solely on tax advice for business growth. We'll discuss why understanding cash flow, revenue, and profit is crucial, and how proper financial planning can help avoid common entrepreneurial mistakes. Get ready to empower yourself with the knowledge to make informed, strategic decisions that drive growth.
What's the secret to maintaining clean financial reports and optimizing cash flow? It's all about building a solid foundation and separating personal from business expenses. Hurley Fox will guide you through best practices for financial management, emphasizing the importance of human-centric relationships through fractional CFO services. We'll also explore how mastering personal finance can be a stepping stone to business success. Join us for an episode packed with insights that could transform your financial strategy and set you on the path to long-term success. Don't miss out on this invaluable conversation with Hurley Fox.
As you're inspired to embark on your side hustle journey after listening to this episode, you might wonder where to start or how to make your vision a reality. With a team of experienced marketing professionals and a track record of helping clients achieve their dreams, we are ready to assist you in reaching your goals. To find out more, visit www.reversedout.com.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Welcome to Side Hustle City and thanks for
joining us.
Our goal is to help you connectto real people who found
success turning their sidehustle into a main hustle, and
we hope you can too.
I'm Adam Kaler.
I'm joined by Kyle Stevie, myco-host.
Let's get started.
Welcome back, everybody, to theSide Hustle City podcast today,
(00:27):
special guest Hurley Fox,coming to us from New Jersey.
How you doing, hurley?
Speaker 2 (00:32):
I'm awesome, Adam.
How are you?
Speaker 1 (00:34):
I'm excellent.
Been running around all day,been in the car and in meetings,
going from neighborhood toneighborhood meetings.
I've been busy, so hopefullyyou haven't had it as bad as me.
And it's hot out today, hot out.
Speaker 2 (00:48):
We have a bunch of rain and I've also been running
around meeting after meeting.
Oh no, but you've been runningin the rain.
That's worse, I know it is, itis, it is.
Speaker 1 (00:57):
Hey, man, it's great to have you on the show.
So you run a firm Fox andPartners and guys, you can check
that out.
Do a little Google search forit, but it's foxandpartnerscom
Pretty easy to find.
But essentially you helpbusinesses with the hardest part
of owning a business, with thefinance part and helping them
(01:18):
understand how to position theircompany for sale Potentially,
uh, you offer outsource CFOservices.
Uh, you know.
Full package of things that asan entrepreneur, as someone who
can attest to this, I hate doingthe financial part.
I hate it.
I just want to work on mybusiness all day, early.
I don't want to mess withaccounting.
I don't want to.
You know, I want somebody elseto help me with that that knows
(01:41):
what the heck they're doing.
Speaker 2 (01:42):
Yeah, I feel you, and that's how I.
I worked at a smallconstruction management firm for
a few years and then I went togo work at an accounting firm
because I was doing some of theaccounting business, all the
business stuff of theconstruction management firm.
I was doing that.
Everybody else is doing theconstruction management part,
and and so then I had anopportunity to go work at an
(02:02):
accounting firm.
I went to go work there.
When I was at that accountingfirm, I realized what you just
said.
There was just a huge voidbetween business professionals
accountants, lawyers, financialplanners etc.
And business owners.
And the business professionalsweren't really helping the
business owners with what theytruly need help with.
Right, they were filing the tax, but were they even asking a
(02:29):
question of hey, was this whatyou wanted to do?
What are your goals for nextyear?
Why is this year worse thanlast year, et cetera.
And so there was just this needout there where the business
owners needed this help withstuff they don't want to be
doing.
Right, the boring stuff of, hey,do you keep stuff organized, do
you look at your financials?
And then the gap between thatand what the business
professionals were kind ofcaring about, which is just
checking their boxes off, right?
Hey, the returns filed, thebookkeeping is done, you're good
(02:52):
, you have perfect accountingand you're losing money.
What's the point, right?
So we exist in that, in thatmiddle ground between the kind
of the accounting and businessprofessional world and the
entrepreneur business ownerworld, and we're in the middle
and we're acting as a liaisonbetween the two.
(03:15):
The firm where what we do eachmonth kind of get our foot in
the door with people is we dothe monthly accounting for
businesses, right?
So anything monthly that'sgoing on with your business and
that could be bookkeeping, ar,ap, monthly closeout, monthly
controller duties and monthlyCFO building reports, all that
fun stuff, we do all that.
We don't do tax returns andfinancial planning, but we act
as the liaison, making sure thatthey're all talking amongst
(03:37):
each other and kind ofcommunicating that and putting
that into the jargon that thebusiness owner understands and
is looking for, right, yes, so,yeah, we exist between that
space between those businessprofessionals and the business
owner, because they often theytalk past each other.
Speaker 1 (03:53):
Just send me my balance sheet and my yearly
report and show me that.
And that's what I want to know.
How well did my business do?
What do I owe in taxes?
You know, that's what I want tobe concerned about.
And then also, I mean, let'stalk about this A lot of
business owners guys, if you'reout there and you're thinking
about starting a business, thisis literally the most.
You have to understand this.
(04:14):
It is so hard as a businessowner to get a loan because you
don't have a W-2.
Yeah, you're, you're.
You may be 1099 in everybodythat you're working with, you
may have a 1099 yourself orwhatever, but all the monies, if
you're a solopreneur, you gotall this money coming in.
You don't have a W-2 from a bigcompany.
(04:36):
You're probably trying to writeoff as much as you possibly can
and at the end of the year itlooks like you have no money.
So what happens when you go outand try to try to get a loan
from a bank?
They're going to tell you likeit looks like you don't have
enough money to put gas in thecar.
Talk a little bit about that.
I mean, I'm sure everybody isdealt with this.
Speaker 2 (04:55):
Yeah, so, and again, that's why it starts with what
are your goals right?
Because then you want tostructure the financials and
your business around what thosegoals are right.
If it's to save money on taxes,then you know having that
income.
You know be lower is not theworst thing, but it'll bite you
when you go and try to get aloan.
So I'll just give a personalstory.
I went to go.
(05:15):
We bought a house last year.
But a couple of years ago, whenI first started to look at
buying a house, I went to gotalk to the banks.
Hey, look, I want to kind ofline up and get pre-approved.
They said, okay, great, we neednot only this year's P&L
balance sheet and forecastedincome okay, which they don't
even really look at.
They look at last year's P&Land balance sheet and the year
(05:39):
before that and they took theaverage of the two years.
So just think about howfrustrating that is for a
business owner.
I was, I was doing business inthat year.
I was going to do you know, thebusiness was going to do seven
figures right and I was going todo pretty well.
And but the year before I didokay, but the year before that I
did terribly right In terms ofwhere the bank, what the bank
was looking at.
(06:00):
So, even though I knew I wasgoing to do well into six
figures in that year, theydidn't really look at that at
all they took.
You know, 2019 and 2020 incomeat the the forecast was was 10 X
what that average was.
They took that average Rightand so it took me.
(06:29):
So I couldn't get a loan.
You know the way I wanted forum for another year, cause I had
to let that back year kind oftime out to get the average up.
So you know, that's somethingwhere, even if you are planning
in there, like if, if you're in2024 right now and you think you
got it all together well, ifyou are planning in there, like
if you're in 2024 right now andyou think you got it all
together, well, if you didn'tplan correctly in 2022, which is
two years ago, which, whenyou're running your own business
(06:51):
and stuff is like eons ago, ohman, that's what the banks look
at, and so that was reallyfrustrating for me.
Kind of experiencing that waswas just like man, you're not
looking at the right thing, butthat's what they look at.
That's how banks today, youknow they have their checklist.
It's not about personalrelationships anymore.
(07:11):
It's about do you fit thesoftware's checklist and if you
don't, you will not get approved.
Speaker 1 (07:17):
That's interesting.
So really the software is theirunderwriter in a way.
Speaker 2 (07:22):
Oh, yeah, software is their underwriter in a way.
Oh yeah, yeah, I mean they're,they're.
They're the days of you knowingthe banker and the and the
local bank and them saying, well, look, your numbers are okay,
but we know that you work forso-and-so and we've known your
family for a while and you know,we know your customers, so
we're going to kind of give youa little bit of wiggle room here
.
That's all.
That's all.
You know.
(07:43):
That doesn't happen anymore.
It's they send it, they havetheir.
This is what we need to see inorder to approve it, and if you
don't meet that criteria, you donot get approved.
Speaker 1 (07:52):
Wow, scumbags, the bank's the worst.
And you don't know what theircriteria are.
So you can't really prepare forit.
And I'm glad you're telling usbecause I never knew that, like
I knew, they asked for the lastcouple of years.
Sometimes they asked for threeyears.
Yeah, and you know, mycoworking space is an example,
right, we signed a bunch ofleases last year.
Not a lot of people wanted tobe in an office.
(08:14):
You know, a couple of years ago, during the pandemic, right?
Yeah, so yeah, the samesituation you were through, you
were having that we had, right,we had a great year last year.
We're going to have a greatyear this year.
And you know, passive income,the income is twice as much,
(08:35):
actually almost two thirds, whatthe expenses are.
If you take out the loan right,that I already have, you know
you want to refinance it orsomething like that.
And it's tough because you knowif I went to go get a loan,
they'd be like, well, this andthat, and blah, blah, blah.
And you look at 2019, look at2020, well, they do 21, 22.
But same issue, right, andpeople gotta understand this
(08:57):
kind of stuff and have a planahead of time.
That's why, when you go and youstart a company, you wanna
start working with a competentaccountant immediately.
I would say I mean, you don'twant to be in there messing
around like, because then whenyou go to work with a competent
accountant they're going to lookat your stuff that you did in
quickbooks the last two yearsand it's going to take them eons
(09:18):
to go through.
All the bad accounting you didis, yeah, you know, uh, the the
you know barbershop owner whodoesn't know what they're doing.
Right, and it's just going tocost you more money.
Speaker 2 (09:29):
Yeah, and, and you know two things there, right,
and I would say working with acompetent accountant is a really
good step.
The problem with accountantsthat I've seen all of my clients
that I have have always hadaccountants before they came to
us Right, and the problem with alot of accountants is the same
problem with the bankers howmany bankers and accountants own
(09:51):
their own business?
And the answer is not a lot.
And you are a business owner oryou're a business, you're,
you're, you're trying to becomea business owner and you're
talking to people who are givingyou advice, who have not done
and do not do what you're tryingto do, and so, like from the
bank, we're trying to get theloan.
You know, how frustrating it isto talk, to talk to somebody who
(10:13):
has no skin in the game, whohas never had their own business
, and they're telling you heylook, we can't pre-preview and
the we is a black box that theydon't even know.
And then on the accountant side, the account you know most
accountants don't own and runtheir own business and don't
think entrepreneurially, and sothey're structuring your books
just to make sure again thatthey're checking the boxes is
(10:34):
was office supplies correctlycategorized in office supplies
and QuickBooks, and that's greatand they keep you organized and
there's a there's a science toaccounting and you need
accountants.
However, you want to make surethat when you're talking to and
getting advice on how do I scalethis business, how do I grow
this business, that theaccountant either thinks
entrepreneurially or has more ofa business sense and can help
(10:57):
you do that than mostaccountants do, because I've
seen a lot of entrepreneurs fallinto the trap of they're only
talking to their CPA for allthings business advice, and I
would highly suggest getting adiverse range of opinions, just
like if you were in the medicalfield.
Right, I consider us businessgeneral practitioners.
We're your daily contact, right, for all the day-to-day stuff
(11:23):
you'll come in, you'll get yourcheckup here's your numbers, all
that stuff and then we willtell you hey, you know what you
need to see a specialist.
We're going to.
You know, your tax situation isreally unique.
Here's a tax accountant that wework with that we're going to
pair you up with.
Hey, you need a certain amountof financial planning.
Here's a financial planner thatwe connect you with.
And you're talking just like inthe medical world you would get
different opinions.
(11:44):
You should be getting differentopinions on your, on your
business and on your business'saccounting.
Speaker 1 (11:50):
I love that.
Well, okay, so this brings usto something, cause maybe I'm
using the term incorrectly.
So what separates your firmfrom just a regular accounting
firm?
I mean what?
How do you?
You're saying we're, we'refractional CFOs.
Yeah, how does a fractional CFOdiffer from an accountant for
the random person out there?
The basic person hasn't starteda business yet is thinking
(12:10):
about it.
Explain the difference.
Speaker 2 (12:13):
Yeah.
So again, these are generalterms.
So I'm sure there are accountsout there who are saying I'm a
really good CFO and there aredefinitely accounts who are good
CFOs out there, but generallyfor most small businesses, the
accountants that we areinteracting with are tax
accountants or, um, or you know,like managerial accountants.
(12:35):
Okay, and what that means isthey are, from a tax perspective
, they're just filing the taxesfor your business, right?
And that is a different skillthan monthly business accounting
, which is a different skillthan kind of what a CFO needs to
have.
So, again, using the medicalworld as an analogy, you
(12:57):
wouldn't go to your heart doctorif your foot was hurting you,
but that's what most people aredoing in the business world by
going to their tax accountantfor advice on how to grow their
business.
Speaker 1 (13:09):
I'll give you another .
Speaker 2 (13:09):
I'll give you a really good example on how you
can figure this out.
We talk about all the time asbusiness owners.
You're trying to get out ofyour business instead of in your
business.
Day to day, right On, not in.
Call your CPA or youraccountant anywhere from
February to April and see if youcan go grab a two-hour lunch
with them.
You won't be able to, why?
Because they're in theirbusiness.
Most accountants, and eventhose who own the accounting
(13:34):
firm, have not set theirbusiness up to work on their
business instead of in and youcan figure this out just by
trying to get a dinner with themor lunch with them during tax
season, that's a good point.
Speaker 1 (13:44):
See how stressed out they are.
Speaker 2 (13:46):
Yeah, and so you want to take business advice from
somebody who is still working intheir business after 30 years?
Speaker 1 (13:51):
That's a great point.
That is a great great point.
I never even thought of that.
No, that that's 100%.
Somebody has a there's a sayingit says never take financial
advice from someone broker thanyou, right, and I was like
that's great advice.
Well, you just dropped anotherthing Like why would you take
business advice on not having towork in your company Right From
(14:13):
someone who's still working intheir company?
Speaker 2 (14:16):
Yeah, exactly.
And again, you need differentskill sets, right?
Just like you don't need to goto your heart doctor every month
for a checkup, but when youhave a heart problem you need
that heart doctor, right?
Your main doctor is not goingto do the job.
There are the tax accountants.
I refer clients of ours to taxaccounts all the time because
tax accounting is its own thing.
It's a totally different gameand I'm not an expert in that.
(14:36):
So I will rely on the expertsto help me and my clients
navigate the tax field.
And you know how do we do thisthat my client wants to do.
But that's a very differentskill than month to month.
Not only how do I have cleanbooks in an efficient way, but
that's just the past.
Right, accounting is the past.
What happened?
You want to know what happenedin a clean way.
(14:58):
But then where the accountantstypically struggle is great.
Here's the data.
Now what do I do with it?
As a business owner, I don't.
You know.
I don't know what to do withthis data.
What action items do I need totake over the next month to
improve these numbers?
Again, we'll use the medicalanalogy.
A lot of accounts are reallygood at taking the blood, taking
your weight, taking your height, getting your, getting your
metrics in.
(15:18):
But then what happens next?
Right, instead of just givingthat to the patient of hey, you
know your cholesterol is up, ok,doc, do I work out more?
Do I sleep more?
Do I change my eating habits?
Do I take more tests?
What do I?
What am I looking for nextmonth?
Right?
And so when you're working witha good CFO or a good controller
, that's what you're getting.
(15:40):
We're taking your reports, we'remaking sure they're clean,
which most businesses are not,but we're making sure they're
clean and accurate.
But then the important part isthe value you get from those
reports.
Adam, your business did $2million in profit last year, but
you paid a million and a halfthrough debt, so you have
$500,000 in free cashflow.
(16:00):
What are we doing with that?
Let's look at four differentinvestment opportunities.
Let's run the ROI on each ofthose and then let's put a
budget and projection togetherto say how do we get a million
dollars in free cashflow nextyear?
That's the value, or it's hey,you're losing money, and here's
why.
And when we compare you to yourcompetitors, here's what
they're doing and you're not.
And if you do this, here's whatwe think what's going to happen
(16:22):
, and so we recommend takingthese three action items over
the next month.
In a month we're going to talk.
Did you do those action items?
Did we see the change we wantedto see?
What do we do the followingmonth?
That's what a good cfo andfinancial partner in your
business does not just hey, wehave clean accounting for you.
Good luck, we'll see you in amonth.
Speaker 1 (16:39):
Yeah, I mean it's kind of like a business partner.
I mean you're the CFO, which ispart of the business generally,
and would you know the CEO isgoing to listen to their
recommendations.
So it's like, hey, there's justnot enough revenue.
They want to make some sales.
I mean that's usually theproblem not enough revenue and
also cash flow.
I mean you know you mentionedon your website too, and
(17:00):
everybody deals with it.
I don't think a lot of peopleunderstand.
You know, maybe they have agood year or maybe have a good
month or something, but that badmonth can bite you in the butt.
I mean, look what's going onright now with a lot of
businesses service businesses.
You know luxury type businesses, a lot of businesses, service
businesses.
You know luxury type businesses.
Those are, you know, thingsthat aren't necessary.
(17:22):
People are cutting back rightnow.
Even the wealthy they'recutting back.
So you might've been livinghigh on the hog and you're
really expensive strip mall in anice neighborhood and all that.
Well, people aren't coming intothe door like they were two
years ago.
So now you've got to worry.
You know, can I pay the rent,like, do you have a cashflow
solution?
And what do you normallyrecommend to people?
Speaker 2 (17:42):
The first thing is education, and so this was
another thing that I didn't seeaccountants or business
professionals helping businessowners with.
Again, teach a man to fish.
Don't just catch the fish andgive it to him, right.
And so everybody who's goinginto business, the language of
business, is accounting.
You don't just catch the fishand give it to them, right, and
so everybody who's going intobusiness, the language of
business, is accounting.
You don't need to have amaster's degree in accounting.
You don't need to do accounting24 seven.
You don't even need to do yourown business as accounting, but
(18:03):
you should understand the basicprinciples of accounting,
because it's the language ofbusiness.
For trying to get into business, you should know the basic
understanding of how accountingworks and what it is.
And so when we talk free cashflow, we don't.
We're not.
We're not talking about revenue.
We're not talking about moneycoming in the door.
We're not talking about profit,right?
(18:23):
There's a lot of profitablecompanies out there that lose
cash on a monthly basis.
If you don't know how that'spossible and you've had an
accountant, they've done you adisservice.
And if you are wondering whythat's possible, it's well,
because stuff happens.
Cash is spent after the incomestatement exists on the balance
sheet.
You have to look at both.
If you're not looking at yourP&L and your balance sheet and
(18:45):
your cash flow statement atleast quarterly.
If the business is more seriousthan you know, monthly and
weekly I can have a milliondollars in profit.
If I spend a million and a halfon my debt servicing, I'm
losing $500,000 of cash.
And the kicker is you don't gettaxed on cash, you get taxed on
income, and so if you have amillion dollars of income and
(19:06):
you spent it all on debt, thegovernment will still come to
you and say hey, we, you owe usthree to 400 grand.
So the first thing we do isdoes the business owner
understand that you understand?
Do we understand and again,we're not going to go super
detailed, but do you understandthe basics of financial
statements and the keyindicators to look for and why
cash is not revenue or profit?
And then, once that's oncethat's you know, talked about
(19:29):
and discussed and understood,it's okay.
What is your free cashflowright?
Where's the benchmark?
I get so frustrated withconsultants and coaches who give
advice and never look at thefinancials.
I don't know if you'veexperienced that, but it's
always that's always sointeresting to me.
Yeah, wild yeah, and so um, andso it's it's education, it's
(19:49):
where are we now?
And then it's walking through aplan on how do we improve that
right?
And building a financial baseto weather the storm.
And positive free cash flow.
Positive free cash flow eachmonth is so important because it
allows you to reduce how muchmoney you need to keep aside for
emergencies, right?
If you know fairly certainlythat you're going to have
(20:13):
positive free cash flow, even ifit's a dollar, if you know
you're going to have a dollarmore in July than you will in
June, you need to keep lessmoney aside because you know
it's going to be a dollar more,not $2,000 less.
The companies that go up anddown are the companies where the
business owners are scared andkeep 3x what they need to in the
bank, and so the problem withdoing that if you have $200,000
(20:35):
in the bank or $50,000 in thebank and you only needed 10,
again, typically most smallbusinesses are not C-corps,
right?
So they're flow pass-throughentities, and so what that means
is, if you have $50,000 in yourbusiness bank account by the
end of the year, you've paid taxon all of that income, but the
cash is still in the businessbank account, it still doesn't
(20:56):
hit you as the business owner,even though you've paid tax on
that money.
And so and you're keeping thatmoney there because you're going
up and down cashflow wise eachand every month.
And so if you can get thatamount that you're keeping to a
normal, healthy amount, you cantake that cash that you've
already paid tax on and eitherinvest it in your business or
you take it out.
You can take that cash thatyou've already paid tax on and
either invest it in yourbusiness or you take it out,
(21:18):
build your personal financialbase and you invest it
personally.
Speaker 1 (21:21):
Wow, yeah, I mean you already, every day you don't
invest that money, I mean you'relosing.
Speaker 2 (21:26):
I said, if it's just in the bank.
Speaker 1 (21:28):
You're not making much of anything on it unless
you got it in like some kind oftreasury account or something
that's paying a decent amountright now.
But most people aren't going todo that.
Now we're talking about cashflow.
We're talking about cash.
I don't think a lot of peopleeven understand on the personal
side of things.
When you're a business owner, alot of times you don't live
above your means.
(21:48):
I don't know too many businessowners, especially ones that are
two or three years in theirbusiness, that as soon as they
start the business they have agood month or they have a good
year or something.
They go out and they buy abunch of stuff.
Speaker 2 (22:00):
Right.
Speaker 1 (22:00):
I just I see people living below their means.
You know being smart about howthey spend their money, but
every once in a while you'll geta business owner that you know
they want to live out in thenice neighborhood, they want to
get a nice car.
They kind of their personaldesires get in the way of the
ups and downs of running abusiness and you just can't let
(22:21):
that happen either.
Speaker 2 (22:22):
No, and in that vein, one of the most important
things that we do with all ofour clients when we start
working with them, we separatethe business from the personal
and I work with.
I work with with clients oftenwhen we start and the business
is paying for personal expensesright, and so if somebody else
were to buy the business, wouldthey spend that same expense,
(22:45):
right?
If the answer is no, then itreally shouldn't be coming out
of the business, because youwant to get true and real
business metrics, but then alsoyou want to have the business
take care of itself and thepersonal take care of itself.
And if you need $5,000 a monthto live personally, great, the
business can cut a check for$5,000, $6,000 a month.
And then if the business growsand sustains and can pay you
(23:07):
more, then, just as if you werean employee of your own business
, the business can give you araise or an extra dividend check
a year and then, when that'sconsistent, then you can slowly
increase, you know, your cost ofliving.
Where I see people get introuble is they increase their
cost of living personallythrough the business.
Right?
So the business buys a nicercar.
The business starts paying forthe cell phones.
(23:29):
The business has more stuffthat's personal, and so then it
never goes to the person.
Right, you've intermingled andthen, when stuff starts to get
shaky, you now have to eitherput money back or you're like,
wow, where's all this moneycoming from?
I don't know where it is.
I feel like I'm never beingable to pay the bills.
It's because you didn't silo,silo consistently and scale
(23:52):
things as if you were anemployee of your own business.
The business can afford to giveyou a raise.
The business gives you a raise.
If it can't, you know thatyou're getting paid consistently
and you're able to pay yourbills.
Speaker 1 (24:02):
That's right.
Speaker 2 (24:03):
And when you have to pay your, when you have to give
yourself a raise, you would onlydo that if the business can
truly afford it.
The problem with paying forstuff right out of the business
is you think I just gotthis100,000 contract, I'm rich,
let me go buy this new car.
Well, that's on revenue andthat's not a continuous thing,
right?
And so now you just loaded upthe business with more expenses
and now it can't give you theraise.
(24:24):
But if you said to yourselfahead of time if could I cut
myself a hundred thousand dollarcheck right now, you wouldn't
because you can't.
And so if you can't do it, thenyou can't do it in the future.
You're just saving yourself thepain of the decision in the
middle there.
Speaker 1 (24:38):
That's right.
That's right.
Now people are probablylistening to this and they're
wondering man, this sounds likehe's doing a lot of work and I'm
, you know, a young business orwhatever.
What kind of money do they needto have?
Or is there?
Is there a target?
I'm sure there is a target thatyou have.
Do they have to be a newbusiness or can they be a new
business?
Do they have to be a three,four-year-old business?
Do they have to be doing a halfmillion in revenue?
(24:59):
Like, who are you looking towork with?
Speaker 2 (25:02):
I mean our typical clients are, are, uh, doing, you
know, seven figures in revenue.
Um, our, our largest clientsare doing nine.
Um, but I talked to anybody inthe business world and, um, um,
I'm happy to take a free call,free, you know, I'll review your
financials free, give you someadvice, like I love seeing
entrepreneurs succeed and I loveseeing business people, you
(25:24):
know, kick some butt.
And so I love talking to peoplein the business world and I've
helped a lot of businesses whoare just starting and then, a
couple of years later, they nowhave the revenue and the
infrastructure where they say,hey, now we can actually work
together kind of on a on aconsistent basis.
And so if you're, if you'relooking to see are my financials
correct, how to read a P and Lor balance sheet, or how do I
(25:47):
think about personal finance andbusiness finance, or, you know,
is my accountant doing theright thing?
Shoot me an email, we'll book aquick, a 30 minute zoom, I'll
look at your financials, I'lltell you.
And then you know, go kick somebutt and come back.
Come back a couple of yearslater and say, hey, now we can,
now we can work in a biggerengagement.
Speaker 1 (26:03):
Yeah, here's how you're going to make money so
that I, you can be a client ofmine here.
Let me help you out a littlebit.
Exactly, you know what?
Like I say, we do good work forgood people right.
Speaker 2 (26:17):
So all entrepreneurs and business owners are the best
group of people that I've met,and so when you do good work for
them, even if it's for free,because they're just starting
out, they may know a businessowner who's 10 X where they are
and they say, hey, look, theyjust helped me out.
You should, you should callthem up, right, that's how most
of our businesses is.
Uh, is gotten this throughreferral and then, um, you know,
(26:39):
it's just the best sort ofmarketing is a really good
product, right?
And so people remember hey,that advice you gave me a couple
of years ago worked and youknow, now I'm ready to work with
you.
But we also, you know, youmentioned earlier being a
partner in people's businesses.
This is why we don't have anysort of contracts.
We're month to month with allof our clients.
If we ever don't provide thevalue we say we're going to each
(27:01):
and every month, a business canleave at any time.
We want to have to earn ourkeep month in and month out.
We want to make sure we'reincentivized correctly in the
structures there to helpbusiness owners, not drag them
with a six month contract of,hey, you're going to pay us this
and here's the services we'regoing to do is you're going to
pay us this on a monthly basis,and here's the problems we're
going to solve.
And if we don't solve it, thengo find somebody who can,
(27:23):
because we don't want to be aburden to you.
Speaker 1 (27:25):
Well, and see, this is one thing I also learned.
Running businesses is, uh,that's actually good for the
customer, right, so yourcustomers are benefiting, but
it's actually hurting youbecause if you ever wanted to
sell your firm, you don't havecontracts in place.
But it's like, look, that'spart of our businesses to not
treat people like that, it's notto lock people into something
that they don't think they'regetting value out of.
If we're not delivering value,then don't use us anymore, I
(27:46):
mean, it's that simple and youknow you're kind of taking an L
to benefit your customers and Idon't think people understand
that.
Speaker 2 (27:54):
Yeah, yeah, and and and the risk is there.
The counter to that is becausethe relationships are much more
holistic and, from a trulysupportive way, they're actually
much tighter and it's astronger relationship than you
know we would have had if wedidn't kind of interact that way
.
And so it's a it's a longerterm approach where short term
(28:14):
it might it might hurt us, butlong-term it will win out,
because when you treat peoplelike humans, good, you know good
things will come back to you.
Speaker 1 (28:22):
And that's right.
Yeah, and I mean people areafraid that their business isn't
going to be open next month,regardless.
Like oh, I got this year longcontract, I have tied in with uh
, with these guys and I got toworry about that.
Or it's just as bad as having alease.
Like you got a lease you wantto get out of and you can't.
Maybe you want to go into abetter space or whatever and you
can't get out of that lease.
You're going to end up foranother year or two years.
(28:43):
I mean that's.
That's rough when you get intothose kinds of positions.
But I mean it sounds likeyou're you're treating people
right.
So what kind of?
I don't know if you want totalk about costs or is there a
percentage?
Or like how does that kind ofwork with a fractional CFO?
Cause you hire a full-time CFO,you're paying crazy money.
That's why fractional CFOsexist.
Speaker 2 (29:02):
Yeah, you know, I mean, it really depends on kind
of where they are in there.
You know, a hundred milliondollar company is going to have
a totally different you knowstructure with us than somebody
who's just kind of starting out.
A typical engagement will looksomething like you know, we have
a free coffee intro session.
Then, you know, we will sendyou an onboarding retainer and
that's just to make sure we'reprotected on time.
(29:22):
We get paid before we, you know, put a lot of time into it and
the client knows okay, look,I'll put a few thousand dollars
into this because everybodywants clean financials and you
mentioned this earlier.
But then when it becomes, hey,you have three years of bad data
and it's going to cost us Xamount to clean up, then you've
got to make this decision canyou afford it and do you really
want to do that?
And so by having that retainer,it allows both sides to say all
(29:44):
right, we can step our toes inthe water, we can see the lay of
the land and then we can kindof better understand what are we
really getting into and do wewant that Once we work through
the onboarding and we've cleanedthe financials to a place where
we can work month to month,then we have a fixed monthly
cost that doesn't reallyincrease unless the scope of
work changes dramatically.
And it's not based on time, it'snot based on how many times you
(30:06):
call me.
You can call me, text me, emailme, work with the team as often
as you want to provide thevalue that we're telling you
we're going to provide, as oftenas you want to provide the
value that we're telling youwe're going to provide.
And you know a typical cost fora small business.
You know that on the smallerside of ours is, you know,
between one and five thousanddollars a month.
Oh, wow, ok, yeah.
Speaker 1 (30:26):
Yeah, do you ever work with companies like?
So I'll just throw myself outas an example I own an ad agency
, right yeah, I also.
The ad agency is inside of myco-working building that I own,
which has its own set of revenue, and I've got rental properties
and I've got, you know, an STRdown in Miami and I do Turo.
(30:47):
I rent my car out on the side,you know, and so you got all
these things and they allseparate bank accounts, right,
yeah, but I file everything kindof like you know me, and I
think a lot of people do thattoo.
So do you work with, like, ifyou're looking, say you know,
you're like, oh man, I onlyreally work with people that are
over this amount of money.
Would you take on like four orfive?
Speaker 2 (31:09):
So you're actually a typical client in that case
because, uh yeah, side hustlesand a lot of real estate, a lot
of real estate, right?
And so the reason of this isbecause it gets complicated or
harder to keep organized quickerthan you know.
If you're running just like ageneral store, you know, I mean,
I'm happy to talk with you,show your financials, but
(31:31):
there's just, there's not a lotof complexity there, you know.
It kind of is just like, well,hey, spend less here, make some
money here, you know, good luck.
But when you have enough eithersize or complexity, that's
where we can really provide alot of value.
And so we have 35 clients thatwe work with on a monthly basis.
Of those 35 clients, there's250 businesses underneath of
(31:53):
them, right?
So that that that kind of willshow you that most of our
clients are, you know we'retalking have, you know, a dozen
plus entities and the other, youknow, kind of where we got
started is there's not a lot ofhelp out there for those people,
right?
So if you have a Merrill Lynchaccount, let's say, or a TD
(32:15):
account or something like that,they can give you in a snapshot
here's your net worth, here'syour holdings, everything's on a
nice clear presentation badabing, bada boom.
If you're in the private world,there is no one giving you.
Hey, here's a snapshot of yourportfolio.
And so that's what we started todo.
Is we said okay, adam has thesefive businesses, we're going to
(32:35):
make sure we have theaccounting for those five
businesses.
We have software that we usethat will pull the accounting
from all those five businesses.
Put that into the software thatwe use, creates reports based
on your entire portfolio and itwill give you a dashboard to see
in Adam's portfolio, just likeyour Merrill Lynch would.
How's your portfolio doing?
What's your operationalperformance?
We can go buy business.
(32:56):
We can go whole portfolio ingeneral.
Right, is your whole portfoliocash flowing to you on a monthly
basis?
But then dive deeper Is eachentity cash flowing to you on a
monthly basis and, if so, what'sthe best return?
Because that's where you canput more money in next time.
Speaker 1 (33:11):
And so, like damn Adam, why do you drink so much
coffee?
Like you should stop going toStarbucks, Right.
Speaker 2 (33:17):
Right, or or hey, this real estate did three times
better than this one.
Why, right?
But when?
What happens when?
When?
When business owners have thatmany side hustles or that many
entities, money flows all aroundand they just think, well, it's
investing it, you know moving,somehow it's making me money,
but it may not be.
You don't really know that.
And so by actually looking ateach one and making sure that
(33:40):
we're we truly understand howthe portfolio and the specific
businesses are doing, you canthen make better decisions for
what to do next.
Speaker 1 (33:47):
Yeah, totally.
Oh, I love it, man.
That's, that was a big questionI had for you.
And how do people reach out toyou?
I mean, you've got the website.
I mean, are you?
You're on LinkedIn?
I'm sure people can kind of hityou up there.
Yeah, your background andthings like that.
Speaker 2 (34:01):
Yeah, you can read on our website.
We have a bunch of differentcase studies and blogs on like
exactly what we've done withbusinesses before.
So in your example, you canactually go see how we've done
and we lay it all out right?
We want people to be assuccessful as possible, and so
you can read a ton about us onour website,
wwwfoxandpartnerscom, and thenyou can just search for me,
hurley Fox, on LinkedIn.
(34:22):
Thankfully there's not thatmany of them, and so I'll come
right up.
Those are the two biggest waysto find me.
And then just kind of one lastword I would say to your
audience who is maybe they'reworking a full-time job and
they're looking and they'retrying to start a business on
the side, right?
So I would say first, if youare not personally budgeting and
(34:43):
personally tracking your networth each month, start there.
Use your personal financials togive you a really good 101 of
finance, because it's not thatmuch different than business and
that will teach you the basicsfor the business when you get
into.
So, essentially, take care ofyour own house first and then
(35:04):
you can expand, right?
So if you're not personallybudgeting, how do you really
know what you want from thebusiness, what you need from the
business.
How do you know how much moneyyou need to set aside to give
you six months of emergency fund?
And so make sure you have apersonal budget, make sure you
have a personal financial planwith your family, make sure your
personal house is secure bythat I mean very little debt,
(35:25):
good emergency fund and goodcash flow and then expand out to
the business and the sidehustle.
Track the same metrics there.
What's my free cash flow?
What's the business's accountsdoing on the balance sheet?
A net worth statement.
Your personal net worthstatement is a balance sheet.
Your personal budget is the P&L.
And so if you think about thosetwo things and you kind of
(35:46):
master on the personal side,that gives you a really good
first step into the businessworld.
And then you start that withyour side hustle.
That will impact your personalfinancials.
And then, once you get to aplace where you can say either
the business can run on its ownor it can support me fully, or
hey, you know I've reached mypersonal goals and so now I can
jump off in a more secure place,that's a really good first step
(36:08):
.
You know, I think a lot ofpeople want to jump into the fun
stuff of the businesses.
Let me make a website.
Get cards, go get sales.
Well, take care of your.
Take care of the boring stuffon the personal side first, and
you'll just be much, much betteroff.
Speaker 1 (36:20):
I've never heard it explained like that.
That does make sense about youknow your balance sheet versus
your P and L, right?
Like those things being likeyeah, your net worth is your
balance sheet.
What, how much money do youhave?
How many assets do you have?
And then, on the other side ofthat, how much debt do you have?
Right, that's a balance sheet.
And then your PNL, obviouslylike, what do you?
You know what's going on everymonth, what's happening, like,
(36:41):
how much money are you spending?
And, uh, you know what do yougot in the bank and things like
that.
So, yeah, that's a really goodway to explain it.
And using your personalfinances books or anything basic
accounting for business peopleor anything that a course or
something on YouTube maybe theyshould look up.
There's a lot of YouTube's areally good place to start.
(37:02):
You've got some case studiesand things on your site.
Speaker 2 (37:05):
Yeah, we've got some case to.
I mean, you know, I think it'shard.
On the book front, there's nota lot of good technical
accounting books that, like theart you know, the audience would
want to read, I'm sure, and so,and so you know a couple good
ones.
You know, like profit first isa good book that is not super
(37:25):
technical in the accounting sidebut kind of hints at some
accounting concepts, the biggestone being, you know, focus on
profit and cashflow over revenue, and so that's one that's
readable, readable that doesdiscuss some accounting concepts
.
But I would say the mosteffective way to learn would be
take care of your personalfinancials first.
(37:46):
That's it.
Get a personal budget in place.
That's a P&L, get a personalnet worth.
If you're starting a businessand you don't know how much
personal debt you have and whatyou're personally paying, what
are all your loans, interestrates, right.
If you don't know that stuff,don't kind of expand before you
know that.
And what's why I like to usethat as a good first step or a
(38:06):
good kind of teaching mechanism,is it relates to them very
deeply, right?
If I'm talking about generalbusiness income statements,
everyone here is going to fallasleep.
But if I'm talking about yourpersonal budget or net worth,
you're interested.
Oh man, I have a 15% loan andmy student loans are 10% and I
(38:26):
have a credit card loan of 22%.
My auto loan is six.
I never really knew that before, but seeing that okay, I now
kind of know which ones I wantto pay for first, or whoa.
This is my monthly payment andhow much is going to interest.
That's a lot.
Or you run the personal budgetA lot of people you know.
An exercise I like to do withpeople is, before we even look
at any bank statements oranything, what do you think you
spend in food a month?
People say 500 bucks.
Then you look at the budget,it's like two grand, right, and
(38:48):
so that $1,500 is where themoney is going.
When you're saying I make allthis money is where the money is
going.
When you're saying, I make allthis money, but how do I not
have cash in the bank Because ofstuff like that?
And if you have a personalbudget, you will know where your
personal money's going.
Same thing will happen in thebusiness world.
I have all this revenue.
Why don't I have money in thebank?
Look at the P&L, that'll tellyou.
Look at the balance sheet andthe cashflow statement.
(39:08):
That'll tell you, and so youknow it's it.
That's a really good first stepand that's how I would
recommend learning kind ofaccounting is.
Do your own personal budget andnet worth statement first.
If you're still interested andyou're not asleep yet, then
start just searching for someterms of you know why cash
doesn't equal profit, why youknow cash, how to how to
(39:31):
understand cashflow, how to reada profit and loss right.
What's the difference betweengross margin and profit margin
Things like that.
What's EBITDA?
Speaker 1 (39:39):
Yeah, ebitda, nobody knows.
They think it's gross profit.
It's like EBITDA mean, I don'tunderstand it.
So, yeah, it's just basic termsthat people throw around in the
business world that you have tounderstand and you have to know
where those come from.
And working with a guy likeHurley here, we'll, uh we'll
help you out a lot and you'llget those nice little, uh clean
reports at the end of the month,the end of the quarter, the end
(40:00):
of the year, uh, that help youmake sense of what's going on.
Well, hurley man, we reallyappreciate you being on today.
And again, guys go to fox andpartnerscom and make sure you
reach out to Hurley.
Thanks a lot, hurley.
Thanks so much for having me.
Adam, thanks for joining us onthis week's episode of Side
Hustle City.
Well, you've heard from ourguests.
(40:21):
Now let's hear from you.
Join our community on FacebookSide Hustle City.
It's a group where people shareideas, share their
inspirational stories andmotivate each other to be
successful and turn their sidehustle into their main hustle.
We'll see you there and we'llsee you next week on the show.
Thank you, bye.
Welcome to Side Hustle City and thanks for
joining us.
Our goal is to help you connectto real people who found
success turning their sidehustle into a main hustle, and
we hope you can too.
I'm Adam Kaler.
I'm joined by Kyle Stevie, myco-host.
Let's get started.
Welcome back, everybody, to theSide Hustle City podcast today,
(00:27):
special guest Hurley Fox,coming to us from New Jersey.
How you doing, hurley?
Speaker 2 (00:32):
I'm awesome, Adam.
How are you?
Speaker 1 (00:34):
I'm excellent.
Been running around all day,been in the car and in meetings,
going from neighborhood toneighborhood meetings.
I've been busy, so hopefullyyou haven't had it as bad as me.
And it's hot out today, hot out.
Speaker 2 (00:48):
We have a bunch of rain and I've also been running
around meeting after meeting.
Oh no, but you've been runningin the rain.
That's worse, I know it is, itis, it is.
Speaker 1 (00:57):
Hey, man, it's great to have you on the show.
So you run a firm Fox andPartners and guys, you can check
that out.
Do a little Google search forit, but it's foxandpartnerscom
Pretty easy to find.
But essentially you helpbusinesses with the hardest part
of owning a business, with thefinance part and helping them
(01:18):
understand how to position theircompany for sale Potentially,
uh, you offer outsource CFOservices.
Uh, you know.
Full package of things that asan entrepreneur, as someone who
can attest to this, I hate doingthe financial part.
I hate it.
I just want to work on mybusiness all day, early.
I don't want to mess withaccounting.
I don't want to.
You know, I want somebody elseto help me with that that knows
(01:41):
what the heck they're doing.
Speaker 2 (01:42):
Yeah, I feel you, and that's how I.
I worked at a smallconstruction management firm for
a few years and then I went togo work at an accounting firm
because I was doing some of theaccounting business, all the
business stuff of theconstruction management firm.
I was doing that.
Everybody else is doing theconstruction management part,
and and so then I had anopportunity to go work at an
(02:02):
accounting firm.
I went to go work there.
When I was at that accountingfirm, I realized what you just
said.
There was just a huge voidbetween business professionals
accountants, lawyers, financialplanners etc.
And business owners.
And the business professionalsweren't really helping the
business owners with what theytruly need help with.
Right, they were filing the tax, but were they even asking a
(02:29):
question of hey, was this whatyou wanted to do?
What are your goals for nextyear?
Why is this year worse thanlast year, et cetera.
And so there was just this needout there where the business
owners needed this help withstuff they don't want to be
doing.
Right, the boring stuff of, hey,do you keep stuff organized, do
you look at your financials?
And then the gap between thatand what the business
professionals were kind ofcaring about, which is just
checking their boxes off, right?
Hey, the returns filed, thebookkeeping is done, you're good
(02:52):
, you have perfect accountingand you're losing money.
What's the point, right?
So we exist in that, in thatmiddle ground between the kind
of the accounting and businessprofessional world and the
entrepreneur business ownerworld, and we're in the middle
and we're acting as a liaisonbetween the two.
(03:15):
The firm where what we do eachmonth kind of get our foot in
the door with people is we dothe monthly accounting for
businesses, right?
So anything monthly that'sgoing on with your business and
that could be bookkeeping, ar,ap, monthly closeout, monthly
controller duties and monthlyCFO building reports, all that
fun stuff, we do all that.
We don't do tax returns andfinancial planning, but we act
as the liaison, making sure thatthey're all talking amongst
(03:37):
each other and kind ofcommunicating that and putting
that into the jargon that thebusiness owner understands and
is looking for, right, yes, so,yeah, we exist between that
space between those businessprofessionals and the business
owner, because they often theytalk past each other.
Speaker 1 (03:53):
Just send me my balance sheet and my yearly
report and show me that.
And that's what I want to know.
How well did my business do?
What do I owe in taxes?
You know, that's what I want tobe concerned about.
And then also, I mean, let'stalk about this A lot of
business owners guys, if you'reout there and you're thinking
about starting a business, thisis literally the most.
You have to understand this.
(04:14):
It is so hard as a businessowner to get a loan because you
don't have a W-2.
Yeah, you're, you're.
You may be 1099 in everybodythat you're working with, you
may have a 1099 yourself orwhatever, but all the monies, if
you're a solopreneur, you gotall this money coming in.
You don't have a W-2 from a bigcompany.
(04:36):
You're probably trying to writeoff as much as you possibly can
and at the end of the year itlooks like you have no money.
So what happens when you go outand try to try to get a loan
from a bank?
They're going to tell you likeit looks like you don't have
enough money to put gas in thecar.
Talk a little bit about that.
I mean, I'm sure everybody isdealt with this.
Speaker 2 (04:55):
Yeah, so, and again, that's why it starts with what
are your goals right?
Because then you want tostructure the financials and
your business around what thosegoals are right.
If it's to save money on taxes,then you know having that
income.
You know be lower is not theworst thing, but it'll bite you
when you go and try to get aloan.
So I'll just give a personalstory.
I went to go.
(05:15):
We bought a house last year.
But a couple of years ago, whenI first started to look at
buying a house, I went to gotalk to the banks.
Hey, look, I want to kind ofline up and get pre-approved.
They said, okay, great, we neednot only this year's P&L
balance sheet and forecastedincome okay, which they don't
even really look at.
They look at last year's P&Land balance sheet and the year
(05:39):
before that and they took theaverage of the two years.
So just think about howfrustrating that is for a
business owner.
I was, I was doing business inthat year.
I was going to do you know, thebusiness was going to do seven
figures right and I was going todo pretty well.
And but the year before I didokay, but the year before that I
did terribly right In terms ofwhere the bank, what the bank
was looking at.
(06:00):
So, even though I knew I wasgoing to do well into six
figures in that year, theydidn't really look at that at
all they took.
You know, 2019 and 2020 incomeat the the forecast was was 10 X
what that average was.
They took that average Rightand so it took me.
(06:29):
So I couldn't get a loan.
You know the way I wanted forum for another year, cause I had
to let that back year kind oftime out to get the average up.
So you know, that's somethingwhere, even if you are planning
in there, like if, if you're in2024 right now and you think you
got it all together well, ifyou are planning in there, like
if you're in 2024 right now andyou think you got it all
together, well, if you didn'tplan correctly in 2022, which is
two years ago, which, whenyou're running your own business
(06:51):
and stuff is like eons ago, ohman, that's what the banks look
at, and so that was reallyfrustrating for me.
Kind of experiencing that waswas just like man, you're not
looking at the right thing, butthat's what they look at.
That's how banks today, youknow they have their checklist.
It's not about personalrelationships anymore.
(07:11):
It's about do you fit thesoftware's checklist and if you
don't, you will not get approved.
Speaker 1 (07:17):
That's interesting.
So really the software is theirunderwriter in a way.
Speaker 2 (07:22):
Oh, yeah, software is their underwriter in a way.
Oh yeah, yeah, I mean they're,they're.
They're the days of you knowingthe banker and the and the
local bank and them saying, well, look, your numbers are okay,
but we know that you work forso-and-so and we've known your
family for a while and you know,we know your customers, so
we're going to kind of give youa little bit of wiggle room here
.
That's all.
That's all.
You know.
(07:43):
That doesn't happen anymore.
It's they send it, they havetheir.
This is what we need to see inorder to approve it, and if you
don't meet that criteria, you donot get approved.
Speaker 1 (07:52):
Wow, scumbags, the bank's the worst.
And you don't know what theircriteria are.
So you can't really prepare forit.
And I'm glad you're telling usbecause I never knew that, like
I knew, they asked for the lastcouple of years.
Sometimes they asked for threeyears.
Yeah, and you know, mycoworking space is an example,
right, we signed a bunch ofleases last year.
Not a lot of people wanted tobe in an office.
(08:14):
You know, a couple of years ago, during the pandemic, right?
Yeah, so yeah, the samesituation you were through, you
were having that we had, right,we had a great year last year.
We're going to have a greatyear this year.
And you know, passive income,the income is twice as much,
(08:35):
actually almost two thirds, whatthe expenses are.
If you take out the loan right,that I already have, you know
you want to refinance it orsomething like that.
And it's tough because you knowif I went to go get a loan,
they'd be like, well, this andthat, and blah, blah, blah.
And you look at 2019, look at2020, well, they do 21, 22.
But same issue, right, andpeople gotta understand this
(08:57):
kind of stuff and have a planahead of time.
That's why, when you go and youstart a company, you wanna
start working with a competentaccountant immediately.
I would say I mean, you don'twant to be in there messing
around like, because then whenyou go to work with a competent
accountant they're going to lookat your stuff that you did in
quickbooks the last two yearsand it's going to take them eons
(09:18):
to go through.
All the bad accounting you didis, yeah, you know, uh, the the
you know barbershop owner whodoesn't know what they're doing.
Right, and it's just going tocost you more money.
Speaker 2 (09:29):
Yeah, and, and you know two things there, right,
and I would say working with acompetent accountant is a really
good step.
The problem with accountantsthat I've seen all of my clients
that I have have always hadaccountants before they came to
us Right, and the problem with alot of accountants is the same
problem with the bankers howmany bankers and accountants own
(09:51):
their own business?
And the answer is not a lot.
And you are a business owner oryou're a business, you're,
you're, you're trying to becomea business owner and you're
talking to people who are givingyou advice, who have not done
and do not do what you're tryingto do, and so, like from the
bank, we're trying to get theloan.
You know, how frustrating it isto talk, to talk to somebody who
(10:13):
has no skin in the game, whohas never had their own business
, and they're telling you heylook, we can't pre-preview and
the we is a black box that theydon't even know.
And then on the accountant side, the account you know most
accountants don't own and runtheir own business and don't
think entrepreneurially, and sothey're structuring your books
just to make sure again thatthey're checking the boxes is
(10:34):
was office supplies correctlycategorized in office supplies
and QuickBooks, and that's greatand they keep you organized and
there's a there's a science toaccounting and you need
accountants.
However, you want to make surethat when you're talking to and
getting advice on how do I scalethis business, how do I grow
this business, that theaccountant either thinks
entrepreneurially or has more ofa business sense and can help
(10:57):
you do that than mostaccountants do, because I've
seen a lot of entrepreneurs fallinto the trap of they're only
talking to their CPA for allthings business advice, and I
would highly suggest getting adiverse range of opinions, just
like if you were in the medicalfield.
Right, I consider us businessgeneral practitioners.
We're your daily contact, right, for all the day-to-day stuff
(11:23):
you'll come in, you'll get yourcheckup here's your numbers, all
that stuff and then we willtell you hey, you know what you
need to see a specialist.
We're going to.
You know, your tax situation isreally unique.
Here's a tax accountant that wework with that we're going to
pair you up with.
Hey, you need a certain amountof financial planning.
Here's a financial planner thatwe connect you with.
And you're talking just like inthe medical world you would get
different opinions.
(11:44):
You should be getting differentopinions on your, on your
business and on your business'saccounting.
Speaker 1 (11:50):
I love that.
Well, okay, so this brings usto something, cause maybe I'm
using the term incorrectly.
So what separates your firmfrom just a regular accounting
firm?
I mean what?
How do you?
You're saying we're, we'refractional CFOs.
Yeah, how does a fractional CFOdiffer from an accountant for
the random person out there?
The basic person hasn't starteda business yet is thinking
(12:10):
about it.
Explain the difference.
Speaker 2 (12:13):
Yeah.
So again, these are generalterms.
So I'm sure there are accountsout there who are saying I'm a
really good CFO and there aredefinitely accounts who are good
CFOs out there, but generallyfor most small businesses, the
accountants that we areinteracting with are tax
accountants or, um, or you know,like managerial accountants.
(12:35):
Okay, and what that means isthey are, from a tax perspective
, they're just filing the taxesfor your business, right?
And that is a different skillthan monthly business accounting
, which is a different skillthan kind of what a CFO needs to
have.
So, again, using the medicalworld as an analogy, you
(12:57):
wouldn't go to your heart doctorif your foot was hurting you,
but that's what most people aredoing in the business world by
going to their tax accountantfor advice on how to grow their
business.
Speaker 1 (13:09):
I'll give you another .
Speaker 2 (13:09):
I'll give you a really good example on how you
can figure this out.
We talk about all the time asbusiness owners.
You're trying to get out ofyour business instead of in your
business.
Day to day, right On, not in.
Call your CPA or youraccountant anywhere from
February to April and see if youcan go grab a two-hour lunch
with them.
You won't be able to, why?
Because they're in theirbusiness.
Most accountants, and eventhose who own the accounting
(13:34):
firm, have not set theirbusiness up to work on their
business instead of in and youcan figure this out just by
trying to get a dinner with themor lunch with them during tax
season, that's a good point.
Speaker 1 (13:44):
See how stressed out they are.
Speaker 2 (13:46):
Yeah, and so you want to take business advice from
somebody who is still working intheir business after 30 years?
Speaker 1 (13:51):
That's a great point.
That is a great great point.
I never even thought of that.
No, that that's 100%.
Somebody has a there's a sayingit says never take financial
advice from someone broker thanyou, right, and I was like
that's great advice.
Well, you just dropped anotherthing Like why would you take
business advice on not having towork in your company Right From
(14:13):
someone who's still working intheir company?
Speaker 2 (14:16):
Yeah, exactly.
And again, you need differentskill sets, right?
Just like you don't need to goto your heart doctor every month
for a checkup, but when youhave a heart problem you need
that heart doctor, right?
Your main doctor is not goingto do the job.
There are the tax accountants.
I refer clients of ours to taxaccounts all the time because
tax accounting is its own thing.
It's a totally different gameand I'm not an expert in that.
(14:36):
So I will rely on the expertsto help me and my clients
navigate the tax field.
And you know how do we do thisthat my client wants to do.
But that's a very differentskill than month to month.
Not only how do I have cleanbooks in an efficient way, but
that's just the past.
Right, accounting is the past.
What happened?
You want to know what happenedin a clean way.
(14:58):
But then where the accountantstypically struggle is great.
Here's the data.
Now what do I do with it?
As a business owner, I don't.
You know.
I don't know what to do withthis data.
What action items do I need totake over the next month to
improve these numbers?
Again, we'll use the medicalanalogy.
A lot of accounts are reallygood at taking the blood, taking
your weight, taking your height, getting your, getting your
metrics in.
(15:18):
But then what happens next?
Right, instead of just givingthat to the patient of hey, you
know your cholesterol is up, ok,doc, do I work out more?
Do I sleep more?
Do I change my eating habits?
Do I take more tests?
What do I?
What am I looking for nextmonth?
Right?
And so when you're working witha good CFO or a good controller
, that's what you're getting.
(15:40):
We're taking your reports, we'remaking sure they're clean,
which most businesses are not,but we're making sure they're
clean and accurate.
But then the important part isthe value you get from those
reports.
Adam, your business did $2million in profit last year, but
you paid a million and a halfthrough debt, so you have
$500,000 in free cashflow.
(16:00):
What are we doing with that?
Let's look at four differentinvestment opportunities.
Let's run the ROI on each ofthose and then let's put a
budget and projection togetherto say how do we get a million
dollars in free cashflow nextyear?
That's the value, or it's hey,you're losing money, and here's
why.
And when we compare you to yourcompetitors, here's what
they're doing and you're not.
And if you do this, here's whatwe think what's going to happen
(16:22):
, and so we recommend takingthese three action items over
the next month.
In a month we're going to talk.
Did you do those action items?
Did we see the change we wantedto see?
What do we do the followingmonth?
That's what a good cfo andfinancial partner in your
business does not just hey, wehave clean accounting for you.
Good luck, we'll see you in amonth.
Speaker 1 (16:39):
Yeah, I mean it's kind of like a business partner.
I mean you're the CFO, which ispart of the business generally,
and would you know the CEO isgoing to listen to their
recommendations.
So it's like, hey, there's justnot enough revenue.
They want to make some sales.
I mean that's usually theproblem not enough revenue and
also cash flow.
I mean you know you mentionedon your website too, and
(17:00):
everybody deals with it.
I don't think a lot of peopleunderstand.
You know, maybe they have agood year or maybe have a good
month or something, but that badmonth can bite you in the butt.
I mean, look what's going onright now with a lot of
businesses service businesses.
You know luxury type businesses, a lot of businesses, service
businesses.
You know luxury type businesses.
Those are, you know, thingsthat aren't necessary.
(17:22):
People are cutting back rightnow.
Even the wealthy they'recutting back.
So you might've been livinghigh on the hog and you're
really expensive strip mall in anice neighborhood and all that.
Well, people aren't coming intothe door like they were two
years ago.
So now you've got to worry.
You know, can I pay the rent,like, do you have a cashflow
solution?
And what do you normallyrecommend to people?
Speaker 2 (17:42):
The first thing is education, and so this was
another thing that I didn't seeaccountants or business
professionals helping businessowners with.
Again, teach a man to fish.
Don't just catch the fish andgive it to him, right.
And so everybody who's goinginto business, the language of
business, is accounting.
You don't just catch the fishand give it to them, right, and
so everybody who's going intobusiness, the language of
business, is accounting.
You don't need to have amaster's degree in accounting.
You don't need to do accounting24 seven.
You don't even need to do yourown business as accounting, but
(18:03):
you should understand the basicprinciples of accounting,
because it's the language ofbusiness.
For trying to get into business, you should know the basic
understanding of how accountingworks and what it is.
And so when we talk free cashflow, we don't.
We're not.
We're not talking about revenue.
We're not talking about moneycoming in the door.
We're not talking about profit,right?
(18:23):
There's a lot of profitablecompanies out there that lose
cash on a monthly basis.
If you don't know how that'spossible and you've had an
accountant, they've done you adisservice.
And if you are wondering whythat's possible, it's well,
because stuff happens.
Cash is spent after the incomestatement exists on the balance
sheet.
You have to look at both.
If you're not looking at yourP&L and your balance sheet and
(18:45):
your cash flow statement atleast quarterly.
If the business is more seriousthan you know, monthly and
weekly I can have a milliondollars in profit.
If I spend a million and a halfon my debt servicing, I'm
losing $500,000 of cash.
And the kicker is you don't gettaxed on cash, you get taxed on
income, and so if you have amillion dollars of income and
(19:06):
you spent it all on debt, thegovernment will still come to
you and say hey, we, you owe usthree to 400 grand.
So the first thing we do isdoes the business owner
understand that you understand?
Do we understand and again,we're not going to go super
detailed, but do you understandthe basics of financial
statements and the keyindicators to look for and why
cash is not revenue or profit?
And then, once that's oncethat's you know, talked about
(19:29):
and discussed and understood,it's okay.
What is your free cashflowright?
Where's the benchmark?
I get so frustrated withconsultants and coaches who give
advice and never look at thefinancials.
I don't know if you'veexperienced that, but it's
always that's always sointeresting to me.
Yeah, wild yeah, and so um, andso it's it's education, it's
(19:49):
where are we now?
And then it's walking through aplan on how do we improve that
right?
And building a financial baseto weather the storm.
And positive free cash flow.
Positive free cash flow eachmonth is so important because it
allows you to reduce how muchmoney you need to keep aside for
emergencies, right?
If you know fairly certainlythat you're going to have
(20:13):
positive free cash flow, even ifit's a dollar, if you know
you're going to have a dollarmore in July than you will in
June, you need to keep lessmoney aside because you know
it's going to be a dollar more,not $2,000 less.
The companies that go up anddown are the companies where the
business owners are scared andkeep 3x what they need to in the
bank, and so the problem withdoing that if you have $200,000
(20:35):
in the bank or $50,000 in thebank and you only needed 10,
again, typically most smallbusinesses are not C-corps,
right?
So they're flow pass-throughentities, and so what that means
is, if you have $50,000 in yourbusiness bank account by the
end of the year, you've paid taxon all of that income, but the
cash is still in the businessbank account, it still doesn't
(20:56):
hit you as the business owner,even though you've paid tax on
that money.
And so and you're keeping thatmoney there because you're going
up and down cashflow wise eachand every month.
And so if you can get thatamount that you're keeping to a
normal, healthy amount, you cantake that cash that you've
already paid tax on and eitherinvest it in your business or
you take it out.
You can take that cash thatyou've already paid tax on and
either invest it in yourbusiness or you take it out,
(21:18):
build your personal financialbase and you invest it
personally.
Speaker 1 (21:21):
Wow, yeah, I mean you already, every day you don't
invest that money, I mean you'relosing.
Speaker 2 (21:26):
I said, if it's just in the bank.
Speaker 1 (21:28):
You're not making much of anything on it unless
you got it in like some kind oftreasury account or something
that's paying a decent amountright now.
But most people aren't going todo that.
Now we're talking about cashflow.
We're talking about cash.
I don't think a lot of peopleeven understand on the personal
side of things.
When you're a business owner, alot of times you don't live
above your means.
(21:48):
I don't know too many businessowners, especially ones that are
two or three years in theirbusiness, that as soon as they
start the business they have agood month or they have a good
year or something.
They go out and they buy abunch of stuff.
Speaker 2 (22:00):
Right.
Speaker 1 (22:00):
I just I see people living below their means.
You know being smart about howthey spend their money, but
every once in a while you'll geta business owner that you know
they want to live out in thenice neighborhood, they want to
get a nice car.
They kind of their personaldesires get in the way of the
ups and downs of running abusiness and you just can't let
(22:21):
that happen either.
Speaker 2 (22:22):
No, and in that vein, one of the most important
things that we do with all ofour clients when we start
working with them, we separatethe business from the personal
and I work with.
I work with with clients oftenwhen we start and the business
is paying for personal expensesright, and so if somebody else
were to buy the business, wouldthey spend that same expense,
(22:45):
right?
If the answer is no, then itreally shouldn't be coming out
of the business, because youwant to get true and real
business metrics, but then alsoyou want to have the business
take care of itself and thepersonal take care of itself.
And if you need $5,000 a monthto live personally, great, the
business can cut a check for$5,000, $6,000 a month.
And then if the business growsand sustains and can pay you
(23:07):
more, then, just as if you werean employee of your own business
, the business can give you araise or an extra dividend check
a year and then, when that'sconsistent, then you can slowly
increase, you know, your cost ofliving.
Where I see people get introuble is they increase their
cost of living personallythrough the business.
Right?
So the business buys a nicercar.
The business starts paying forthe cell phones.
(23:29):
The business has more stuffthat's personal, and so then it
never goes to the person.
Right, you've intermingled andthen, when stuff starts to get
shaky, you now have to eitherput money back or you're like,
wow, where's all this moneycoming from?
I don't know where it is.
I feel like I'm never beingable to pay the bills.
It's because you didn't silo,silo consistently and scale
(23:52):
things as if you were anemployee of your own business.
The business can afford to giveyou a raise.
The business gives you a raise.
If it can't, you know thatyou're getting paid consistently
and you're able to pay yourbills.
Speaker 1 (24:02):
That's right.
Speaker 2 (24:03):
And when you have to pay your, when you have to give
yourself a raise, you would onlydo that if the business can
truly afford it.
The problem with paying forstuff right out of the business
is you think I just gotthis100,000 contract, I'm rich,
let me go buy this new car.
Well, that's on revenue andthat's not a continuous thing,
right?
And so now you just loaded upthe business with more expenses
and now it can't give you theraise.
(24:24):
But if you said to yourselfahead of time if could I cut
myself a hundred thousand dollarcheck right now, you wouldn't
because you can't.
And so if you can't do it, thenyou can't do it in the future.
You're just saving yourself thepain of the decision in the
middle there.
Speaker 1 (24:38):
That's right.
That's right.
Now people are probablylistening to this and they're
wondering man, this sounds likehe's doing a lot of work and I'm
, you know, a young business orwhatever.
What kind of money do they needto have?
Or is there?
Is there a target?
I'm sure there is a target thatyou have.
Do they have to be a newbusiness or can they be a new
business?
Do they have to be a three,four-year-old business?
Do they have to be doing a halfmillion in revenue?
(24:59):
Like, who are you looking towork with?
Speaker 2 (25:02):
I mean our typical clients are, are, uh, doing, you
know, seven figures in revenue.
Um, our, our largest clientsare doing nine.
Um, but I talked to anybody inthe business world and, um, um,
I'm happy to take a free call,free, you know, I'll review your
financials free, give you someadvice, like I love seeing
entrepreneurs succeed and I loveseeing business people, you
(25:24):
know, kick some butt.
And so I love talking to peoplein the business world and I've
helped a lot of businesses whoare just starting and then, a
couple of years later, they nowhave the revenue and the
infrastructure where they say,hey, now we can actually work
together kind of on a on aconsistent basis.
And so if you're, if you'relooking to see are my financials
correct, how to read a P and Lor balance sheet, or how do I
(25:47):
think about personal finance andbusiness finance, or, you know,
is my accountant doing theright thing?
Shoot me an email, we'll book aquick, a 30 minute zoom, I'll
look at your financials, I'lltell you.
And then you know, go kick somebutt and come back.
Come back a couple of yearslater and say, hey, now we can,
now we can work in a biggerengagement.
Speaker 1 (26:03):
Yeah, here's how you're going to make money so
that I, you can be a client ofmine here.
Let me help you out a littlebit.
Exactly, you know what?
Like I say, we do good work forgood people right.
Speaker 2 (26:17):
So all entrepreneurs and business owners are the best
group of people that I've met,and so when you do good work for
them, even if it's for free,because they're just starting
out, they may know a businessowner who's 10 X where they are
and they say, hey, look, theyjust helped me out.
You should, you should callthem up, right, that's how most
of our businesses is.
Uh, is gotten this throughreferral and then, um, you know,
(26:39):
it's just the best sort ofmarketing is a really good
product, right?
And so people remember hey,that advice you gave me a couple
of years ago worked and youknow, now I'm ready to work with
you.
But we also, you know, youmentioned earlier being a
partner in people's businesses.
This is why we don't have anysort of contracts.
We're month to month with allof our clients.
If we ever don't provide thevalue we say we're going to each
(27:01):
and every month, a business canleave at any time.
We want to have to earn ourkeep month in and month out.
We want to make sure we'reincentivized correctly in the
structures there to helpbusiness owners, not drag them
with a six month contract of,hey, you're going to pay us this
and here's the services we'regoing to do is you're going to
pay us this on a monthly basis,and here's the problems we're
going to solve.
And if we don't solve it, thengo find somebody who can,
(27:23):
because we don't want to be aburden to you.
Speaker 1 (27:25):
Well, and see, this is one thing I also learned.
Running businesses is, uh,that's actually good for the
customer, right, so yourcustomers are benefiting, but
it's actually hurting youbecause if you ever wanted to
sell your firm, you don't havecontracts in place.
But it's like, look, that'spart of our businesses to not
treat people like that, it's notto lock people into something
that they don't think they'regetting value out of.
If we're not delivering value,then don't use us anymore, I
(27:46):
mean, it's that simple and youknow you're kind of taking an L
to benefit your customers and Idon't think people understand
that.
Speaker 2 (27:54):
Yeah, yeah, and and and the risk is there.
The counter to that is becausethe relationships are much more
holistic and, from a trulysupportive way, they're actually
much tighter and it's astronger relationship than you
know we would have had if wedidn't kind of interact that way
.
And so it's a it's a longerterm approach where short term
(28:14):
it might it might hurt us, butlong-term it will win out,
because when you treat peoplelike humans, good, you know good
things will come back to you.
Speaker 1 (28:22):
And that's right.
Yeah, and I mean people areafraid that their business isn't
going to be open next month,regardless.
Like oh, I got this year longcontract, I have tied in with uh
, with these guys and I got toworry about that.
Or it's just as bad as having alease.
Like you got a lease you wantto get out of and you can't.
Maybe you want to go into abetter space or whatever and you
can't get out of that lease.
You're going to end up foranother year or two years.
(28:43):
I mean that's.
That's rough when you get intothose kinds of positions.
But I mean it sounds likeyou're you're treating people
right.
So what kind of?
I don't know if you want totalk about costs or is there a
percentage?
Or like how does that kind ofwork with a fractional CFO?
Cause you hire a full-time CFO,you're paying crazy money.
That's why fractional CFOsexist.
Speaker 2 (29:02):
Yeah, you know, I mean, it really depends on kind
of where they are in there.
You know, a hundred milliondollar company is going to have
a totally different you knowstructure with us than somebody
who's just kind of starting out.
A typical engagement will looksomething like you know, we have
a free coffee intro session.
Then, you know, we will sendyou an onboarding retainer and
that's just to make sure we'reprotected on time.
(29:22):
We get paid before we, you know, put a lot of time into it and
the client knows okay, look,I'll put a few thousand dollars
into this because everybodywants clean financials and you
mentioned this earlier.
But then when it becomes, hey,you have three years of bad data
and it's going to cost us Xamount to clean up, then you've
got to make this decision canyou afford it and do you really
want to do that?
And so by having that retainer,it allows both sides to say all
(29:44):
right, we can step our toes inthe water, we can see the lay of
the land and then we can kindof better understand what are we
really getting into and do wewant that Once we work through
the onboarding and we've cleanedthe financials to a place where
we can work month to month,then we have a fixed monthly
cost that doesn't reallyincrease unless the scope of
work changes dramatically.
And it's not based on time, it'snot based on how many times you
(30:06):
call me.
You can call me, text me, emailme, work with the team as often
as you want to provide thevalue that we're telling you
we're going to provide, as oftenas you want to provide the
value that we're telling youwe're going to provide.
And you know a typical cost fora small business.
You know that on the smallerside of ours is, you know,
between one and five thousanddollars a month.
Oh, wow, ok, yeah.
Speaker 1 (30:26):
Yeah, do you ever work with companies like?
So I'll just throw myself outas an example I own an ad agency
, right yeah, I also.
The ad agency is inside of myco-working building that I own,
which has its own set of revenue, and I've got rental properties
and I've got, you know, an STRdown in Miami and I do Turo.
(30:47):
I rent my car out on the side,you know, and so you got all
these things and they allseparate bank accounts, right,
yeah, but I file everything kindof like you know me, and I
think a lot of people do thattoo.
So do you work with, like, ifyou're looking, say you know,
you're like, oh man, I onlyreally work with people that are
over this amount of money.
Would you take on like four orfive?
Speaker 2 (31:09):
So you're actually a typical client in that case
because, uh yeah, side hustlesand a lot of real estate, a lot
of real estate, right?
And so the reason of this isbecause it gets complicated or
harder to keep organized quickerthan you know.
If you're running just like ageneral store, you know, I mean,
I'm happy to talk with you,show your financials, but
(31:31):
there's just, there's not a lotof complexity there, you know.
It kind of is just like, well,hey, spend less here, make some
money here, you know, good luck.
But when you have enough eithersize or complexity, that's
where we can really provide alot of value.
And so we have 35 clients thatwe work with on a monthly basis.
Of those 35 clients, there's250 businesses underneath of
(31:53):
them, right?
So that that that kind of willshow you that most of our
clients are, you know we'retalking have, you know, a dozen
plus entities and the other, youknow, kind of where we got
started is there's not a lot ofhelp out there for those people,
right?
So if you have a Merrill Lynchaccount, let's say, or a TD
(32:15):
account or something like that,they can give you in a snapshot
here's your net worth, here'syour holdings, everything's on a
nice clear presentation badabing, bada boom.
If you're in the private world,there is no one giving you.
Hey, here's a snapshot of yourportfolio.
And so that's what we started todo.
Is we said okay, adam has thesefive businesses, we're going to
(32:35):
make sure we have theaccounting for those five
businesses.
We have software that we usethat will pull the accounting
from all those five businesses.
Put that into the software thatwe use, creates reports based
on your entire portfolio and itwill give you a dashboard to see
in Adam's portfolio, just likeyour Merrill Lynch would.
How's your portfolio doing?
What's your operationalperformance?
We can go buy business.
(32:56):
We can go whole portfolio ingeneral.
Right, is your whole portfoliocash flowing to you on a monthly
basis?
But then dive deeper Is eachentity cash flowing to you on a
monthly basis and, if so, what'sthe best return?
Because that's where you canput more money in next time.
Speaker 1 (33:11):
And so, like damn Adam, why do you drink so much
coffee?
Like you should stop going toStarbucks, Right.
Speaker 2 (33:17):
Right, or or hey, this real estate did three times
better than this one.
Why, right?
But when?
What happens when?
When?
When business owners have thatmany side hustles or that many
entities, money flows all aroundand they just think, well, it's
investing it, you know moving,somehow it's making me money,
but it may not be.
You don't really know that.
And so by actually looking ateach one and making sure that
(33:40):
we're we truly understand howthe portfolio and the specific
businesses are doing, you canthen make better decisions for
what to do next.
Speaker 1 (33:47):
Yeah, totally.
Oh, I love it, man.
That's, that was a big questionI had for you.
And how do people reach out toyou?
I mean, you've got the website.
I mean, are you?
You're on LinkedIn?
I'm sure people can kind of hityou up there.
Yeah, your background andthings like that.
Speaker 2 (34:01):
Yeah, you can read on our website.
We have a bunch of differentcase studies and blogs on like
exactly what we've done withbusinesses before.
So in your example, you canactually go see how we've done
and we lay it all out right?
We want people to be assuccessful as possible, and so
you can read a ton about us onour website,
wwwfoxandpartnerscom, and thenyou can just search for me,
hurley Fox, on LinkedIn.
(34:22):
Thankfully there's not thatmany of them, and so I'll come
right up.
Those are the two biggest waysto find me.
And then just kind of one lastword I would say to your
audience who is maybe they'reworking a full-time job and
they're looking and they'retrying to start a business on
the side, right?
So I would say first, if youare not personally budgeting and
(34:43):
personally tracking your networth each month, start there.
Use your personal financials togive you a really good 101 of
finance, because it's not thatmuch different than business and
that will teach you the basicsfor the business when you get
into.
So, essentially, take care ofyour own house first and then
(35:04):
you can expand, right?
So if you're not personallybudgeting, how do you really
know what you want from thebusiness, what you need from the
business.
How do you know how much moneyyou need to set aside to give
you six months of emergency fund?
And so make sure you have apersonal budget, make sure you
have a personal financial planwith your family, make sure your
personal house is secure bythat I mean very little debt,
(35:25):
good emergency fund and goodcash flow and then expand out to
the business and the sidehustle.
Track the same metrics there.
What's my free cash flow?
What's the business's accountsdoing on the balance sheet?
A net worth statement.
Your personal net worthstatement is a balance sheet.
Your personal budget is the P&L.
And so if you think about thosetwo things and you kind of
(35:46):
master on the personal side,that gives you a really good
first step into the businessworld.
And then you start that withyour side hustle.
That will impact your personalfinancials.
And then, once you get to aplace where you can say either
the business can run on its ownor it can support me fully, or
hey, you know I've reached mypersonal goals and so now I can
jump off in a more secure place,that's a really good first step
(36:08):
.
You know, I think a lot ofpeople want to jump into the fun
stuff of the businesses.
Let me make a website.
Get cards, go get sales.
Well, take care of your.
Take care of the boring stuffon the personal side first, and
you'll just be much, much betteroff.
Speaker 1 (36:20):
I've never heard it explained like that.
That does make sense about youknow your balance sheet versus
your P and L, right?
Like those things being likeyeah, your net worth is your
balance sheet.
What, how much money do youhave?
How many assets do you have?
And then, on the other side ofthat, how much debt do you have?
Right, that's a balance sheet.
And then your PNL, obviouslylike, what do you?
You know what's going on everymonth, what's happening, like,
(36:41):
how much money are you spending?
And, uh, you know what do yougot in the bank and things like
that.
So, yeah, that's a really goodway to explain it.
And using your personalfinances books or anything basic
accounting for business peopleor anything that a course or
something on YouTube maybe theyshould look up.
There's a lot of YouTube's areally good place to start.
(37:02):
You've got some case studiesand things on your site.
Speaker 2 (37:05):
Yeah, we've got some case to.
I mean, you know, I think it'shard.
On the book front, there's nota lot of good technical
accounting books that, like theart you know, the audience would
want to read, I'm sure, and so,and so you know a couple good
ones.
You know, like profit first isa good book that is not super
(37:25):
technical in the accounting sidebut kind of hints at some
accounting concepts, the biggestone being, you know, focus on
profit and cashflow over revenue, and so that's one that's
readable, readable that doesdiscuss some accounting concepts
.
But I would say the mosteffective way to learn would be
take care of your personalfinancials first.
(37:46):
That's it.
Get a personal budget in place.
That's a P&L, get a personalnet worth.
If you're starting a businessand you don't know how much
personal debt you have and whatyou're personally paying, what
are all your loans, interestrates, right.
If you don't know that stuff,don't kind of expand before you
know that.
And what's why I like to usethat as a good first step or a
(38:06):
good kind of teaching mechanism,is it relates to them very
deeply, right?
If I'm talking about generalbusiness income statements,
everyone here is going to fallasleep.
But if I'm talking about yourpersonal budget or net worth,
you're interested.
Oh man, I have a 15% loan andmy student loans are 10% and I
(38:26):
have a credit card loan of 22%.
My auto loan is six.
I never really knew that before, but seeing that okay, I now
kind of know which ones I wantto pay for first, or whoa.
This is my monthly payment andhow much is going to interest.
That's a lot.
Or you run the personal budgetA lot of people you know.
An exercise I like to do withpeople is, before we even look
at any bank statements oranything, what do you think you
spend in food a month?
People say 500 bucks.
Then you look at the budget,it's like two grand, right, and
(38:48):
so that $1,500 is where themoney is going.
When you're saying I make allthis money is where the money is
going.
When you're saying, I make allthis money, but how do I not
have cash in the bank Because ofstuff like that?
And if you have a personalbudget, you will know where your
personal money's going.
Same thing will happen in thebusiness world.
I have all this revenue.
Why don't I have money in thebank?
Look at the P&L, that'll tellyou.
Look at the balance sheet andthe cashflow statement.
(39:08):
That'll tell you, and so youknow it's it.
That's a really good first stepand that's how I would
recommend learning kind ofaccounting is.
Do your own personal budget andnet worth statement first.
If you're still interested andyou're not asleep yet, then
start just searching for someterms of you know why cash
doesn't equal profit, why youknow cash, how to how to
(39:31):
understand cashflow, how to reada profit and loss right.
What's the difference betweengross margin and profit margin
Things like that.
What's EBITDA?
Speaker 1 (39:39):
Yeah, ebitda, nobody knows.
They think it's gross profit.
It's like EBITDA mean, I don'tunderstand it.
So, yeah, it's just basic termsthat people throw around in the
business world that you have tounderstand and you have to know
where those come from.
And working with a guy likeHurley here, we'll, uh we'll
help you out a lot and you'llget those nice little, uh clean
reports at the end of the month,the end of the quarter, the end
(40:00):
of the year, uh, that help youmake sense of what's going on.
Well, hurley man, we reallyappreciate you being on today.
And again, guys go to fox andpartnerscom and make sure you
reach out to Hurley.
Thanks a lot, hurley.
Thanks so much for having me.
Adam, thanks for joining us onthis week's episode of Side
Hustle City.
Well, you've heard from ourguests.
(40:21):
Now let's hear from you.
Join our community on FacebookSide Hustle City.
It's a group where people shareideas, share their
inspirational stories andmotivate each other to be
successful and turn their sidehustle into their main hustle.
We'll see you there and we'llsee you next week on the show.
Thank you, bye.
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