July 16, 2025 • 42 mins
Your business might show a healthy profit on paper — but why does your bank account still feel empty? In this eye-opening episode, Avi Pinsky, founder & CEO of Pinsky Consulting and a sought-after fractional CFO, uncovers the hidden reasons so many business owners struggle with cash flow despite seeing "profits" in their statements.
Avi explains the real difference between profit and cash, breaking down the three essential financial statements every business owner needs to understand: the profit & loss statement, the balance sheet, and — most importantly — the statement of cash flows. You'll discover why the cash flow statement is often ignored but tells the true story of your business health.
Through relatable stories and real-world examples, Avi shares how accounts receivable delays and inventory buildup quietly drain your cash, even while your P&L looks strong. You'll also learn his powerful six-step cycle for business growth — a clear, actionable framework to turn financial data into better decisions, stronger cash flow, and sustainable success.
Feeling embarrassed about messy books? You're not alone. Avi shares why perfection isn’t the goal, and why understanding trends matters far more than having every number exactly right.
If you want to gain true financial clarity, stop feeling cash-strapped, and start making confident growth decisions, this episode is a must-listen.
Avi Pinksky: Founder & CEO of Pinsky Consulting
Website: https://www.pinskyconsulting.com/
LinkedIn: https://www.linkedin.com/in/avrahampinsky/
Prosperity Playbook: https://www.pinskyconsulting.com/prosperity-playbook
#BusinessFinances #CashFlow #SmallBusinessGrowth #ProfitVsCash #FractionalCFO #FinancialClarity #PinskyConsulting #EntrepreneurTips #BusinessStrategy #KnowYourNumbers #AviPinsky #PinskyConsulting #BusinessGrowth #SmallBusinessPivots #MichaelDMorrison #BusinessPodcast #OklahomaBusiness #BOSS #BusinessCoach #OklahomaCity
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All right, welcome to another Small Business Pivots,
where we well, where I alwayssay, where we have special
guests from around the world.
But today, if you're in the US,we literally have someone from
around the world.
But I know business owners arethe only ones that can say their
name and their business likethey can.
So I let you introduce yourselfso we can say it correctly.
(00:22):
Moving forward, I'll let youhave the floor.
Speaker 2 (00:31):
Sounds good.
So I'm Avi Pinsky.
I'm originally.
I'm from Los Angeles, born andborn and raised in Los Angeles.
I went to school in the NewYork area where I met my wife,
so we lived in New York for alittle while as well, so I got
both coasts in.
About almost nine years ago wemoved to Israel, so we are now
international.
Speaker 1 (00:45):
Wow, what got you to move?
You just like to move.
If you went from LA to New York, that's already a big move in
culture and everything, believeit or not, I actually hate
moving.
Speaker 2 (00:58):
I hate packing up all my stuff.
We've done it like five or sixtimes, but I hate moving.
I just go where I need to go.
What brought us to Israel is, Iguess I guess you could call it
a religious calling.
We both spent a post highschool gap year here and fell in
love with it.
Once we got married, we bothknew we were going to come back.
It was just a matter of time.
So it took about five or sixyears and then we made the jump.
Speaker 1 (01:22):
Awesome, awesome.
Well, how do you think we'regoing to help our small business
owners today with our content?
Speaker 2 (01:29):
Yeah.
So I like to talk about theimportance of understanding your
numbers and your finances andhow to use those to get the data
and the information that'sneeded to make the right
decisions in your business sothat it can grow.
Oftentimes, business ownersdon't really look at their
numbers.
If they do, they don't reallyunderstand them.
Even less often do they knowwhat to do with that
(01:50):
understanding.
So I have a process that Iteach people by which they can
use that data where they'regrowing their business, based on
information and on facts,instead of their gut intuition
and their feelings, whichsometimes might be right,
sometimes it might be wrong.
Speaker 1 (02:07):
Most of the time it's wrong.
Speaker 2 (02:10):
Yes, as a business.
I didn't want to say it but youwere.
Speaker 1 (02:13):
You were trying to be polite.
I'm I'm a business coach.
I get brutal about numbers.
Anyone that's listened to ourshow before.
I'm not an accountant, but Iunderstand financials and it is
critical, critical, essentialthat you have clear, accurate
numbers.
So let's introduce the showreal quick and we'll be right
(02:33):
back.
Welcome to Small Business Pivots, a podcast produced for small
business owners.
I'm your host, Michael Morrison, founder and CEO of Boss, where
we make business ownershipsimplified for success.
Our business is helping yoursgrow.
Boss offers business loans withbusiness coaching support.
(02:56):
Apply in minutes and getapproved and funded in as little
as 24 to 48 hours atbusinessownershipsimplifiedcom.
All right, welcome back toSmall Business Pivots.
Let's get going, becausenumbers are important and I know
as a business coach, if youdon't have clear, accurate
(03:19):
numbers, you cannot make wisedecisions.
You cannot make wise decisions.
So your business website saysyou have a simple cycle to grow
your business.
Where do you want to start?
Because, or maybe we just startwith what are financials and
what do they tell you?
Because, like you mentionedearlier, most business owners
(03:40):
use their bank account todetermine the health of their
business, if they can buysomething or not or hire an
employee or not, and you werekind of, you didn't say it quite
like that, but you addressed it.
So let's talk about thefinancials, what they tell you.
Speaker 2 (03:54):
Yeah.
So the way that I look at thefinancials is that it's a.
It's a way to look at thehistory and gain insight into
what happened, what went rightand what went wrong.
Once you have that information,then you can figure out what
the path is forward so that morethings can go right, which
(04:17):
things can have the biggestimpact if we change them based
on the numbers.
If I look back at the historyand I say our prices are too low
, so if I can raise my pricessome way, so that's going to
change my history.
It's a matter of understandingwhat that history tells you in
terms of making differentdecisions going forward, so that
(04:39):
things look up instead ofrepeating themselves time and
time again and we get out ofthat vicious cycle of, you know,
maybe taking out a loan, losingout all that money or wasting
that money.
It's a matter of making betterdecisions based on the facts and
the circumstances.
So if you can understand yourfinances, if you can read your
(05:02):
financials, it gives you thataccurate understanding of what
happened so that you can knowwhat finances.
If you can read your financials, it gives you that accurate
understanding of what happenedso that you can know what to do
about it.
Speaker 1 (05:10):
Most business owners that we come across have heard
of a P&L, but we like to usethree different financials for
decision-making, and that's thebalance sheet, the statement of
cash flows and the P&L.
Can you explain just shortlywhat each of those do, Because I
know business owners have seenthem and it's just a printed
(05:32):
page to them and they don'treally understand how to use
them or what they're for.
Speaker 2 (05:37):
Exactly, yeah, exactly, and most of them are
more familiar with the P&L,sometimes the balance sheet, but
most of them have no clue whata statement of cash flows is and
unfortunately, that tells themajority of the story.
So if you're not getting thatthird piece of the puzzle,
you're missing a huge chunk.
So, briefly, what they are, p&lis going to show you a
(06:00):
timeframe, what happens in termsof revenue and expenses.
So usually it's looked at on ayearly basis.
You can look at it on a monthly, quarterly, whatever you want.
It's going to show you how muchrevenue came in during that
time, how many expenses went outduring that time and what was
left.
Hopefully, yeah.
Speaker 1 (06:19):
Well, let me ask that .
Let me.
I don't want to interrupt, butI want to ask this question
because every business ownersays, or ask why does it show I
made money?
I don't want to interrupt, butI want to ask this question
because every business ownersays or ask why does it show I
made money, but I don't havemoney in the bank account?
Speaker 2 (06:30):
Exactly so that's where the statement of cash
flows comes in.
We'll get to that in a secondand that's the biggest problem
is that making that jump fromthe P&L to the statement of cash
flows is usually where thingsgo haywire.
They'll look at their accountsand they'll say okay, so my P&L
shows that I made a milliondollars, two million dollars
(06:51):
this year, whatever it is.
A half a million dollars Go tomy banker and my banker says
you're overdrawn.
Speaker 1 (06:57):
So now, what do I do about it right, yes, if you're
lucky, you're at zero.
Speaker 2 (07:03):
So we'll go step by step.
So the P&L is showing over aperiod of time what happened.
The balance sheet is showingyou at any specific point in
time what is a picture of thebusiness.
So, whereas a P&L is over time,a balance sheet is a picture at
a specific moment in time.
Usually you're going to look atthat at the end of a month,
(07:24):
you'll look at it at the end ofa quarter, the end of a year,
whenever it shows all of theassets, liabilities and,
hopefully, equity that's in thebusiness at that specific point
in time.
So if you have machinery, ifyou have inventory excuse me, if
you have computers, whatever itis that you all the things that
(07:46):
you own in the business at thatdate.
So that's going to be on yourasset side.
Anything that you owe to otherpeople, any loans you took out,
any debts that you have, that'llbe on the liabilities section
and anything that's left over.
So that's going to be in theequity section.
But again, it's a snapshot asof a specific date or time or
(08:08):
year.
Whenever it is that you decideto look at it, the statement of
cash flows is going to show youwhere money comes into the
business and where it goes out,and a lot of times that's going
to be the downfall of a businessthat's having cash flow
problems.
You can uncover those if youhave an updated statement of
cash flows and if you understandit and can study it.
(08:30):
One of the biggest issues withthat difference between profits
and cash in the bank canoftentimes be accounts
receivable.
Those are essentially loansthat you're giving out to your
clients that they haven't paidyou back on yet.
So if you have unfavorablepayment terms from your clients,
you're still paying money toyour vendors to service those
(08:55):
clients and to your employeesand to your electric bill, your
overhead all those things you'restill paying in order so that
you can serve your clients, butthe money hasn't come in from
the client yet.
You've essentially just givenan interest or free loan to your
clientele during that period oftime.
So that's going to be revenue,it's going to show up on your
P&L as profit, but it's notactually cash in the bank.
(09:18):
Another big issue, depending onwhat service you provide or what
product you provide, could beinventory.
So if you are building upinventory, you're building more
and more widgets and you'restoring them in your warehouse,
so you're expending on yourmachinery working, on your
(09:40):
workers working.
You're buying more material,more cost of goods sold, but
until you actually sell thatinventory to a third party, to a
client, so that money is justgoing from your bank account and
then sitting on your shelf inthe warehouse.
That's not helping you.
It's not necessarily going toshow up on your P&L.
If you're running an accrualbasis accounting system, which
(10:02):
you should, that's a differentconversation.
So you're not necessarily goingto see it on your P&L but
you're going to see it out ofyour bank account.
So having a good grasp on thisstatement of cash flows can help
you foresee the problems thatare coming down the pipe.
Speaker 1 (10:18):
Can you share the importance of hiring a
professional accountantbookkeeper so that they do have
accurate accounting?
I know a lot of business ownersfor some reason that area of
their business.
They feel like they can go atit alone but that's not helpful.
Can you explain the differencebetween them doing it and a
(10:41):
professional doing it?
Speaker 2 (10:43):
So I don't know if they think that they can go out
alone or they just don't realizethe value that can be added
from someone that really doesunderstand it.
I think that it's somethingthat's not in the forefront of
their brains.
It comes to the forefront ofthe mind around tax time, when
they have to do their taxes andtheir accountant takes care of
that.
Their bookkeeper and theiraccountants figure out their tax
(11:03):
liability and they send a checkto the IRS.
Fine, they don't realize thatthis is something that should be
driving decisions throughoutthe year and should really
possibly change the course ofthe business throughout the year
.
If it's just something in theback of the mind that you're
going to handle once a year,you're going to look at it once
a year.
You're not gaining anything outof it.
(11:24):
Right?
It's like going forward withoutstudying your history.
Eventually, you're going torepeat the past because you're
not going to learn any lessons.
You have to look back at thehistory regularly, not because
the history itself is soimportant, but because you can
learn lessons from it and youneed somebody that can help you
understand those lessons andfigure out how to apply them to
(11:46):
your business going forward.
So, whether you like it or not,every business has somebody
who's in charge of the finances.
It might be one of those hatsthat the owner is wearing that
they don't want to be wearing.
Somebody is going to be thechief financial officer of every
business, no matter how big orhow small.
They might not have thatofficial title, but if they're
the ones that are running thebooks, running the financial
(12:08):
decisions, they are the CFO.
And if they don't understand it, you're missing out on a huge
tool and a huge opportunity inbuilding your business by
understanding those facts,understanding that history and
learning those lessons so thatyou can move it forward.
So you need to bring somebodyon board whether it's your
bookkeeper, your accountant,getting a fractional CFO in to
(12:28):
help you understand it, so thatyou can make the right decisions
and change course where needed.
Speaker 1 (12:34):
I know a lot of business owners are
bootstrapping their business,especially startups and those
that may have fallen upondifficult times.
Is there a benchmark orsuggestion that you can give?
Like, if you're doing X revenue, that would be a good time to
really invest in a outsidebookkeeper, fractional CFO?
(12:56):
Is there a number that it wouldbe beneficial to the business,
Because some of them just don'thave that extra money available?
Speaker 2 (13:05):
Yeah, I would say from the first dollar.
You need somebody who's gettingit Now.
It doesn't always need somebodyfrom the outside that you're
hiring.
There are resources online thatyou can use to understand your
numbers to some extent byyourself, but once your business
is taking up more of your timeand you need to free up some of
(13:28):
your headspace so that you canfocus on other aspects of
growing the business.
So, just like, eventuallyyou're going to hire out a
secretary, you're eventuallygoing to hire out employees to
take care of the client-facingservices, so eventually you're
going to need to outsource thatas well.
It's just a matter of whetheryou have the bandwidth to take
care of it yourself.
(13:49):
If you don't, somebody has totake care of it.
If you can learn it yourselfand your business is still small
enough where you can manage it,so that's great, that's
wonderful.
Those resources are out there.
I have a resource on my websitethat you can download for free
and that'll show you a way toset your goals and to manage
your goals.
(14:09):
But if it's something that youpersonally just don't understand
numbers don't speak toeverybody, I understand that
then you need someone who'sgoing to help you understand it.
Speaker 1 (14:22):
Well, I think a lot of people can relate to some of
your questions or statements onyour website.
Your business relies on you orit falls apart.
You can't grow your businesswithout more cash, but you don't
have more cash to grow.
You don't have a simple way toknow what is and isn't working
in your business and you don'tknow what to do next to grow
your business.
You're here to help, so can youkind of share a little bit?
(14:45):
You're a fractional CFO so youcan be that guide for them, just
like I'm a business coach.
I can guide them on thebusiness side.
But what is your simple cycleto grow your business?
Can you share kind of how thatworks?
Speaker 2 (15:01):
Yeah.
So the cycle that I implementwith my clients, and the one
that I profess to anybody thatwill listen, is that on a yearly
basis, or, if not yearly, ithas to be some sort of regular
basis.
I'm a proponent of doing itannually Towards the end of the
year November, december, startlooking towards the next year,
(15:24):
seeing what it's going to belike, but on that yearly basis.
Setting out your targets.
Like, but on that yearly basis,setting out your targets,
there's anywhere between 10 to15 targets that you can set for
any given business, from theamount of leads you're bringing
in, how well you convert thoseleads, all the way down to what
new debt you're expecting totake out or what withdrawals or
(15:46):
investments are you planning onmaking in the business.
Setting targets for all ofthose 10 to 15 numbers on a
regular annual basis.
That's step number one.
Step number two is on a monthly, maybe bimonthly, basis, you're
going to look and see what didyour business actually do during
the last two, three, fourmonths, wherever we are in the
(16:06):
year.
So, from January 1st until thedate that you're doing that
analysis, how far have I cometowards achieving those goals?
Step number three is going tothen make an estimate for the
remainder of the year, right?
So if right now we're in June,so from June till December,
where do I think the business isgoing?
Keeping in mind any seasonalityto my business, right?
(16:28):
If I run a ski lodge, I'm notexpecting any business coming in
, uh, in July, August andSeptember, probably not October,
maybe not even November, right?
I might be just a December toFebruary type of a type of
business.
Um, so, projecting out based onyour history and your
seasonality, what?
What does the future look likeuntil the end of the year?
Uh, step number four would betaking what you did in two and
(16:50):
three, so basically the wholeyearly picture, based on what
has happened and what I projectto happen, taking that total and
comparing it to the targetsthat I set in the first step.
And so two, three and four, andfive and six as well, I'm going
to be doing on a monthly basis.
Number five is going to besetting goals, figuring out
(17:12):
which of those targets am Iachieving, which ones am I kind
of lagging behind on, and, ofthose ones that I can do
something about, which ones willhave the biggest impact if I do
that thing about them, right?
So if I could bring in moreleads.
Would that even help?
Or am I just blowing everysales call, in which case that's
(17:32):
not really the thing that'sdriving my business down the
tubes?
I have to now focus on my leadconversion.
I have to get some salescoaching or whatever, trying to
figure out which of thosenumbers I can do something about
and, if I did, which would havethe biggest impact.
I'm going to narrow that down totwo, maybe three of the numbers
on my list and then in step six, I'm going to actually list out
(17:56):
what am I going to do in thenext 30 days to accomplish the
goals that I set out in stepfive, right?
So step five I'm determiningwhich of those numbers I want to
set a goal for for the next 30days, and step six is what am I
going to actually do duringthose 30 days to accomplish
those goals?
And then the next month I'mgoing to start again from number
two.
(18:16):
Right, the targets that I setin number one.
Those should last me all yearlong, unless something happens
and I'm realizing I have tochange them or update them or
whatever.
But steps two to six every monthI'm looking again and seeing
what's changed.
Where have we been?
Where are we going?
What can I do about gettingcloser to where I want to be?
(18:39):
And some businesses might notbe moving on a monthly cycle, so
maybe they're really small andthings don't change that much At
least once a quarter to do thiscycle.
Every business, no matter howbig, how small, has to do this
reflection at least once aquarter.
Speaker 1 (18:54):
Yeah, A lot of people don't think of financials as
the scoreboard and that's kindof how you're describing it.
Just like in any sport rightnow.
Currently we're in the NBAfinals in America and everybody
knows who wins by looking at thescoreboard, or who's ahead or
who's behind, and they taketimeouts and they adjust defense
(19:16):
, offense, things like that, andthat's kind of what you're
sharing on your website.
You have a free copy of You'relistening to Small Business
Pivots.
This podcast is produced by mycompany, Boss.
Our business is helping yoursgrow.
Boss offers business loans withbusiness coaching support.
Apply in minutes and getapproved and funded in as little
(19:39):
as 24 to 48 hours atbusinessownershipsimplifiedcom.
If you're enjoying this podcast, don't forget to hit the
subscribe button and share it aswell.
Now let's get back to ourspecial guest.
On your website, you have afree copy of a prosperity
playbook.
How can that help people?
Speaker 2 (20:02):
So yeah, the prosperity playbook.
It helps you with that firststep of setting out the goals,
step of setting out the goals.
And then I actually have inthere something that I call the
scoreboard which helps you withsteps, steps four and, to an
extent, steps five, two andthree you kind of have to track
(20:23):
on your own.
There's ways to do that.
It's not so hard to usually.
Step two is basically your P&Lfrom year to date.
Step three is a little bit moreof guesswork of kind of you
know we can't really predict thefuture.
We can make some educatedguesses on where we think things
are going, uh, but it's.
It takes a little bit moreanalysis, uh.
Step four is a matter ofputting that together and seeing
where are we on the scoreboard.
(20:43):
Right Part of that prosperityplaybook, the last tab in there,
is a scoreboard to see which ofthe goals that I set am I going
to meet, how am I doing in thegame of business, and then you
use that to set steps five'sobjectives and step six's next
steps.
Speaker 1 (21:02):
You mentioned you're in Israel.
What types of businesses do youwork with and where?
Speaker 2 (21:09):
So I work with any English speaking business right.
I uh to an extent I couldpotentially work with uh, with
uh Hebrew speaking businesses.
My Hebrew is not that great, um, but any business across the
world has financials right, eventhough my background is in
accounting, doing taxes for USbusinesses.
The work that I'm doing as afractional CFO or, like I like
(21:33):
to say, business finance doctor,to get your business healthy,
it's universal concepts thattranscend tax law, transcend
local business law.
These are concepts that dateback thousands of years.
Just that idea of assets,liabilities, equities, that P&L
balance sheet statement of cashflows.
These are universal conceptsthat apply to any business, any
(21:57):
size, any industry, in anylocation.
That being said, I do tend towork more with US-based
businesses, just because that'smy background.
Like I said, with US taxation,I'm a recovering accountant, as
I like to say, but I tend togravitate towards the trades
(22:22):
people, the blue collar types ofbusinesses, the home services.
That's kind of the personalitythat I get along with.
The home services.
That's the personality that Iget along with, not to say that
I can't work with other types ofpeople.
I have a client that's a doctor, who does coaching for medical
(22:42):
issues that people have.
There's other industries aswell.
Lawyers need this type of helpas well, because they might know
what it is to practice law andto write up contracts.
When it comes to growing anactual law practice, that's a
whole different ballgame, awhole different animal.
But myself, personally, I liketo look at myself as a
(23:03):
blue-collar type of person in awhite-collar job, so that's kind
of where I gravitate towards.
Speaker 1 (23:09):
I'm curious for a little history lesson, since you
are a recovering accountant.
Do you know where or whenaccounting began?
Is there a system?
Is it a law?
Is it you know?
Where did it come from?
You don't have to give likedetails and names and years, I'm
(23:31):
just curious like how it evenbecame what it is.
Speaker 2 (23:36):
That's a great question and I don't actually
know.
I would love to know the answer.
I do know that these principleshave been around since way way
way back when Three 4,000 years,something like that.
So that is probably one of thefirst things that I'm going to
do as soon as we're done withour call.
Speaker 1 (23:53):
I am too, and I'm sure some listeners are also
it's.
Speaker 2 (23:58):
It is something that I have been curious of lately.
Uh, so I'm I'm definitely goingto look it up so that I'll be
more prepared for that next time.
Speaker 1 (24:05):
Well, you are a fractional CFO, so your business
is probably picture perfect,right, just like mine is
probably, just because I'm abusiness coach.
Wrong, so tell us some thingsthat you've done or experienced
or pivoted in your business sothat others can learn from our
(24:30):
mistakes.
Speaker 2 (24:31):
Picture perfect is.
You know that's a relative term, right?
So, like I said, just like I dowith other people's businesses,
my clientele's businesses, I dowith my own.
I set my own goals.
Now those goals have to besomething that's achievable, and
it also can't be where I'm atcurrently, because that's not a
goal, be something that'sachievable, and it also can't be
where I'm at currently, becausethat's not a goal.
(24:52):
Right, it has to be somethingwhere I'm striving towards.
So it may be that if I werelooking back from five years ago
to my life now, maybe I wouldsay that's picture perfect.
But if I'm in the same placenow, in five years from now,
there's a problem there.
Right, businesses have to grow.
Right.
If your, if your business isnot growing, then it's probably
doing the opposite, right?
(25:13):
I look at life kind of like atreadmill If you're not moving
forward, you're most likelymoving backwards.
So in terms of changes that I'vemade personally, starting this
practice of being a fractionalCFO was a huge jump for me.
I kind of got into accounting Idon't want to say by mistake,
but it certainly wasn't what Iexpected.
(25:35):
It wasn't what I was hoping forwhen I got into it.
I worked in US taxes for abouta dozen years before I came
across this fractional CFO workand it really spoke to me just
from going way, way back to whyI got into accounting was to be
that business doctor, thatfinancial doctor for people.
(25:57):
I'd always expected that itwould be on the personal side,
on the family budgeting, butjust where my career took me, it
took me to the business side ofthings and that's kind of where
I see my fractional CFOpractice going.
But at the end of the day, whenyou're dealing with a small
(26:18):
business owner, they have afamily to feed.
The business is the personal.
So I see that the fulfillmentof helping a family make ends
meet and figuring out what'sgoing wrong and how to fix their
lives from a financialperspective.
That's why I got intoaccounting Again.
(26:39):
Taxes was really not thatavenue, even though I was led to
believe that it could be.
But that's the number onechange that I've made in my
business was just, instead offocusing on taxes and on the
reporting side of accounting,which you know that that's
important, it's needed right,you need somebody to keep to do
the bookkeeping, to do the taxes.
(26:59):
That's.
That's a hundred percentnecessary.
My fulfillment comes fromhelping people change the future
, so that's not as bleak as thepast makes the future seem.
Speaker 1 (27:10):
I see a few books behind you and the Rubik's Cube.
What is?
Some books, or maybe somepodcasts that have helped you
build your business, that youcould share with others.
Speaker 2 (27:24):
Yeah, I was actually just talking to some people
about this today on a grouphuddle that I do on Thursdays,
and we were just talking aboutGood to Great by Jim Collins
concept of knowing where yourlane is and sticking to it, no
matter what that things mightchange.
The world might change.
(27:54):
Ai can come in and you're goingto think it's going to upend
your industry and your wholelife is going to be flipped
upside down.
You might lose your job, youmight lose your practice.
If you have that hedgehogconcept of knowing where in life
you can make a difference forother people, you just have to
keep that in your focus andyou'll then be able to ride the
(28:14):
waves of technology.
And as long as you can figureout how to apply that hedgehog
concept to your new reality,that's the way you're going to
find your path forward.
Really, those three conceptsthat he talks about in the
hedgehog concept are why I gotinto what I'm doing.
(28:37):
The three questions essentiallywhat are you good at?
Where is your skill set?
If you don't have a skill setin a certain area, you're not
going to do very well in thatarea.
What do you enjoy doing?
The number two thing what doyou enjoy doing?
If you don't enjoy your work,how long can you do it before
you burn out?
And the third concept where areyou going to make a difference
(28:59):
in the world?
Where can you add value toother people?
That's where you're going toget clients.
So if you don't have a passionfor something, if you don't have
a skill set in something, or ifwhat you're doing doesn't make
a difference to other people'slives, those three things, they
have to be in harmony in orderto figure out your business.
That's kind of where I got theimpetus to go into this type of
(29:24):
work comes from.
And then when I read it in Goodto Great, that was like an
eye-opener that this is not justa concept that I can apply in
my own personal life, but it's aconcept that every business has
to have as well.
Right?
A business is a living,breathing organism, just like a
person is.
So the business itself has tohave that core concept of
(29:47):
where's it going, has to havethat core concept of you know
where's it going, what's itspathway, in order to survive and
to thrive.
It needs those same threethings it needs a passion, it
needs a skill and it needsclients.
Right, if you're missing in anyof those three things.
The business can't long endure.
Speaker 1 (30:04):
Yeah, speaking of, you mentioned AI, and when this
gets uploaded, your answer couldbe different.
It changes that fast.
What is AI doing to yourindustry in the accounting world
?
It seems to be doing affectingeverybody somehow.
Speaker 2 (30:24):
I mean, where I see it, it's in the grunt work,
sometimes In the accountingworld in general.
It can be in doing thebookkeeping or filling out the
tax forms.
In my specific work, it canhelp with the analysis of the
P&L and of the balance sheet andof the statement of cash flows
in order to see what areas arelagging behind, for lack of a
(30:48):
better term.
But at the same time, I thinkthat when you're dealing with a
business coaching type ofrelationship and I imagine
you'll agree with me this youcan tell me you can disagree as
well.
People need a personal touchand that's a huge part of it.
Right, just the other day,somebody reached out and said on
(31:13):
a group that I'm in, and saidanybody know any business
financial coaches or consultants?
And so I raised my hand and youknow?
I said you know I can help you,and apparently two other people
did as well and I asked and Iasked the person when they
reached out to me, who are theother two people?
And when they told me and Isaid okay, so why come to me?
(31:33):
Why not go to them?
And it really comes down to thepersonal touch.
Right, there's a relationshipthere when I'm asking somebody
to help me through a roughsituation.
I need somebody that I knowcares and, as much as it might
sound like it does, and it canmake its voice change to
whatever tone is needed, ai doesnot care, right, it just
(31:56):
doesn't.
It's a computer, it really doesnot care and you can tell it.
Put on an empathetic voice whenyou talk to me and whatever,
and it'll listen to yourinstructions.
But when you're dealing withsomething so close to people's
emotions, you need that personaltouch.
And people who build theirbusiness from scratch, right,
(32:18):
people who are really so highlyinvested in their, in their
business, it becomes likeanother child.
And you know, go tell somebodyI want you to help me raise my
child.
And you're a computer.
They're not going to be veryhappy about that.
So it can help with a lot ofthe backend stuff.
It can help a lot with thegrunt work, but when it comes to
(32:40):
the actual face-to-face withthe clients and the actual
discussions on what can we doand what can we change and how
can we work on this, I don'tthink that's ever going to go
away.
I don't think that'll everreplace a person.
Speaker 1 (32:51):
I agree.
I agree there's something aboutthe emotional process that's
got to be included, you know.
So what are some commonchallenges that you see with
businesses?
Kind of you see these repeatedchallenges that business owners
are going through, and then whatare some solutions that you've
(33:12):
helped them with through thosechallenges?
Speaker 2 (33:16):
Yeah.
So I think the biggestchallenge, if you had to put it
into one word, would be focusRight, figuring out where they
should place their focus.
Which are those, you know?
Going to another book, theSeven Habits of Highly Effective
People, that quad, that thosefirst, second, third, fourth
(33:38):
quadrants, the urgent and theimportant and the not urgent,
not important where are theyspending their time in their day
and which things can actuallymove the needle in the business
that they should be focusing onthat?
Unfortunately, they're not.
So I think that's the biggestoverall problem that I see
amongst people.
Where that manifests is seeingwhere are those low-hanging
(34:01):
fruits, right?
Where are those things that Ican easily change in my business
that's going to bring in anextra $100,000 in cash tomorrow,
right?
I had one client that theiraccounts receivables were just
growing and growing year to yearor month to month, if not week
to week, and they couldn'tfigure out why and took a little
(34:21):
bit of digging not a whole lot,a very little amount of digging
figured out that there was alot of.
Their invoices were notactually being sent to their
clients.
So they were servicing theseclients and there was a little
checkbox in their invoicingsoftware saying you know, send
invoice to client and that boxdefaulted to being unchecked.
So there was all these invoicesthat just never went out.
That's all you need is a littlebit of analysis on the numbers
(34:44):
to see.
Wait a minute, this growing,climbing accounts receivable is
not normal.
Something is wrong here andthen okay, let's dig into it.
Five minutes later you figuredout the problem.
You send out all these invoicesand you can just bring in
hundreds of thousands of dollarsin cash.
Now, looking at your P&L wasn'tgoing to help you because the
revenue was there.
You were booking the revenuewhen you're doing the service,
(35:06):
but something's wrong on thestatement of cash flows.
Why is this accounts receivablejust ballooning and going out
of control?
Another area that I seesometimes is focusing on the
wrong types of services.
One of the first things I dowith my clients when we're
setting those targets in thatfirst step is figuring out what
are their different services andproducts that they offer, which
(35:28):
ones are more profitable andwhich ones are less profitable,
and are they focusing on theones that are the most
profitable?
I know somebody who had apicture frame business and they
had kind of more modern metalframes and then like more
classic wooden frames and theywere spending a lot of their
efforts on pushing the modernmetal frames excuse me to their
customers and not so much effortwas efforts on pushing the
(35:48):
modern metal frames excuse me totheir customers and not so much
effort was going on to thewooden frames.
Turns out which ones were themore profitable endeavor was the
wooden ones that they weren'tpushing.
So here they are, putting allthis effort, marketing expenses,
payroll into the salespeople topush the least profitable of
their services.
(36:08):
So again, a little bit of ananalysis, a little bit of
understanding of the numbers isgoing to help you figure out
where you should put your focusand help you make it so that it
could become profitable, just byfocusing on the right service
and maybe downplaying or maybeeven sometimes canceling the
wrong service if it can besomething that's actually
causing a loss.
Speaker 1 (36:30):
What would you tell a business owner that's afraid to
ask for help?
And what I mean by that is whenI come across business owners
at networking events.
They have this facade.
They have to share people whatthey do and how good they are
(36:52):
this, that and other but a lotof times they're afraid to go to
professionals like you orourselves because it's a little
messy under the hood, if youwill, and they don't want to be
exposed.
So how do you work withovercome that and how would you
encourage someone?
It's okay, you know, because alot of times that's their
hesitation for not reaching out.
Speaker 2 (37:05):
Everybody's books are a mess for not reaching out.
Everybody's books are a mess.
Everybody's numbers are arewildly inaccurate.
Yes, the the fix is not as bigof a deal as you think.
Right, you don't need yournumbers to tick and tie to match
perfectly in the real world.
That does not happen.
(37:26):
Businesses, just their numbers,are going to be a mess to some
extent.
What you need is just in termsof fixing that.
You need a generalunderstanding of where are the
numbers actually moving.
You don't need the numbers tobe perfect, you just need a
general understanding of is thisnumber increasing?
(37:47):
Is it increasing a lot?
Is it decreasing?
Is it decreasing a lot or is itstaying stagnant?
As long as you can fit it intoone of those, you kind of have a
general idea as to where youhave to focus In terms of being
able to ask for help.
Nobody can do it all.
Everybody has their own skillset, and if your skill set is
not in numbers, then you willnot understand the numbers to
(38:07):
the extent that you need to.
If you are somebody who is,like we said, a lawyer or a
plumber or a HVAC technician orwhatever, you're very good at
that, but if you're not focusingon that.
You're going to be spending alot more energy on whatever it
is you are trying to focus on.
Let's say it is the numbers.
So you're going to be spendinga lot more energy on that and
(38:30):
it's going to take away yourtime from doing the things that
you are good at and the thingsthat you can focus on growing
within your business.
So everybody needs help, right?
Nobody can do it all.
Nobody can wear all of the hatsand when they do, their
business is going to sufferessentially.
Speaker 1 (38:46):
Yeah, yeah.
So I'm sure you've piqued someinterest from our listeners.
Where's a good place to followyou, engage with you, get in
touch with you for additionalinsights.
Speaker 2 (39:01):
So you can go to my website pinskyconsultingcom.
I have on there, like you said,the prosperity playbook where
you can download a guide towardssetting your goals and keeping
score of your goals.
You can also follow me onLinkedIn under Abraham Avi
Pinsky.
I think if you search for AviPinsky, you'll probably get me.
My full name is Abraham, sothat's kind of where I did that.
(39:24):
But yeah, those are the twomain places, linkedin and my
website.
Speaker 1 (39:30):
Fantastic.
Well, I always end with aquestion, and that is if you
were in a room full of businessowners, different industries,
different seasons of businesswhat's one thing applicable that
could help all of them, nomatter what season of business
or type of business they have,that you have discovered?
Speaker 2 (39:49):
One thing that can help every business across the
board.
Speaker 1 (39:52):
Could be a quote, could be a book, it could be
anything.
Speaker 2 (39:56):
Oh, okay, we can go there.
I was going to say just get abasic understanding of numbers,
right, you don't have to be anaccountant.
But accounting is the languageof business.
So if you don't understand whatyour accountant is telling, you
ask a question.
Right, that's what they'rethere for.
They're not there to just doyour books, to just do your
taxes.
They're there to be a resourcefor you.
(40:18):
And if your accountant is notwilling to answer your questions
, they're not willing to explainthings to you.
Get a different accountant,right.
You need to understand what'sgoing on in your numbers.
You need to understand your P&L, your balance sheet, your
statement of cash flows.
And if you cannot understandthe way that they're talking to
(40:38):
you, then you need to getclarity either from them or from
somebody else.
Right, the accountant's job hasto be a translator to translate
the finances into English sothat you can understand it.
And again, there are resourcesout there that you can get the
education yourself.
But if you're already payingsomebody to do the work for you,
who knows your situation, knowsyour numbers, they should be
doing that for you as well.
Speaker 1 (41:00):
Absolutely.
And just to piggyback on top ofthat, as I always tell our
clients when we start workingwith them, there are no dumb
questions.
There aren't, yes.
So if you're thinking yes, askit.
Don't assume that it's a dumbquestion, because there are no
dumb questions.
You don't understand it.
You don't understand it.
So you've been a wealth ofinformation today.
(41:23):
I appreciate it and wish youcontinued success, thank you.
Thank you very much.
Thank you for listening youvery much.
Thank you for listening toSmall Business Pivots.
This podcast is created andproduced by my company, boss.
Our business is growing yours.
Boss offers flexible businessloans with business coaching
support.
Apply in minutes and getapproved and funded in as little
(41:45):
as 24 to 48 hours.
Atbusinessownershipsimplifiedcom.
If you're enjoying this podcast, don't forget to hit the
subscribe button and share it aswell.
If you need help growing yourbusiness, email me at michael at
michaeldmorrisoncom.
We'll see you next time onSmall Business Pivots.
All right, welcome to another Small Business Pivots,
where we well, where I alwayssay, where we have special
guests from around the world.
But today, if you're in the US,we literally have someone from
around the world.
But I know business owners arethe only ones that can say their
name and their business likethey can.
So I let you introduce yourselfso we can say it correctly.
(00:22):
Moving forward, I'll let youhave the floor.
Speaker 2 (00:31):
Sounds good.
So I'm Avi Pinsky.
I'm originally.
I'm from Los Angeles, born andborn and raised in Los Angeles.
I went to school in the NewYork area where I met my wife,
so we lived in New York for alittle while as well, so I got
both coasts in.
About almost nine years ago wemoved to Israel, so we are now
international.
Speaker 1 (00:45):
Wow, what got you to move?
You just like to move.
If you went from LA to New York, that's already a big move in
culture and everything, believeit or not, I actually hate
moving.
Speaker 2 (00:58):
I hate packing up all my stuff.
We've done it like five or sixtimes, but I hate moving.
I just go where I need to go.
What brought us to Israel is, Iguess I guess you could call it
a religious calling.
We both spent a post highschool gap year here and fell in
love with it.
Once we got married, we bothknew we were going to come back.
It was just a matter of time.
So it took about five or sixyears and then we made the jump.
Speaker 1 (01:22):
Awesome, awesome.
Well, how do you think we'regoing to help our small business
owners today with our content?
Speaker 2 (01:29):
Yeah.
So I like to talk about theimportance of understanding your
numbers and your finances andhow to use those to get the data
and the information that'sneeded to make the right
decisions in your business sothat it can grow.
Oftentimes, business ownersdon't really look at their
numbers.
If they do, they don't reallyunderstand them.
Even less often do they knowwhat to do with that
(01:50):
understanding.
So I have a process that Iteach people by which they can
use that data where they'regrowing their business, based on
information and on facts,instead of their gut intuition
and their feelings, whichsometimes might be right,
sometimes it might be wrong.
Speaker 1 (02:07):
Most of the time it's wrong.
Speaker 2 (02:10):
Yes, as a business.
I didn't want to say it but youwere.
Speaker 1 (02:13):
You were trying to be polite.
I'm I'm a business coach.
I get brutal about numbers.
Anyone that's listened to ourshow before.
I'm not an accountant, but Iunderstand financials and it is
critical, critical, essentialthat you have clear, accurate
numbers.
So let's introduce the showreal quick and we'll be right
(02:33):
back.
Welcome to Small Business Pivots, a podcast produced for small
business owners.
I'm your host, Michael Morrison, founder and CEO of Boss, where
we make business ownershipsimplified for success.
Our business is helping yoursgrow.
Boss offers business loans withbusiness coaching support.
(02:56):
Apply in minutes and getapproved and funded in as little
as 24 to 48 hours atbusinessownershipsimplifiedcom.
All right, welcome back toSmall Business Pivots.
Let's get going, becausenumbers are important and I know
as a business coach, if youdon't have clear, accurate
(03:19):
numbers, you cannot make wisedecisions.
You cannot make wise decisions.
So your business website saysyou have a simple cycle to grow
your business.
Where do you want to start?
Because, or maybe we just startwith what are financials and
what do they tell you?
Because, like you mentionedearlier, most business owners
(03:40):
use their bank account todetermine the health of their
business, if they can buysomething or not or hire an
employee or not, and you werekind of, you didn't say it quite
like that, but you addressed it.
So let's talk about thefinancials, what they tell you.
Speaker 2 (03:54):
Yeah.
So the way that I look at thefinancials is that it's a.
It's a way to look at thehistory and gain insight into
what happened, what went rightand what went wrong.
Once you have that information,then you can figure out what
the path is forward so that morethings can go right, which
(04:17):
things can have the biggestimpact if we change them based
on the numbers.
If I look back at the historyand I say our prices are too low
, so if I can raise my pricessome way, so that's going to
change my history.
It's a matter of understandingwhat that history tells you in
terms of making differentdecisions going forward, so that
(04:39):
things look up instead ofrepeating themselves time and
time again and we get out ofthat vicious cycle of, you know,
maybe taking out a loan, losingout all that money or wasting
that money.
It's a matter of making betterdecisions based on the facts and
the circumstances.
So if you can understand yourfinances, if you can read your
(05:02):
financials, it gives you thataccurate understanding of what
happened so that you can knowwhat finances.
If you can read your financials, it gives you that accurate
understanding of what happenedso that you can know what to do
about it.
Speaker 1 (05:10):
Most business owners that we come across have heard
of a P&L, but we like to usethree different financials for
decision-making, and that's thebalance sheet, the statement of
cash flows and the P&L.
Can you explain just shortlywhat each of those do, Because I
know business owners have seenthem and it's just a printed
(05:32):
page to them and they don'treally understand how to use
them or what they're for.
Speaker 2 (05:37):
Exactly, yeah, exactly, and most of them are
more familiar with the P&L,sometimes the balance sheet, but
most of them have no clue whata statement of cash flows is and
unfortunately, that tells themajority of the story.
So if you're not getting thatthird piece of the puzzle,
you're missing a huge chunk.
So, briefly, what they are, p&lis going to show you a
(06:00):
timeframe, what happens in termsof revenue and expenses.
So usually it's looked at on ayearly basis.
You can look at it on a monthly, quarterly, whatever you want.
It's going to show you how muchrevenue came in during that
time, how many expenses went outduring that time and what was
left.
Hopefully, yeah.
Speaker 1 (06:19):
Well, let me ask that .
Let me.
I don't want to interrupt, butI want to ask this question
because every business ownersays, or ask why does it show I
made money?
I don't want to interrupt, butI want to ask this question
because every business ownersays or ask why does it show I
made money, but I don't havemoney in the bank account?
Speaker 2 (06:30):
Exactly so that's where the statement of cash
flows comes in.
We'll get to that in a secondand that's the biggest problem
is that making that jump fromthe P&L to the statement of cash
flows is usually where thingsgo haywire.
They'll look at their accountsand they'll say okay, so my P&L
shows that I made a milliondollars, two million dollars
(06:51):
this year, whatever it is.
A half a million dollars Go tomy banker and my banker says
you're overdrawn.
Speaker 1 (06:57):
So now, what do I do about it right, yes, if you're
lucky, you're at zero.
Speaker 2 (07:03):
So we'll go step by step.
So the P&L is showing over aperiod of time what happened.
The balance sheet is showingyou at any specific point in
time what is a picture of thebusiness.
So, whereas a P&L is over time,a balance sheet is a picture at
a specific moment in time.
Usually you're going to look atthat at the end of a month,
(07:24):
you'll look at it at the end ofa quarter, the end of a year,
whenever it shows all of theassets, liabilities and,
hopefully, equity that's in thebusiness at that specific point
in time.
So if you have machinery, ifyou have inventory excuse me, if
you have computers, whatever itis that you all the things that
(07:46):
you own in the business at thatdate.
So that's going to be on yourasset side.
Anything that you owe to otherpeople, any loans you took out,
any debts that you have, that'llbe on the liabilities section
and anything that's left over.
So that's going to be in theequity section.
But again, it's a snapshot asof a specific date or time or
(08:08):
year.
Whenever it is that you decideto look at it, the statement of
cash flows is going to show youwhere money comes into the
business and where it goes out,and a lot of times that's going
to be the downfall of a businessthat's having cash flow
problems.
You can uncover those if youhave an updated statement of
cash flows and if you understandit and can study it.
(08:30):
One of the biggest issues withthat difference between profits
and cash in the bank canoftentimes be accounts
receivable.
Those are essentially loansthat you're giving out to your
clients that they haven't paidyou back on yet.
So if you have unfavorablepayment terms from your clients,
you're still paying money toyour vendors to service those
(08:55):
clients and to your employeesand to your electric bill, your
overhead all those things you'restill paying in order so that
you can serve your clients, butthe money hasn't come in from
the client yet.
You've essentially just givenan interest or free loan to your
clientele during that period oftime.
So that's going to be revenue,it's going to show up on your
P&L as profit, but it's notactually cash in the bank.
(09:18):
Another big issue, depending onwhat service you provide or what
product you provide, could beinventory.
So if you are building upinventory, you're building more
and more widgets and you'restoring them in your warehouse,
so you're expending on yourmachinery working, on your
(09:40):
workers working.
You're buying more material,more cost of goods sold, but
until you actually sell thatinventory to a third party, to a
client, so that money is justgoing from your bank account and
then sitting on your shelf inthe warehouse.
That's not helping you.
It's not necessarily going toshow up on your P&L.
If you're running an accrualbasis accounting system, which
(10:02):
you should, that's a differentconversation.
So you're not necessarily goingto see it on your P&L but
you're going to see it out ofyour bank account.
So having a good grasp on thisstatement of cash flows can help
you foresee the problems thatare coming down the pipe.
Speaker 1 (10:18):
Can you share the importance of hiring a
professional accountantbookkeeper so that they do have
accurate accounting?
I know a lot of business ownersfor some reason that area of
their business.
They feel like they can go atit alone but that's not helpful.
Can you explain the differencebetween them doing it and a
(10:41):
professional doing it?
Speaker 2 (10:43):
So I don't know if they think that they can go out
alone or they just don't realizethe value that can be added
from someone that really doesunderstand it.
I think that it's somethingthat's not in the forefront of
their brains.
It comes to the forefront ofthe mind around tax time, when
they have to do their taxes andtheir accountant takes care of
that.
Their bookkeeper and theiraccountants figure out their tax
(11:03):
liability and they send a checkto the IRS.
Fine, they don't realize thatthis is something that should be
driving decisions throughoutthe year and should really
possibly change the course ofthe business throughout the year
.
If it's just something in theback of the mind that you're
going to handle once a year,you're going to look at it once
a year.
You're not gaining anything outof it.
(11:24):
Right?
It's like going forward withoutstudying your history.
Eventually, you're going torepeat the past because you're
not going to learn any lessons.
You have to look back at thehistory regularly, not because
the history itself is soimportant, but because you can
learn lessons from it and youneed somebody that can help you
understand those lessons andfigure out how to apply them to
(11:46):
your business going forward.
So, whether you like it or not,every business has somebody
who's in charge of the finances.
It might be one of those hatsthat the owner is wearing that
they don't want to be wearing.
Somebody is going to be thechief financial officer of every
business, no matter how big orhow small.
They might not have thatofficial title, but if they're
the ones that are running thebooks, running the financial
(12:08):
decisions, they are the CFO.
And if they don't understand it, you're missing out on a huge
tool and a huge opportunity inbuilding your business by
understanding those facts,understanding that history and
learning those lessons so thatyou can move it forward.
So you need to bring somebodyon board whether it's your
bookkeeper, your accountant,getting a fractional CFO in to
(12:28):
help you understand it, so thatyou can make the right decisions
and change course where needed.
Speaker 1 (12:34):
I know a lot of business owners are
bootstrapping their business,especially startups and those
that may have fallen upondifficult times.
Is there a benchmark orsuggestion that you can give?
Like, if you're doing X revenue, that would be a good time to
really invest in a outsidebookkeeper, fractional CFO?
(12:56):
Is there a number that it wouldbe beneficial to the business,
Because some of them just don'thave that extra money available?
Speaker 2 (13:05):
Yeah, I would say from the first dollar.
You need somebody who's gettingit Now.
It doesn't always need somebodyfrom the outside that you're
hiring.
There are resources online thatyou can use to understand your
numbers to some extent byyourself, but once your business
is taking up more of your timeand you need to free up some of
(13:28):
your headspace so that you canfocus on other aspects of
growing the business.
So, just like, eventuallyyou're going to hire out a
secretary, you're eventuallygoing to hire out employees to
take care of the client-facingservices, so eventually you're
going to need to outsource thatas well.
It's just a matter of whetheryou have the bandwidth to take
care of it yourself.
(13:49):
If you don't, somebody has totake care of it.
If you can learn it yourselfand your business is still small
enough where you can manage it,so that's great, that's
wonderful.
Those resources are out there.
I have a resource on my websitethat you can download for free
and that'll show you a way toset your goals and to manage
your goals.
(14:09):
But if it's something that youpersonally just don't understand
numbers don't speak toeverybody, I understand that
then you need someone who'sgoing to help you understand it.
Speaker 1 (14:22):
Well, I think a lot of people can relate to some of
your questions or statements onyour website.
Your business relies on you orit falls apart.
You can't grow your businesswithout more cash, but you don't
have more cash to grow.
You don't have a simple way toknow what is and isn't working
in your business and you don'tknow what to do next to grow
your business.
You're here to help, so can youkind of share a little bit?
(14:45):
You're a fractional CFO so youcan be that guide for them, just
like I'm a business coach.
I can guide them on thebusiness side.
But what is your simple cycleto grow your business?
Can you share kind of how thatworks?
Speaker 2 (15:01):
Yeah.
So the cycle that I implementwith my clients, and the one
that I profess to anybody thatwill listen, is that on a yearly
basis, or, if not yearly, ithas to be some sort of regular
basis.
I'm a proponent of doing itannually Towards the end of the
year November, december, startlooking towards the next year,
(15:24):
seeing what it's going to belike, but on that yearly basis.
Setting out your targets.
Like, but on that yearly basis,setting out your targets,
there's anywhere between 10 to15 targets that you can set for
any given business, from theamount of leads you're bringing
in, how well you convert thoseleads, all the way down to what
new debt you're expecting totake out or what withdrawals or
(15:46):
investments are you planning onmaking in the business.
Setting targets for all ofthose 10 to 15 numbers on a
regular annual basis.
That's step number one.
Step number two is on a monthly, maybe bimonthly, basis, you're
going to look and see what didyour business actually do during
the last two, three, fourmonths, wherever we are in the
(16:06):
year.
So, from January 1st until thedate that you're doing that
analysis, how far have I cometowards achieving those goals?
Step number three is going tothen make an estimate for the
remainder of the year, right?
So if right now we're in June,so from June till December,
where do I think the business isgoing?
Keeping in mind any seasonalityto my business, right?
(16:28):
If I run a ski lodge, I'm notexpecting any business coming in
, uh, in July, August andSeptember, probably not October,
maybe not even November, right?
I might be just a December toFebruary type of a type of
business.
Um, so, projecting out based onyour history and your
seasonality, what?
What does the future look likeuntil the end of the year?
Uh, step number four would betaking what you did in two and
(16:50):
three, so basically the wholeyearly picture, based on what
has happened and what I projectto happen, taking that total and
comparing it to the targetsthat I set in the first step.
And so two, three and four, andfive and six as well, I'm going
to be doing on a monthly basis.
Number five is going to besetting goals, figuring out
(17:12):
which of those targets am Iachieving, which ones am I kind
of lagging behind on, and, ofthose ones that I can do
something about, which ones willhave the biggest impact if I do
that thing about them, right?
So if I could bring in moreleads.
Would that even help?
Or am I just blowing everysales call, in which case that's
(17:32):
not really the thing that'sdriving my business down the
tubes?
I have to now focus on my leadconversion.
I have to get some salescoaching or whatever, trying to
figure out which of thosenumbers I can do something about
and, if I did, which would havethe biggest impact.
I'm going to narrow that down totwo, maybe three of the numbers
on my list and then in step six, I'm going to actually list out
(17:56):
what am I going to do in thenext 30 days to accomplish the
goals that I set out in stepfive, right?
So step five I'm determiningwhich of those numbers I want to
set a goal for for the next 30days, and step six is what am I
going to actually do duringthose 30 days to accomplish
those goals?
And then the next month I'mgoing to start again from number
two.
(18:16):
Right, the targets that I setin number one.
Those should last me all yearlong, unless something happens
and I'm realizing I have tochange them or update them or
whatever.
But steps two to six every monthI'm looking again and seeing
what's changed.
Where have we been?
Where are we going?
What can I do about gettingcloser to where I want to be?
(18:39):
And some businesses might notbe moving on a monthly cycle, so
maybe they're really small andthings don't change that much At
least once a quarter to do thiscycle.
Every business, no matter howbig, how small, has to do this
reflection at least once aquarter.
Speaker 1 (18:54):
Yeah, A lot of people don't think of financials as
the scoreboard and that's kindof how you're describing it.
Just like in any sport rightnow.
Currently we're in the NBAfinals in America and everybody
knows who wins by looking at thescoreboard, or who's ahead or
who's behind, and they taketimeouts and they adjust defense
(19:16):
, offense, things like that, andthat's kind of what you're
sharing on your website.
You have a free copy of You'relistening to Small Business
Pivots.
This podcast is produced by mycompany, Boss.
Our business is helping yoursgrow.
Boss offers business loans withbusiness coaching support.
Apply in minutes and getapproved and funded in as little
(19:39):
as 24 to 48 hours atbusinessownershipsimplifiedcom.
If you're enjoying this podcast, don't forget to hit the
subscribe button and share it aswell.
Now let's get back to ourspecial guest.
On your website, you have afree copy of a prosperity
playbook.
How can that help people?
Speaker 2 (20:02):
So yeah, the prosperity playbook.
It helps you with that firststep of setting out the goals,
step of setting out the goals.
And then I actually have inthere something that I call the
scoreboard which helps you withsteps, steps four and, to an
extent, steps five, two andthree you kind of have to track
(20:23):
on your own.
There's ways to do that.
It's not so hard to usually.
Step two is basically your P&Lfrom year to date.
Step three is a little bit moreof guesswork of kind of you
know we can't really predict thefuture.
We can make some educatedguesses on where we think things
are going, uh, but it's.
It takes a little bit moreanalysis, uh.
Step four is a matter ofputting that together and seeing
where are we on the scoreboard.
(20:43):
Right Part of that prosperityplaybook, the last tab in there,
is a scoreboard to see which ofthe goals that I set am I going
to meet, how am I doing in thegame of business, and then you
use that to set steps five'sobjectives and step six's next
steps.
Speaker 1 (21:02):
You mentioned you're in Israel.
What types of businesses do youwork with and where?
Speaker 2 (21:09):
So I work with any English speaking business right.
I uh to an extent I couldpotentially work with uh, with
uh Hebrew speaking businesses.
My Hebrew is not that great, um, but any business across the
world has financials right, eventhough my background is in
accounting, doing taxes for USbusinesses.
The work that I'm doing as afractional CFO or, like I like
(21:33):
to say, business finance doctor,to get your business healthy,
it's universal concepts thattranscend tax law, transcend
local business law.
These are concepts that dateback thousands of years.
Just that idea of assets,liabilities, equities, that P&L
balance sheet statement of cashflows.
These are universal conceptsthat apply to any business, any
(21:57):
size, any industry, in anylocation.
That being said, I do tend towork more with US-based
businesses, just because that'smy background.
Like I said, with US taxation,I'm a recovering accountant, as
I like to say, but I tend togravitate towards the trades
(22:22):
people, the blue collar types ofbusinesses, the home services.
That's kind of the personalitythat I get along with.
The home services.
That's the personality that Iget along with, not to say that
I can't work with other types ofpeople.
I have a client that's a doctor, who does coaching for medical
(22:42):
issues that people have.
There's other industries aswell.
Lawyers need this type of helpas well, because they might know
what it is to practice law andto write up contracts.
When it comes to growing anactual law practice, that's a
whole different ballgame, awhole different animal.
But myself, personally, I liketo look at myself as a
(23:03):
blue-collar type of person in awhite-collar job, so that's kind
of where I gravitate towards.
Speaker 1 (23:09):
I'm curious for a little history lesson, since you
are a recovering accountant.
Do you know where or whenaccounting began?
Is there a system?
Is it a law?
Is it you know?
Where did it come from?
You don't have to give likedetails and names and years, I'm
(23:31):
just curious like how it evenbecame what it is.
Speaker 2 (23:36):
That's a great question and I don't actually
know.
I would love to know the answer.
I do know that these principleshave been around since way way
way back when Three 4,000 years,something like that.
So that is probably one of thefirst things that I'm going to
do as soon as we're done withour call.
Speaker 1 (23:53):
I am too, and I'm sure some listeners are also
it's.
Speaker 2 (23:58):
It is something that I have been curious of lately.
Uh, so I'm I'm definitely goingto look it up so that I'll be
more prepared for that next time.
Speaker 1 (24:05):
Well, you are a fractional CFO, so your business
is probably picture perfect,right, just like mine is
probably, just because I'm abusiness coach.
Wrong, so tell us some thingsthat you've done or experienced
or pivoted in your business sothat others can learn from our
(24:30):
mistakes.
Speaker 2 (24:31):
Picture perfect is.
You know that's a relative term, right?
So, like I said, just like I dowith other people's businesses,
my clientele's businesses, I dowith my own.
I set my own goals.
Now those goals have to besomething that's achievable, and
it also can't be where I'm atcurrently, because that's not a
goal, be something that'sachievable, and it also can't be
where I'm at currently, becausethat's not a goal.
(24:52):
Right, it has to be somethingwhere I'm striving towards.
So it may be that if I werelooking back from five years ago
to my life now, maybe I wouldsay that's picture perfect.
But if I'm in the same placenow, in five years from now,
there's a problem there.
Right, businesses have to grow.
Right.
If your, if your business isnot growing, then it's probably
doing the opposite, right?
(25:13):
I look at life kind of like atreadmill If you're not moving
forward, you're most likelymoving backwards.
So in terms of changes that I'vemade personally, starting this
practice of being a fractionalCFO was a huge jump for me.
I kind of got into accounting Idon't want to say by mistake,
but it certainly wasn't what Iexpected.
(25:35):
It wasn't what I was hoping forwhen I got into it.
I worked in US taxes for abouta dozen years before I came
across this fractional CFO workand it really spoke to me just
from going way, way back to whyI got into accounting was to be
that business doctor, thatfinancial doctor for people.
(25:57):
I'd always expected that itwould be on the personal side,
on the family budgeting, butjust where my career took me, it
took me to the business side ofthings and that's kind of where
I see my fractional CFOpractice going.
But at the end of the day, whenyou're dealing with a small
(26:18):
business owner, they have afamily to feed.
The business is the personal.
So I see that the fulfillmentof helping a family make ends
meet and figuring out what'sgoing wrong and how to fix their
lives from a financialperspective.
That's why I got intoaccounting Again.
(26:39):
Taxes was really not thatavenue, even though I was led to
believe that it could be.
But that's the number onechange that I've made in my
business was just, instead offocusing on taxes and on the
reporting side of accounting,which you know that that's
important, it's needed right,you need somebody to keep to do
the bookkeeping, to do the taxes.
(26:59):
That's.
That's a hundred percentnecessary.
My fulfillment comes fromhelping people change the future
, so that's not as bleak as thepast makes the future seem.
Speaker 1 (27:10):
I see a few books behind you and the Rubik's Cube.
What is?
Some books, or maybe somepodcasts that have helped you
build your business, that youcould share with others.
Speaker 2 (27:24):
Yeah, I was actually just talking to some people
about this today on a grouphuddle that I do on Thursdays,
and we were just talking aboutGood to Great by Jim Collins
concept of knowing where yourlane is and sticking to it, no
matter what that things mightchange.
The world might change.
(27:54):
Ai can come in and you're goingto think it's going to upend
your industry and your wholelife is going to be flipped
upside down.
You might lose your job, youmight lose your practice.
If you have that hedgehogconcept of knowing where in life
you can make a difference forother people, you just have to
keep that in your focus andyou'll then be able to ride the
(28:14):
waves of technology.
And as long as you can figureout how to apply that hedgehog
concept to your new reality,that's the way you're going to
find your path forward.
Really, those three conceptsthat he talks about in the
hedgehog concept are why I gotinto what I'm doing.
(28:37):
The three questions essentiallywhat are you good at?
Where is your skill set?
If you don't have a skill setin a certain area, you're not
going to do very well in thatarea.
What do you enjoy doing?
The number two thing what doyou enjoy doing?
If you don't enjoy your work,how long can you do it before
you burn out?
And the third concept where areyou going to make a difference
(28:59):
in the world?
Where can you add value toother people?
That's where you're going toget clients.
So if you don't have a passionfor something, if you don't have
a skill set in something, or ifwhat you're doing doesn't make
a difference to other people'slives, those three things, they
have to be in harmony in orderto figure out your business.
That's kind of where I got theimpetus to go into this type of
(29:24):
work comes from.
And then when I read it in Goodto Great, that was like an
eye-opener that this is not justa concept that I can apply in
my own personal life, but it's aconcept that every business has
to have as well.
Right?
A business is a living,breathing organism, just like a
person is.
So the business itself has tohave that core concept of
(29:47):
where's it going, has to havethat core concept of you know
where's it going, what's itspathway, in order to survive and
to thrive.
It needs those same threethings it needs a passion, it
needs a skill and it needsclients.
Right, if you're missing in anyof those three things.
The business can't long endure.
Speaker 1 (30:04):
Yeah, speaking of, you mentioned AI, and when this
gets uploaded, your answer couldbe different.
It changes that fast.
What is AI doing to yourindustry in the accounting world
?
It seems to be doing affectingeverybody somehow.
Speaker 2 (30:24):
I mean, where I see it, it's in the grunt work,
sometimes In the accountingworld in general.
It can be in doing thebookkeeping or filling out the
tax forms.
In my specific work, it canhelp with the analysis of the
P&L and of the balance sheet andof the statement of cash flows
in order to see what areas arelagging behind, for lack of a
(30:48):
better term.
But at the same time, I thinkthat when you're dealing with a
business coaching type ofrelationship and I imagine
you'll agree with me this youcan tell me you can disagree as
well.
People need a personal touchand that's a huge part of it.
Right, just the other day,somebody reached out and said on
(31:13):
a group that I'm in, and saidanybody know any business
financial coaches or consultants?
And so I raised my hand and youknow?
I said you know I can help you,and apparently two other people
did as well and I asked and Iasked the person when they
reached out to me, who are theother two people?
And when they told me and Isaid okay, so why come to me?
(31:33):
Why not go to them?
And it really comes down to thepersonal touch.
Right, there's a relationshipthere when I'm asking somebody
to help me through a roughsituation.
I need somebody that I knowcares and, as much as it might
sound like it does, and it canmake its voice change to
whatever tone is needed, ai doesnot care, right, it just
(31:56):
doesn't.
It's a computer, it really doesnot care and you can tell it.
Put on an empathetic voice whenyou talk to me and whatever,
and it'll listen to yourinstructions.
But when you're dealing withsomething so close to people's
emotions, you need that personaltouch.
And people who build theirbusiness from scratch, right,
(32:18):
people who are really so highlyinvested in their, in their
business, it becomes likeanother child.
And you know, go tell somebodyI want you to help me raise my
child.
And you're a computer.
They're not going to be veryhappy about that.
So it can help with a lot ofthe backend stuff.
It can help a lot with thegrunt work, but when it comes to
(32:40):
the actual face-to-face withthe clients and the actual
discussions on what can we doand what can we change and how
can we work on this, I don'tthink that's ever going to go
away.
I don't think that'll everreplace a person.
Speaker 1 (32:51):
I agree.
I agree there's something aboutthe emotional process that's
got to be included, you know.
So what are some commonchallenges that you see with
businesses?
Kind of you see these repeatedchallenges that business owners
are going through, and then whatare some solutions that you've
(33:12):
helped them with through thosechallenges?
Speaker 2 (33:16):
Yeah.
So I think the biggestchallenge, if you had to put it
into one word, would be focusRight, figuring out where they
should place their focus.
Which are those, you know?
Going to another book, theSeven Habits of Highly Effective
People, that quad, that thosefirst, second, third, fourth
(33:38):
quadrants, the urgent and theimportant and the not urgent,
not important where are theyspending their time in their day
and which things can actuallymove the needle in the business
that they should be focusing onthat?
Unfortunately, they're not.
So I think that's the biggestoverall problem that I see
amongst people.
Where that manifests is seeingwhere are those low-hanging
(34:01):
fruits, right?
Where are those things that Ican easily change in my business
that's going to bring in anextra $100,000 in cash tomorrow,
right?
I had one client that theiraccounts receivables were just
growing and growing year to yearor month to month, if not week
to week, and they couldn'tfigure out why and took a little
(34:21):
bit of digging not a whole lot,a very little amount of digging
figured out that there was alot of.
Their invoices were notactually being sent to their
clients.
So they were servicing theseclients and there was a little
checkbox in their invoicingsoftware saying you know, send
invoice to client and that boxdefaulted to being unchecked.
So there was all these invoicesthat just never went out.
That's all you need is a littlebit of analysis on the numbers
(34:44):
to see.
Wait a minute, this growing,climbing accounts receivable is
not normal.
Something is wrong here andthen okay, let's dig into it.
Five minutes later you figuredout the problem.
You send out all these invoicesand you can just bring in
hundreds of thousands of dollarsin cash.
Now, looking at your P&L wasn'tgoing to help you because the
revenue was there.
You were booking the revenuewhen you're doing the service,
(35:06):
but something's wrong on thestatement of cash flows.
Why is this accounts receivablejust ballooning and going out
of control?
Another area that I seesometimes is focusing on the
wrong types of services.
One of the first things I dowith my clients when we're
setting those targets in thatfirst step is figuring out what
are their different services andproducts that they offer, which
(35:28):
ones are more profitable andwhich ones are less profitable,
and are they focusing on theones that are the most
profitable?
I know somebody who had apicture frame business and they
had kind of more modern metalframes and then like more
classic wooden frames and theywere spending a lot of their
efforts on pushing the modernmetal frames excuse me to their
customers and not so much effortwas efforts on pushing the
(35:48):
modern metal frames excuse me totheir customers and not so much
effort was going on to thewooden frames.
Turns out which ones were themore profitable endeavor was the
wooden ones that they weren'tpushing.
So here they are, putting allthis effort, marketing expenses,
payroll into the salespeople topush the least profitable of
their services.
(36:08):
So again, a little bit of ananalysis, a little bit of
understanding of the numbers isgoing to help you figure out
where you should put your focusand help you make it so that it
could become profitable, just byfocusing on the right service
and maybe downplaying or maybeeven sometimes canceling the
wrong service if it can besomething that's actually
causing a loss.
Speaker 1 (36:30):
What would you tell a business owner that's afraid to
ask for help?
And what I mean by that is whenI come across business owners
at networking events.
They have this facade.
They have to share people whatthey do and how good they are
(36:52):
this, that and other but a lotof times they're afraid to go to
professionals like you orourselves because it's a little
messy under the hood, if youwill, and they don't want to be
exposed.
So how do you work withovercome that and how would you
encourage someone?
It's okay, you know, because alot of times that's their
hesitation for not reaching out.
Speaker 2 (37:05):
Everybody's books are a mess for not reaching out.
Everybody's books are a mess.
Everybody's numbers are arewildly inaccurate.
Yes, the the fix is not as bigof a deal as you think.
Right, you don't need yournumbers to tick and tie to match
perfectly in the real world.
That does not happen.
(37:26):
Businesses, just their numbers,are going to be a mess to some
extent.
What you need is just in termsof fixing that.
You need a generalunderstanding of where are the
numbers actually moving.
You don't need the numbers tobe perfect, you just need a
general understanding of is thisnumber increasing?
(37:47):
Is it increasing a lot?
Is it decreasing?
Is it decreasing a lot or is itstaying stagnant?
As long as you can fit it intoone of those, you kind of have a
general idea as to where youhave to focus In terms of being
able to ask for help.
Nobody can do it all.
Everybody has their own skillset, and if your skill set is
not in numbers, then you willnot understand the numbers to
(38:07):
the extent that you need to.
If you are somebody who is,like we said, a lawyer or a
plumber or a HVAC technician orwhatever, you're very good at
that, but if you're not focusingon that.
You're going to be spending alot more energy on whatever it
is you are trying to focus on.
Let's say it is the numbers.
So you're going to be spendinga lot more energy on that and
(38:30):
it's going to take away yourtime from doing the things that
you are good at and the thingsthat you can focus on growing
within your business.
So everybody needs help, right?
Nobody can do it all.
Nobody can wear all of the hatsand when they do, their
business is going to sufferessentially.
Speaker 1 (38:46):
Yeah, yeah.
So I'm sure you've piqued someinterest from our listeners.
Where's a good place to followyou, engage with you, get in
touch with you for additionalinsights.
Speaker 2 (39:01):
So you can go to my website pinskyconsultingcom.
I have on there, like you said,the prosperity playbook where
you can download a guide towardssetting your goals and keeping
score of your goals.
You can also follow me onLinkedIn under Abraham Avi
Pinsky.
I think if you search for AviPinsky, you'll probably get me.
My full name is Abraham, sothat's kind of where I did that.
(39:24):
But yeah, those are the twomain places, linkedin and my
website.
Speaker 1 (39:30):
Fantastic.
Well, I always end with aquestion, and that is if you
were in a room full of businessowners, different industries,
different seasons of businesswhat's one thing applicable that
could help all of them, nomatter what season of business
or type of business they have,that you have discovered?
Speaker 2 (39:49):
One thing that can help every business across the
board.
Speaker 1 (39:52):
Could be a quote, could be a book, it could be
anything.
Speaker 2 (39:56):
Oh, okay, we can go there.
I was going to say just get abasic understanding of numbers,
right, you don't have to be anaccountant.
But accounting is the languageof business.
So if you don't understand whatyour accountant is telling, you
ask a question.
Right, that's what they'rethere for.
They're not there to just doyour books, to just do your
taxes.
They're there to be a resourcefor you.
(40:18):
And if your accountant is notwilling to answer your questions
, they're not willing to explainthings to you.
Get a different accountant,right.
You need to understand what'sgoing on in your numbers.
You need to understand your P&L, your balance sheet, your
statement of cash flows.
And if you cannot understandthe way that they're talking to
(40:38):
you, then you need to getclarity either from them or from
somebody else.
Right, the accountant's job hasto be a translator to translate
the finances into English sothat you can understand it.
And again, there are resourcesout there that you can get the
education yourself.
But if you're already payingsomebody to do the work for you,
who knows your situation, knowsyour numbers, they should be
doing that for you as well.
Speaker 1 (41:00):
Absolutely.
And just to piggyback on top ofthat, as I always tell our
clients when we start workingwith them, there are no dumb
questions.
There aren't, yes.
So if you're thinking yes, askit.
Don't assume that it's a dumbquestion, because there are no
dumb questions.
You don't understand it.
You don't understand it.
So you've been a wealth ofinformation today.
(41:23):
I appreciate it and wish youcontinued success, thank you.
Thank you very much.
Thank you for listening youvery much.
Thank you for listening toSmall Business Pivots.
This podcast is created andproduced by my company, boss.
Our business is growing yours.
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support.
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(41:45):
as 24 to 48 hours.
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