Podcast on Bookkeeping, Budgeting and Profitability

Be More Profitable By Keeping Track Of Your Key Numbers

Tim Fitzpatrick
The financial side of running your business can be a real pain. I know, but it is critical for us to be able to make great business decisions. Our special guest today is going to share some of his best bookkeeping and finance tips to help you make sense of the numbers.

Tim Fitzpatrick
Hi, I’m Tim Fitzpatrick with Rialto Marketing, where we believe marketing shouldn’t be difficult. All you need is the right plan. I am super excited to have with me Paul Heffner from Finance Pals. Paul, welcome and thanks for taking the time.

Paul Heffner
Thanks, Tim. Super excited to be here.

Tim Fitzpatrick
Yes, awesome. It’s nice to have a fellow, a fellow Denver metro person on with me here. It doesn’t happen very often, but happy to have you. So, yeah, but so before we jump into talking about bookkeeping and finance, let’s get to know you just a little bit better. I’ve got some rapid-fire questions. If you’re ready to, uh, to jump into it.

Paul Heffner
Let’s hit it.

Tim Fitzpatrick
Awesome. So when you’re not working, how do you like to spend your time?

Paul Heffner
I like to do a lot of outdoor stuff, you know, being in Colorado, I do all the Colorado stuff, so climbing 14 years, running, snowboarding. I grew up in Kentucky, so I do a lot of golf and tennis as well. And then probably where that’s where I would like to spend my time, but where I spent a lot of time with my kids.

Paul Heffner
We have three kids all ages and they’re they’re a handful, but a lot of fun, too. So now they’re just now getting old enough where I can take them on some of those hikes and things like that.

Tim Fitzpatrick
Never a dull moment, right?

Paul Heffner
Never a dull moment.

Tim Fitzpatrick
What’s your hidden talent now?

Paul Heffner
I think it’s staying calm. I was asking my wife this question and I grew up watching tennis. And so Pete Sampras was kind of my guy, sort of calm. He never got too frazzled. And there was always the, you know, the John McEnroe, those that were thrown, the rackets and stuff like that. But I was always super calm and I still take that forward. So when I’m in a business meeting, I have a boss that’s like going crazy and yelling.

Paul Heffner
I just sort of, you know, I can find I can do better. And whatever else, the ticket don’t really take it personally. Or if I have a stressful deadline, I stay super calm. And I don’t know where it comes from. But I, you know, just seems to help me in a lot of situations.

Tim Fitzpatrick
That’s that’s a fantastic hidden talent to have. I think a lot of us could benefit by being more calm. What’s the best piece of advice you’ve ever been given?

Paul Heffner
This is a tricky one, and it wasn’t it was more by accident. I once asked my dad for a job. He had his own business and I said, hey, I’ll just come work for you after college. And you say, no, I won’t give you a job. You’re not you know, I’m not going to give it to you. And I said, OK, fine, you know, whatever, I’m going to go do it. Or else, what’s a college? And it’s what I wanted. And then, you know, five years later, my daddy was like, oh, yeah, if you had really wanted a job or if you had looked disappointed, I would have given you a job. Or if you had asked me a second time, like I’d really want to go to work for you, you would have given it to me.

Paul Heffner
But by telling me, no, this sort of forced me to find my own path and sort of my head and follow my passion. So that’s basically the advice to follow your passion and do what you know, what you’re interested and don’t take the easy way out. That’s sort of my best piece of advice, because now I got to do business that’s sort of in an area that I like to have the adventure of figuring it out myself versus, you know, just going to work for his business.

Tim Fitzpatrick
Yeah, all the all the great things in life don’t come easy, do they?

Paul Heffner
No, but that’s the fun part.

Tim Fitzpatrick
Yes. Yeah. If it was if it was easy. Everybody be doing it right.

Paul Heffner
Yeah, for sure. It’s nice to have the easy easy button every once in a while, but it’s also fun to have some of the struggle and to figure things out.

Tim Fitzpatrick
Yeah. Totally agree. What’s the one thing about you that surprises people?

Paul Heffner
I don’t know if it surprises people, but it’s different. And I’ve just traveled a ton and I studied abroad in Australia. I’ve worked in Africa, I’ve worked in Scotland. I’ve worked in most major U.S. cities and just traveled around. And I did a program called AmeriCorps that took me around a bunch of different places. And I was a management consultant. So I was working in big Fortune 500 companies, you know, over the years.

Tim Fitzpatrick
So how’d you end up settling in Denver?

Paul Heffner
It is AmeriCorps. AmeriCorps brought me out here. I was applying to all the East Coast jobs, that’s where I’m from, and I got stationed out here and I was based out here. But then during that year, I worked in Austin, Minneapolis, even around the surrounding area, like sort of a winter park in some other places. But then I loved it. I never snowboarded. And I was like, I tried snowboarding once. And it’s like, this is awesome. I’m horrible at it, but it’s really fun. So I kept doing it and then I got better and better and now I love it.

Tim Fitzpatrick
Awesome. What about success? What does it mean to you?

Paul Heffner
I think this one’s another hard one for me and I’m always changing my answer. But right now, just with kids and with my business and all the craziness going on, it’s actually when whenever I take the time and whenever I reflect back and write something in my gratitude journal, which is not a typical answer, it wouldn’t have been my answer even two years ago. But what I find is sometimes the success is literally just making it through a night when you have a sick kid and you throw up everywhere, whatever else is going on, it’s like, hey, we made it through the middle.

Paul Heffner
Like you weren’t sure how it was going to go. And that’s that’s it. Or sometimes, you know, it’s getting an exciting client is taking the time to write that down and say, hey, I really am grateful that I got that client or whatever it is. I’m constantly changing that answer. But that’s where I am and sort of this present day.

Tim Fitzpatrick
That’s OK. Things are always in motion, so things change. What about your happy place? Where is it?

Paul Heffner
I think it’s on the top of a mountain. You know, just the beauty of the surroundings being in nature. Usually, there’s no cell phone reception, so that’s a good thing. And then there’s always some sort of, I don’t know, accomplishment, maybe hiked to the top or maybe it’s like a ski lift out and you’re going to ski down or whatever it is, there’s some sort of adventure where you’re actually doing something. So that’s my happy place.

Tim Fitzpatrick
Awesome. What qualities do you look for and value in the people whom you spend time with?

Paul Heffner
Sort of similar to what I was a value, yes people that will do the adventure stuff, so not necessarily yes people, but, you know, if you want to take a trip to surveil, who wants to do that’s, you know, the people that’ll say yes. And it we’ll take those chances. Or it could be people that are investing in real estate or that are, you know, having their own business and trying things and learning from them.

Paul Heffner
I love those stories of, hey, I tried this. It completely sucked, but it was really fun. And I learned this lesson or we had this crazy trap. We got completely lost and went down the wrong side of the mountain. And I have lots of those stories. And the people that I, you know, will put up with, with getting lost and doing all those things and enjoy the adventure of it or who I like to be around.

Tim Fitzpatrick
Awesome. So let’s jump in and just learn more about what you’re doing with Finance Pals, tell us who you’re working with, what you guys do, and then we’ll jump into some bookkeeping and finance tips.

Paul Heffner
Yeah. So so we’re basically doing bookkeeping tax and CFO work. We do it mainly for small businesses and startups, and we try to do more than just do the books or just get the compliance side of know taxes done or things like that. We’re really trying to find insights to help the businesses be more efficient, to help them make more money and to even just provide simple insights like, you know, did you know you’re paying all this credit card interest?

Paul Heffner
Why don’t you pay down your credit card or your bank balance as to whether you’re getting charge, all these minimum balances to more strategic, like you’re spending all this money on marketing, you know, could you be more efficient with what you’re spending in? All sorts of things like that. And then we’re super flexible as well. So we’ll train people how to do their own bookkeeping, will train their staff, we’ll teach them how to do it or we’ll help them just come up with better processes a lot of time so they can take it going forward. Wherever they are. We’ll take it all, too. But everybody’s in a different spot of what they want to do.

Tim Fitzpatrick
I was looking at your website and you actually have hourly pricing for most of your services on there, is that how you typically work or do you also work on a monthly retainer?

Paul Heffner
We do both. So and we’ll do project work like, hey, can you do this project or can you build us a budget? Can you do this things or did some of those things fix for you? What I found is a lot of time and it was funny. Clients go back and forth and although they’ll start out here, we have all this work. Our books are a mess to fix fee for, like, you know, whatever it is, five hundred dollars a month.

Paul Heffner
And then the books get clean and they’re like, your problem. I spent much time with respect early and then they want to switch back and forth and all that stuff. But yes, that’s sort of where we try to be super flexible when we put all our pricing on our website. And I think that that helps people, if they look at the pricing is looking for, you know, we don’t want to waste their time. We also want to be very upfront, which, you know, I don’t know.

Paul Heffner
I have a good question for you, Jim. I know why people don’t get pricing on their websites, but I try to be an open book and say here’s our pricing and yeah, we can do to fix it. It’s just about the same amount. But a lot of times, though, the fixed fee puts it on us to be more efficient. You know, we might talk about some of that later, but you know that we’re trying to do a fixed fee. We’re going to be super incentivized to do it as efficiently as possible.

Tim Fitzpatrick
It was refreshing to see pricing on your website because most people don’t do it and actually had a conversation in a podcast interview about that. Like because there are two schools of thought. Right. It’s either you publish it or you don’t. And the people that publish it just want to be upfront, transparent. And like you just said, you know, hey, if we’re not a good fit price-wise, then why spend time talking?

Tim Fitzpatrick
We can’t help, you know. And then there’s others, I think, that feel like when they put it up there, they’re reading people there. They may be just getting rid of people before they actually have the ability to have that conversation. So I don’t know. I’m more on the transparent put pricing up side of it or, you know, even like with some of our pricing, it’s not quite as said it. It is going to vary depending on what we’re doing.

Tim Fitzpatrick
But where we can put up pricing, I do like to put it up so that people know so awesome. Well, listen, let’s jump into this. Bookkeeping is not the most exciting thing in the world, but it’s got to be done. How can people be more efficient with their bookkeeping?

Paul Heffner
Yeah, this is a great question. It starts with looking at where they’re spending the most time. So a lot of times people will come to us and they’ll say, hey, you know, our invoicing is taking a long time. We have all these things reconciling and we’ll sort of start in those areas to help that. But what we find is that you can change the process a little bit to say, like reconciling like some people follow the old school methodology of having a printout and taking that to print and highlighting stuff and saying, OK, that’s expenses here, that’s expenses here.

Paul Heffner
And, you know, when we get rid of all that, we have it all. Use the tools and whatever software input works or things like that to find out if it’s a really messy one where word excel undebatable checking stuff and we can literally go right to the table and say, this is the day where the variances look at one day versus what you get thirty days. And then there’s a lot of things that people can do to automate stuff.

Paul Heffner
And this is where we sort of said, I’m sure there’s a lot of marketing automation that you introduce to people and they’re like, wow, that’s amazing. So we do that. We automate accounts receivable follow-up. That’s probably the most annoying thing that people hate, is trying to send emails like our invoices overdue. Do you know, don’t send it because either they are lazy time or whatever it is by doing that and automatically sending it, you know, having the software does it saves them a lot of time.

Paul Heffner
And if you take a page faster, we do the same thing with our fixed fee or recurring invoices. You set that up so it automatically sends it out, which is awesome because, you know, you sort of wake up that morning and literally you see 10 emails go out and you’re like, well, I just sent 10 invoices and didn’t do a thing. And that’s amazing. The other one is invoicing is really hard. And some people have very sophisticated invoicing processes like, hey, I’m going to do this, then I’m going to just do all these things.

Paul Heffner
But especially for hourly invoicing, where if you have staff that is working, you know, like five hours on this client and 10 hours of this client, you’re going to take your incident invoice. We use software to do that. So as an example, we had one client as a software developer and they were having their contractor send them invoices. So they were getting a PDF of like I worked on these clients and those things that were that somebody was going in and typing it and putting it both in AP and we automated at the end of their time.

Paul Heffner
The contract was their time to get tickets, which is now Quickbooks time. And then that automatically flows through to automatically to the invoice where they say, you know, at this time, and that adds all the time. Plus all the contractors that’s used to take them probably 20 hours a month now takes some like three hours. So it’s huge time savings.

Tim Fitzpatrick
Is most of your accounting work in Quickbooks or do you work with other programs as well?

Paul Heffner
We’re across the board. Quickbooks is probably about 80 percent of our clients and most of those are Quickbooks online. We do still have some desktop Zero. And then we get a handful of Wave, Freshbooks, the smaller ones, and then occasionally get a bigger one that’s on a stage or something like that, or predominantly Quickbooks online, which is a, you know, people. It’s funny, the people that don’t use Quickbooks, it’s not because they hate the software, it’s because they hate the company.

Paul Heffner
Hear the word about it. It’s a it’s a good product, but so are all the other ones. We all get the job done and they’ll have free trials. And it’s I always tell people there’s a cost. You know, they asked me which was the best and there’s a cost to transfer over. It’s probably about the business, about five hundred dollars to change from one to the other. And so we just keep it where it is. I know there’s some bookkeepers who specialize in one. We don’t care that much. We’re happy to switch between them.

Tim Fitzpatrick
Do you find from an automation standpoint, are people just not taking advantage of the automation capabilities within Quickbooks or are they not using third-party apps that can integrate with Quickbooks to automate?

Paul Heffner
Both. And there’s some resistance. You know, they’re worried about getting it wrong or making a mistake, because once you automated, it’s like, hey, what if I send out a reminder and it’s not really overdue or what if it sends out an invoice that’s wrong or they know people are maybe rightfully so afraid to trust a computer to do that stuff, they feel like you have to be in it to do it. Once they can sort of let go of the divine or do whatever they’re going to do to let the freedom go.

Paul Heffner
It saves them a ton of time. So that’s probably the number one obstacle. And they don’t know about it. I show people even just like in Quickbooks or Zero or they all have ways to do the rules, say, hey, whenever I go to coffee, go to whenever I go to any sort of thing with coffee in the name or if I go to Starbucks just to be entertained, that there’s ways to do those rules. And when we show them how to automate it, it’s a really easy thing that all the softwares do this.

Paul Heffner
The last time you coded it this way, you know, you still want to go this way, but to automate that word automatically puts it in. Even if it saves you ten seconds or five seconds, it’s still saving you time. Just the mental power of like, hey, is this right? Am I OK to click this. It’s automatically done. And then you can always go back after the fact. And we’re always reviewing the financials to say, hey, does this make sense that now was booked.

Paul Heffner
And so that’s where he gets a lot easier to look at it that way because you’re going to do that anyway. But yeah, so it’s a combination of things. But I think that it’s the knowledge of knowing what’s out there and the to. Really being OK with letting go of the control, which is hard.

Tim Fitzpatrick
Yeah, so OK, so I want to make sure I got this right because I think you hit on some really important points here. How can we be more efficient with our bookkeeping? One, automation. Two, looking at and analyzing our bottlenecks or where we’re spending most of our time and how can we make that aspect more? How can we make that better?

Paul Heffner
Got it. Yeah.

Tim Fitzpatrick
OK, awesome. I love it. Those are fantastic tips. So. Where do people go wrong when it comes to budgeting and planning? My guess is some people just don’t budget or plan, period. But let’s dig into this.

Paul Heffner
Yeah, no, that’s a great first step. You know, I think not having a budget or plan is the first one. Creating a marketing plan to be able to plan and use so much value in that plan. I used to always say that not having one is sort of like going to the airport without having booked a flight, which I’ve done plenty of times. It works out fine, but you end up wasting a lot of time waiting for the flight. If you don’t have a, you know, a marketing plan or any sort of financial plan, you’re going to end up spending too much time or too much money in spots where you shouldn’t or you’re not going to be spending enough because you’re just saying, hey, I want to get to this goal, but you’re not having a plan to get there. So that’s number one is creating one.

Paul Heffner
And then the second part of it is what you do after the fact. That’s in the next. Next thing people do is they say, I’ve got this plan to get you a million dollars and then they don’t touch it for a year. And so it’s getting it in a way where you can track you actually did it with actuals and sort of do the variance analysis. And a lot of people will have the super-detailed plan, like, you know, the marketing will be like, hey, we’re going to have this many clients. We can have this many, you know SEO, we’re going to have this mini marketing strategy. And then they have all this detail in their budget and then they go to their accounting software and they have it.

Paul Heffner
All of us just it’s like sales and it’s like, well, hey, now I can’t compare. You know, I’ve got ten thousand in sales. I don’t know how much was in each of those categories. So you have to make just getting the details the right level so you can start to track where it is. Sort of the next part of starting to have a budget, start to have a planning process so that the variance analysis and say, hey, I was expecting to get a thousand dollars and this type of revenue, how I got five hundred. Let’s figure out why. And that’s the next piece sort of tracking that variance and then you improve the forecast going forward.

Tim Fitzpatrick
I want to hit on something that you said because I think it’s super important if you don’t put in the proper categories that you’re going to track. The data that you spit out could be not worthless, but not worth nearly as much as it should be. So the input is going to determine the quality. The input is going to determine the quality of the output.

Paul Heffner
And what it needs to match up what you’re planning or how you’re tracking things. Because some people and I’ve seen it the other way too literally, people will have almost like a thousand lines of like, you know, hey, this is how much I spend at Starbucks. This is how much I spend, so much I spent. And it’s like, well, but then it goes the other way to where, you know, you can start to say, like, let’s say you have a company vehicles and people will you know, it’s really easy to say how much I spent on fuel.

Paul Heffner
And that will work for most of the time. But I’ve seen it where people will try to get the fuel buy for the per van because they want to see if any of their employees are stealing fuel, you know, where they might go and say, hey, you know, this car’s not as much efficiency as another one. Let’s ask the employee what’s going on. So it goes back and forth and it’s all, you know. But I would say don’t track it by vehicle if you’re not going to go back and check it and say, hey, is this something?

Paul Heffner
And then ultimately, you know, maybe you could get that analysis another way as well. You don’t have to have it in your books. So I go back and forth on it. It all depends on how they’re going to use the data and what they’re doing. So there’s a sweet spot and it changes year to year for the company as they grow bigger or things like that.

Tim Fitzpatrick
Which is OK, right. I mean, because you can update it and change how you’re going to track things at any given point in time, right.

Paul Heffner
Yeah. So I mean, companies are always changing how they’re tracking things and even how they’re categorizing things. You know, as you get bigger, you know, more sophisticated software companies like what’s cost and what’s not cost of goods sold is a big sticking point on, you know, and it really changes year to year how they track those things.

Tim Fitzpatrick
So once people have some budgeting and planning in place, like what should happen from a forecasting standpoint and how do they do that?

Paul Heffner
Yeah, I think it’s sort of we started to touch on some of it, but it’s making those doing that variance analysis and then changing the forecast going forward and making thess cheat sheet plans. So a common question I get is how much cushion or how much money should I keep in the bank? And you can’t answer that question until you have a good forecast. If your forecast is really accurate and you say, you know, my profit next month is going to be, you know, a thousand dollars, my revenue is going to be ten thousand and the actuals and you’re right on that, you start to have more faith in how much cushion it’s like, OK, well, now I feel comfortable in my forecast.

Paul Heffner
But if your forecast is way off and you think you’re going to have a thousand dollars of profit and ten thousand dollars, it’s like, oh well, I don’t have faith in my in my forecast. And so that’s building towards having a good feel on your business. And then once you have that, you start to make the strategic plans that, hey, I want to hire a person. You know, we’re going to hire a sales rep.

Paul Heffner
We’re going to spend. More on marketing, because we want to get more customers over things because we have a good idea of how much cash we have and that’s really what you start to do when you start to have these forecasting what’s really, really important. And then ultimately, it’s going back to your point of why companies are created in the first place. You know, you don’t want to run, I don’t know, 10 months of SEO work or something like that.

Paul Heffner
And you quit because you don’t have any customers. But your plan said, hey, we’re going to do this for a year and then, you know, you quit one month too early or too much too early. And you get discouraged or something because you’re not seeing the results or the opposite side is, hey, you’re trying to stop. You’re spending all this money on Facebook or something else going on Google. And it’s like, hey, we’re getting so many more customers from Google stuff to Facebook.

Paul Heffner
So you can have it both ways by tracking that the financial results, you can start to make those strategic decisions a lot better. And that’s where all the that’s why you’re creating the plans in the first place.

Tim Fitzpatrick
Yeah, I love it. So let’s talk about growth. How do companies improve their growth, profitability and in cash flow?

Paul Heffner
This is tricky because you really don’t do all of them, you can’t do it all. It’s sort of like the old work-life balance. You know, you can’t have all the work you want all the time. But like, when you sort of have to pick and choose. Yeah. And so if I’m working with a startup, it’s all about growth.

Paul Heffner
If they’re receiving angel or VC funding and they’re showing a profit, you know, they’ve done something wrong. You know, they need to be investing in growth and trying to work towards an exit or their exit multiple is all based on that sort of growth and revenue versus a bootstrap business. They’re going to choose more to be on the profitability side so that they can choose and it may change based on how much cash you have and where you are in your cycle.

Paul Heffner
So that’s the first thing is sort of start to choose which one you’re going to look at. And then you can start to get into, you know, how to move those leverage. And once you start to do what you choose, which way you’re going to focus on. So with growth, it goes back to that plan where you’re spending your marketing dollars, which are your cost to acquire in different channels. You know, how could you lower that?

Paul Heffner
How can you optimize it? How can you spend more? Because as you spend more, you sort of get diminishing returns. But managing all that and then the profitability side is the other side. You start looking at what are your fixed cost, what are your variable costs? And sometimes it’s trying to figure out how to leverage to pull to improve your profitability, which is tricky in its own way.

Tim Fitzpatrick
And how those growth and profitability then impact cash flow?

Paul Heffner
Yes, I said all it all flows through, so obviously, your profitability will be profitable. A lot of times that will lead to positive cash flow. Sometimes you can grow fast enough where you’re at your customers. Maybe you have enough lifetime value where they might spend a hundred dollars to get a customer and that customer brings you back four hundred. But if you had too many customers in one month, it’s still going to be another three or four months before you get the cash back.

Paul Heffner
Even though you’re profitable, your cash flow might be negative. So you need to to manage that. And I guess it comes down to sort of really looking at how you analyze it and they make the right decisions. So I had a company that I worked with was a solar company. There were about 10 million dollar company. And we started looking at how much they were spending on different areas of marketing. We called a marketing effectiveness analysis and we said, here’s how much you’re spending New Jersey, here’s how much you’re spending in Alabama.

Paul Heffner
Here’s how much you’re spending for sort of channel partners that, you know, you’re paying a commission to do so. What, you’re paying sales reps. And we ran this whole analysis and we said, hey, look, these regions are sucking, you know, they’re not making any money. You’re not getting any customers. And they made a change and they’re going to save like five hundred thousand dollars a year just by sort of implementing this change that they were sort of, you know, doing too many different things. And they optimized said this is what we’re going to do to save money and to grow the company. So it’s balancing all those things, doing some analysis.

Tim Fitzpatrick
Got it. And do you find like if people are investing heavily in growth, you know, like you said in a startup. Does investing heavily in growth automatically impact cash flow negatively or how do those two things coincide?

Paul Heffner
In my mind they’re inversely related to the more spending on growth, the worse your cash flow is. But I think that there’s smarter ways to do it. So we always encourage people to sort of ramp it up. So know that that first month you’re spending, you know, Google ads or whatever, you know, you’re not optimize your cost. You’re cost per cliks is going to be too high. You don’t have the right landing pages. You don’t know what campaigns are working.

Paul Heffner
And then so we say, you know, sort of ramp it up as you as you go. And that’s sort of what we’re trying to do. But ultimately, you know, if you’re a growing company, you’re going to need cash to do it unless you’re, I guess, going back even full circle. You can look at your cash conversion cycle and things like that, so we work with some companies that are able to grow fast and have cash flow because they have their customers pay them upfront.

Paul Heffner
So when you’re collecting the money, when you pay your employees and your vendors and the cash conversion cycle, so if you can flip it around, flip it around where you get paid upfront. Those are some of the things you can do to improve growth. And then I don’t want to go off on a tangent too much, but it’s cool. There’s just people that don’t understand how it all ties together in the profitability side. So we’re working with that same-store company I was talking about.

Paul Heffner
We were looking at their stuff and they were factoring their receivables, you know, like, you know, ten thousand dollar solar project and their factor, which means they would essentially get paid like nine thousand dollars right away and the bank would take a thousand dollars or probably more than that to give them the money upfront. So that’s called accounts receivable factoring. So those are some of the things that people do. And then they were getting payments when the contract was signed, sort of when they hit a certain milestone and the project was completed.

Paul Heffner
So they were getting three payments and they were using that cash from sort of the first infusion of cash contract was signed to spend more on marketing and then to grow and to get more customers and to do all that stuff. But they’re their challenge was they had no idea. They were just like, hey, we’re growing. This is great. Like, you know, we look at each contract as like, you know, we’re getting ten thousand dollars, you know, we’re getting nine thousand dollars in cash and we’re spending eight thousand on all of our expenses.

Paul Heffner
We’re making a thousand dollars per contract. But what they weren’t doing is managing the cash flow. And so what ended up happening is most of those eight thousand dollars were on the late stage of the product. You know, they were doing all the installation, they were doing all the stuff. And that was at the very end. And they had already spent six thousand dollars, you know, on growth, on all the other markets. Like, that’s the backlog of stuff.

Paul Heffner
And they need to pay all of these vendors to do the install. Didn’t have any cash because they had already spent it. And so it has been managing all of that stuff is it’s complicated. And you need to I like to say you need a good model to sort of say, hey, how are we making sure that we don’t over overspend our cash, even if it’s not growth and or in a positive method, know on paper you’re still profitable.

Paul Heffner
But if your cash is tied up and you’re not managing around, you’re going to run out of money and you’re not going to do good, then you’re going have to factor more money. You’re going to have to do more stuff, and you’re going to end up in a vicious cycle where you’re going to end up maybe going out of business or at least struggling to overcome some of these challenges. And I think at the end of it, we were doing the math and they needed to, like, raise a million dollars because they spent it, you know, they had this backlog of stuff they needed to install so well.

Tim Fitzpatrick
So that’s a perfect example of why businesses need somebody like you to come in and make sure that they’re making the right decisions because there’s plenty I mean, I’m sure you’ve seen that there’s plenty of examples of companies that are profitable that have gone out of business.

Paul Heffner
Oh, yeah, for sure. Yeah. And it’s also. That where people have, you know, maybe a good business, but they get discouraged, they have a few bad months, they don’t understand what’s going on. They’re like, I’m you know, I’m fed up with this. I’m ready to go back to my salary job or whatever it is. I’ve been doing this just long enough that I’ve seen a wave of all those people that to do that.

Paul Heffner
And I think that having the plan helps with the strategy and making the right decisions and not running out of cash to starting a business. But it also helps you stay encouraged when you have a bad month or something like that, too. But, yeah, we’re helping. I think you’re playing it and I see there promote my business. But, yes, that’s basically our job. You know, we’re trying to help people make those decisions so they can do it on their own.

Paul Heffner
They can come up with this analysis. They can do this stuff. But a lot of times they don’t they don’t know how or they’re frustrated and they just feel like they don’t have enough cash or they’re not making a profit. And they’re saying, how can we do this better? And that’s what we help out with. Whether it’s simple models to say, hey, if you increase prices by one percent, what to do? Or if you reduce your you know, even your interest expense on your credit cards or something like that, what would that do? And running these scenarios, we love doing those types of analysis to help people run their business better.

Tim Fitzpatrick
Awesome. Any last-minute words of wisdom or parting thoughts you want to leave us with here?

Paul Heffner
Sure. And this is one for me personally. What I do is I try to choose door, which is sort of an interesting thing. So what you do every day is sort of your door. So like how you drive to work or what you eat for dinner, all those things are sort of your habits and your things. And so whenever I can, I try to do something different, whether it’s, you know, watching when I to work, I’m very efficient.

Paul Heffner
So I would have to have optionality. So there’s multiple places where I turn and depending on traffic and all these things, like I’m always optimizing the best drive. So that’s probably I would say I almost never drive to school, drop off or to work or whatever the same way two days in a row just because I’m doing whatever, but more importantly, applying it towards like business and things like that. You know, if people are hesitant to hire marketing help or hire financial help or hurt or whatever it is, those are the things that if you’re doing the same thing over and over and your business is stalled out at five hundred K in revenue or whatever it is, then you need to try something different and it’s scary.

Paul Heffner
But then when you try it, you’re at least going to learn something. You’re going to have a fun experience and try it. And then hopefully it will lead to different outcomes and better results than what you seen before. That’s my thoughts. And then make a plan and all that stuff, you know, just wasted money or whatever. But you have some idea of what you’re gonna do.

Tim Fitzpatrick
Awesome. Paul, where can people learn more about you? Obviously, guys, if you listen to this, Paul knows what he’s talking about. So if you hit some roadblocks, you need some accounting finance help, need somebody to dig into the numbers to give you some answers and some clarity on what shift you may need to make. You’ve got to reach out to Paul. Where’s the best place for them to do that?

Paul Heffner
Yup. You got it right there. Check out our website. We try to put some good content out there, not as good as tents, but no content out there to help you along the way. Some of the stuff I was talking about automating some of the stuff we have, but our podcast or not podcast, we have a blog post on all of those topics and then, yeah, my email and it’s on there so you can reach out to me there. Love to talk to anybody.

Tim Fitzpatrick
Cool. So that’s financepals.com. It’s finance P-A-L-S .com. So go check it out. Paul, I really appreciate you taking the time in. And thank you for those who are watching, listening. Again, I am Tim Fitzpatrick with Rialto Marketing. If you want to gain clarity on where to focus your marketing efforts right now, hop on over to our website at rialtomarketing.com. That’s R-I-A-L-T-O marketing.com. Just click on the free console button, guarantee you’ll get a ton of value and get some clarity on where you need to focus right now. Thanks for tuning in. Till next time, take care.