EP 152: Improving Your Financial Reporting Strategy with Nathan Jenson

Well, how I got here is a much bigger question, I guess. But it sort of does set it up a little bit. So let me give you the brief story as brief as I can. When I was in my very early 20s, I decided I was going to be an entrepreneur and started a window cleaning business. Right. Pretty simple business. pick up clients, clean their windows, get paid. Not a lot of technical know-how needed. About two and a half years in, I managed to drive that business into the ground. Part of it was just kind of burnout. Part of it is I had taken on some debt, didn't know how to manage it. And part of it was I actually hired a bookkeeper who really messed up my accounts receivable and I had trouble getting paid. And the amount in receivables was minuscule now as I look back, but at the time it was enough that it just... emotionally, I really couldn't get past it. So, uh, went out of business, went back and got a job, started another business, drove that one in the ground. Uh, and yeah, started feeling like, boy, maybe I'm just not cut out for this, right? Maybe I, maybe I'm just the employee and that's all I'm ever going to be. But it was something inside of me. I'm like, I'm just going to keep going. I've, I ended up, uh, getting some education in accounting. Uh, that's a whole nother story as to why, but I never intended to. But once I started doing accounting, it just clicked for me like nothing really ever had. And so I went back to school, got a master's in forensic accounting, became a certified fraud examiner, certified management accountant. I've got a couple other credentials. And the interesting thing is most people who go into accounting, they know they're going to accounting, right? They want to be a CPA. They're going to do audits, do public accounting. Again, for me, it was never really my intention. And so as I learned accounting, I learned it while I was working for small businesses. And I eventually got to the point where I sort of leapt off again, said, I'm going to do my own business. This time it's an accounting business. And I was able to take my skill and just go into small businesses and do the bookkeeping, right? Just very simple stuff. As I started to grow that business, I had one client who was very, they asked very good questions. And so they would want, they would want help with forecasting. They would want to look at certain metrics. that they knew were important in their business. And that one client, just because of the questions that they asked me, they sort of forced me to, again, get more education, dig deeper and find more ways to make companies profitable. And so what got me here, again, I never intended to go into accounting, but as I've worked with different companies and several contractors over the years, I find that most people don't understand really what's driving that profitability. What I've seen in so many companies, I mentioned this before we actually started recording, is so many companies, they will focus on growth. And they'll say, I need to bring in more clients and more clients equals more money. And what happens is they then work themselves managing more people or more subcontractors. And they're working twice as hard. And somehow the extra money, the extra profit never quite materializes like they expected to. And so what I do is I go and I focus. I help clients understand first, what are those metrics that matter? Revenue obviously is an important metric, but it's not the only metric. A lot of clients need to understand better what drives certain costs, certain areas of costs. And so by doing that, by focusing internally first, we're able to say, okay, where are we efficient and where are we not? And if we can fix where we're not efficient so that we're running, let's say even 90% efficiently, then when we bring on new clients, we can plug them into our system. And they will be just as profitable as all the other clients. But if we're inefficient internally, growth more often than not seems to really not do a whole lot for small businesses.

Not very many people say that when I talk about accounting. So let's explain that maybe.

so i'm just the flip side of that right if you hand me a hammer I'm not always going to be sure which end I'm supposed to hold to get it to work right. But if you put me in front of an Excel spreadsheet, I will create a work of art in my eyes, maybe not in everybody's eyes. But that's my tool, right? Well, that's one of several tools. But yeah, so one of the misconceptions, accounting, profitability, there's very light math, right? It's really mostly addition and subtraction, maybe a little bit of percentages or fractions. It's not the math that's hard. It's really understanding just the structure behind those numbers. And as I said before, which ones are important? And let me give you a quick story about a general contractor friend of mine who maybe a year and a half ago called me and said, hey, Nate, I need to understand. It was a very good question, actually. I was impressed with the question in the first place. But he said, I need to understand, would it make more sense to hire or to use subcontractors instead of all of our employees that we have? Right? On the surface, you might just say, well, which one's cheaper, right? And go with that. But the astuteness behind his question was he understood that his subcontractors could get the work done a lot faster than his employees. Also, he had additional managerial costs in having employees internally, right? And so we looked at not only what were the costs, but what was the, essentially, the turnover of jobs? Like how quickly could we complete each new job? And so... The analysis that we sat down and did was looking at at what point does it make more sense to use the more expensive subcontractor than to use your own employees. And again, it's been about a year and a half, so I'm remembering the numbers as best I can. But we came up with this sort of concept is in one year, you make with employees, you make a certain amount of profit. In eight months with subcontractors, you make the same profit. And so we, again, using the cost versus the time that it takes to get jobs done with the caveat, Mike, as long as you can keep bringing in enough work, right? It's better to keep your subcontractors going because at month eight, you've broken even. And then those next four months, you're making more money than you would have with your employees. However, that's, we sat down again, that's been quite a while. We sat down and did that analysis. Is that still going to be the case today? I don't know. And so what I've focused my business on lately, I still do a little bit of consulting, but I really focus on a financial dashboard. If a company wants to really manage their profit, there's three things that they need in my world. They need to know what metrics matter that we mentioned already. They need to have a target for those metrics. And they need to understand, well, really, what was their actual on those metrics, right, which tells them the difference between the target and the actual. And so I build financial dashboards. So instead of having to pay me every single time you have a question, we sort of sit down and figure out what are the questions, right? What do we need to know about our business if we're going to drive profitability? I can then build a dashboard. And so when you have that question, you can open your dashboard, like click of a button. Who's my most profitable employee? Who's my most profitable client relationship or referral source? Or again, whatever the metric is that matters in your business, you can see we wanted to hit this point. We only got to this point. That's where we need to focus. That's what we need to fix, right? That's our inefficiency. And so it's just an idea of identifying those gaps. And that's going to tell you what you need to fix. So when people talk to me about accounting or profit and say, ah, the math is hard. It's not the math that's hard. It's understanding kind of how all those numbers interrelate, which ones really matter. And then just having an easy way to track, did we do what we were supposed to do? And if we didn't hit it, we can figure out why.

So, so that's a great question. Cause I'd love to sort of leave some value, right. With your listeners. The number one thing I would do first thing is I would sit down and figure out what is my break even, uh, this, and that's not just contractors. That's just about any business. Uh, if you're starting today, you need to know, okay, every time I sell a dollar worth of business, how much is going to variable costs, right? So meaning if I sell a dollar, I know I've got to pay 70% or 85% in my material and labor costs. That leaves me 15 cents to run my business. And out of that 15 cents, I've got to pay, you know, am I renting an office or am I doing it out of my garage? Am I having to hire some kind of staff, you know, administrative staff or whatever? Understanding that number, what does it take to break even every month? You can then say, okay, every month I need to sell X.I need to sell $10,000. I need to sell $100,000, right? Whatever it is. So that's number one thing. Second thing is identify your other metrics. Decide what metrics are important, right? So break even, I think, is the first one when you're starting out. But after that, you need to know what numbers matter. I'll give you a couple of examples. If you think of your business in two parts, one is the actual work that we do, right? We build a house, we renovate the kitchens, whatever it is. The second part is we run our business and it's two completely separate ideas, right? So you may be great at uh again renovating a kitchen or bathroom you may be great at managing people to do that but you've got to look at those numbers completely separate from how good how effective am i at managing my office staff or controlling my overhead costs uh so for example if you're looking at let's say let's talk about the overhead costs once you've you know built your house renovated the bathroom you have what's called gross profit right revenue minus your cost of goods sold is gross profit most companies don't Don't look at it this way, but they should. They should say, okay, out of that gross profit, how much should be my net income? How much do I get to keep? Okay, so let's say it's 20%. That means I have 80% to cover anything else that's overhead. It could be my facilities costs, my marketing costs, insurance costs, whatever. But if you think of your business in those two pieces, it lets you say, okay, what can I do to improve my efficiency in the actual work that I do? But then below that gross profit line, what can I do to improve my efficiency? in those overhead costs. And again, it's not so much about math. It's simply breaking those costs apart and saying, maybe even below that gross profit line, I like to put those in different compartments, maybe four or five kind of broad areas and say, this part should be 15% of gross profit. This should be 20% of gross profit. This should be 40% of gross profit. And that leaves me, whatever my target is for my net income. And so if my net income, my net income as a percentage of gross profit, if it's too low, I just go look at those other categories and say, okay, which one of these is too high? And then I can dig down into that category and say, oh, I'm overspending on mills or travel or whatever it is.

So that's why it's so important in my mind to have a dashboard. Because if you've got to go to your P &L every time, you've got to then throw it into a spreadsheet, split the accounts up into those buckets that you've already designated, plug in some formulas about which ones, the targets on each one. But if you have a dashboard that's set up, you just open the dashboard. And if it connects to your QuickBooks or whatever software you're using, you can see today, hey, here's those buckets for this month or for last month. And there's no stop in your flow to be like, oh, I've got to sit down and... you know, analyze my numbers for a couple hours, you can jump in for five minutes and be like, oh, I know exactly where that offending category or whatever the problem is. You can see it right there.

Yeah. So I build the dashboard. I've got a couple of different tools. Okay. I, you know, some, some data analysis tools and some BI tools, uh, kind of depends on the customer need. Some are good at the financial statement level. Hey, we can look at just the financial statement. And that's good enough for us to identify where our problems are. But a lot of them, let's say they're not doing good on their gross profit number. So their cost of goods sold are too high, for example. The only way to really diagnose what's going wrong there is you need to go deeper and look at, okay, let's look at the job level, which jobs are not profitable. And so that takes... that kind of detail takes a more robust dashboard tool. So it just kind of depends on what someone needs to really get to the bottom of things.

Well, there are some off the shelf softwares, right? That you can plug into. They'll give you some kind of canned reports or whatever. Problem I find with that is every business is different. Even contractor to contractor, some struggle with different things, right? Let me give you an example. I met with a client yesterday who happens to be a restaurant. And he's been a client for about four months. And he's like, Nate, the dashboard, I like it. It's good. But can you talk through it with me? So we met and his revenues have gone up. His diners, I guess, his customers have gone up. He's like, can I know what I do? Like, what's next? I can't increase people visiting my restaurant 10% every single month. How do I improve my profit? And so for his case, we looked at how many tables he turned over every month, right? Which basically means how many, he had like a 14 table restaurant, pretty small. How many times does he go through each of those tables per month? And then we looked at average ticket size. And so with that, I said, hey, look, I've had a similar conversation with him before when we started. So we looked at the average ticket size and I said, if you raise your ticket price, $2.50, you'll make about $10,000 more per month, right? That's not, that's like, you have to raise your margin that much. It's like, if you sell one more drink per dinner or one more dessert, you're making another 10 grand. And he was like, okay, that's great. And so that's partly why he's done well in the past few months. But as we looked at it again, I said, you know what we need to know is we need to know which of your menu items are most profitable, right? If you sell two dishes for 15 bucks, but one of them costs you 10 and one of them costs you five, well, all you gotta do is sell the one that costs you five instead of the $10 one and just recommend it. you know, your waiter recommends it as they're taking the orders. And if you can make a slight shift there, again, you don't have to sell anything more. Your revenue is the same, but your costs are lower. And so you're able to have a higher profit margin. So to do something like that with an off-the-shelf dashboard or off-the-shelf kind of software, it's going to be very difficult, right? So that's why I use the tools that I do, because I can come in, I can understand somebody's business with the... the financial and accounting brain that I've developed over the years and say, what do they need? What are their metrics that matter? And then I build the pathway really to get that data out of their accounting system or whatever system into their dashboard. And then they can just say, oh, there's my problem or, hey, we're doing better here. So it's really that for me, it's really that customization that really matters.

So job costing is actually what made me fall in love with accounting. I was. Gosh, this is close to 20 years ago, not quite 20 years ago. I was working as a bookkeeper for a door manufacturer. They did doors and molding. And the owner of the business at that time, I think he kind of started to realize I didn't really know what I was doing in terms of accounting, right, at that point. And so he, cool guy, in fact, his name was Brad as well. And he came up and he said, hey, Nate, if you want to go take a class at the community college in accounting, I will pay for it. And I went and I actually took two classes. I took managerial accounting. I took cost accounting. And cost accounting, every single day that I went to that class, I would sit there at the end of the class and be like, I had no idea accounting could do this. Like I thought accounting was just like taxes. You know, I didn't have any idea really. But it became so clear how just with the right information tracked in the right way, you could say this client's profitable, this one's not. Or this product is profitable, this one's not. And make decisions to make a business profitable, right? It's fascinating to me, Brad, because something like QuickBooks does this, right? You can track stuff in QuickBooks. There's obviously a number of contracting softwares out there that do this. And yet even so, a lot of the contracting clients that I have are somehow, they're not able to really make that connection between their software and the changes that need to happen in their business. Right. For me, anytime you look at a report, you should be looking at it to figure out what action to take. Right. It should either tell you everything is perfect or you need to fix something. And if you know, if you're like any business, everything's almost never perfect. Right. And so you should look at reports and say, OK, what actions does this suggest? I take most people, they look at the P &L for last month and they say, oh, we did better or worse than we wanted to. And they there's no again, there's nothing like that's connecting that report to. Here's the action you take to fix it. It's just like, ah, I guess we'll just work harder. Right. And so for me, that's really the piece that I, that I fix is here's all your data. Like you said, data is great. Right. Uh, but it only matters if you actually can do something. If it tells you, you need to change something, what to change.

Yes.

I talked to have told me a

Absolutely. Let me start with that, with a client I had actually, who has become a friend over the years. I've probably been his bookkeeper slash accountant four separate times. And we'd have a good relationship and things were going well. In fact, he was one of my first bookkeeping clients when I was actually like a freelancer. And I felt like, I think on that first one, I felt like it was time to go. I was going to, you know, I don't know, change what I was offering or something. For whatever reason, we decided to part ways. And then he'd call me back. a year later and say, Hey, my books are all messed up. Could you come fix them? Right. And the same, for whatever reason we kept separating, he kept calling me saying, Nate, I need your help. I need you to fix this. And I think in fact, that's, I'll be honest, Brad, that's part of the reason I chose to focus my business on contractors is because they do have complex businesses. Right. I mentioned my, my window cleaning business. It's not very complex, right? Somebody could come in there. Who's, who's, you know, average at accounting and understand, okay, you get revenue from cleaning the windows. The only cost you really have are the people, you know, laborers who clean the windows and a little bit of overhead. It's pretty straightforward. With something like a contractor where, you know, if you're building a house and you've got material from all different places and subs doing some of the work and employees doing some of the work, if there's someone who's not on their game in terms of bookkeeping, they're going to screw it up. It's just, if you don't, if you don't understand that world. you're going to make errors. You're going to make a lot of errors. And it usually takes, I don't know, a few months, three or four months. And then the owner starts to be like, Hey, these reports look all funny. I don't, this, you know, this job is way further along than you're showing. And then they realize there's a problem. And then they've got four months of books to clean up and they've got to go hire someone who knows how to do it. I've, I've got a couple of bookkeepers that, that I recommend. I'm not going to mention them here, but for that reason, right? Like if I'm trying to analyze someone's data and the data is garbage in the first place, Now, my dashboards are good for that. Like, we can look at the dashboard and use that to diagnose problems, not just in the business, but in the bookkeeping itself. But I really like having good data to analyze. And so if someone's like, Nate, do you know a bookkeeper? There's two right now that I actually recommend that I know do a good job. So for me, most of the data analysis happens in data entry. You've got to have a good person tracking your data.

Kind of. Yeah. When I was getting in my twenties, after I'd lost my window cleaning business, I had to go and get a job. And at that time I really had no skills, had very little education. But guess what? Anybody would hire you for a sales job. Right. And so I had in the course of, I don't know, six years, I probably had 10 or 12 different sales related jobs and I was not good at any of them. Sales was not my thing. And I think bookkeeping to a point is similar where if you've got enough skills to say, in fact, this is kind of how I started. I knew how to use QuickBooks a little bit. Right. And so if you've got enough skills to say, hey, I know how to use QuickBooks, good bookkeepers are hard to find. And so there's always people out there looking for bookkeepers. And so when you're looking for a job, if you know how to use QuickBooks and you look up bookkeeping jobs, there's all kinds of them, right? They're all over the place. And I think there's just a mismatch between the demand for a good bookkeeper and the supply of good bookkeepers. There just aren't that many out there. And when you're desperate to get your books done, you'll sometimes take the first person who looks like they know what they're doing and you just hope that they actually do.

the again contracting is so complex you've got to know the details i for me i think the best way to get a good bookkeeper is a referral right like if you know another contractor has a good bookkeeper who's a freelancer and they actually do a good job uh and they say hey you could you know my my bookkeeper is actually looking for another client i bet they do your books, that's probably the best way to get one. It's just to look at, you know, put out an ad. It's kind of a crapshoot. I've even seen where established bookkeeping companies can completely fail because they're, as a bookkeeping company, they're hiring as well, right? They're in that demand side for those bookkeepers. And if they have a client, they just pick up a new client that's a contractor. Hopefully they have an employee that fits that. And if they don't, they might put somebody there. And I've seen this. They might put somebody there who maybe they're great on, I don't know, restaurants or some other service kind of business or something, but they're not up to it on contractors. So even established businesses aren't safe.

Well, and recognize, obviously, that's kind of a blanket question, right? Like which one's better? For me, I think you're going to find the most success with the solo entrepreneur. And I can tell you that because I actually had a bookkeeping business that I sold, I don't know, a couple of years ago now, maybe. And I grew it to about 10 employees. And we did pretty well. But I found that with each successive employee that I had to hire, the control that I had over the quality of the books was diminished. So I started as that solo entrepreneur. I'm the bookkeeper. And I could get up to about six to eight clients on my own because I'm really fast. But that's where I really start to burn out as well. And so I'm like, oh, I'll hire somebody. And maybe that person's really good. It's just the one person so I can kind of keep on top of their work enough to make sure they're doing it right and doing it well. But you hire that second one and suddenly I've got, it's two against one and then three against one. And there's just no way to stay on top of it. So the bigger you get, the less control you have over the final product. So I do like the solo entrepreneur. Again, Just because they show up and say, I'm that solo entrepreneur, you still need some sort of way to validate their skills. Oh, yeah.

You know, that's a good question. I've seen some people who swear by it and seem to use it with great success. I've also seen one company in particular that I'm thinking of that used it to essentially burn a lot of bridges. because they basically said, if you're not putting money in my pocket right now, then you don't matter. So I think there's some value to it. And I don't know that that particular example necessarily demonstrates the thought behind profit first accounting that's supposed to be there. So that kind of may be just a bad egg. For me, I sort of avoid the question, to be honest. I look at it and say, you know what, there's profit to go around, right? If you've got to decide, am I going to pay my bills? Am I going to take my profit? there's probably an efficiency issue we need to address, right? So as I mentioned earlier, if I'm separating your charter accounts into buckets, you've got your facilities expenses, you've got your marketing expenses, etc. I know how much profit you should be making, okay? Let's use 20% of gross profit. So your 20% of gross profit, you've got these four other categories that each should be 20% of costs, okay? So that gives you 100% of your gross profit. If I'm not making 20% of gross profit, I'm going to go to those other categories and say why. which are these categories or which multiple of these categories is too expensive, is, you know, we're spending too much. And that lets me address those underlying causes. Again, I just, I don't feel, I've seen people use profit first and they do fine with it. I just, I feel like you don't have to decide. Like it feels like too much of a tug of war for me. It's like, well, I'm either gonna pay myself and then hopefully have enough money to pay other people. It's like, well, if we're on top of our accounting and our financial reporting is really good. then we know where the money is we know how much is coming in we know how we're going to be performing three months from now because we do forecasting too uh i know that eight weeks from now i'm going to run out of cash to pay my employees so i better solve you know solve that issue right now instead of eight weeks from now right uh yeah so for me let me go down a different rabbit hole for a second brad i i used to read so many books i was i was a business book junkie and i read Every new book I could, I want to be so knowledgeable. And I finally started realizing that book after book after book was, for the most part, same ideas, just kind of rehashed. And the reason I bring that up is business really is a science. There's certainly some art to it. But you can go to college and get an MBA, and it's like, here's how to run a business. Here's how to make it profitable. Here's how to make it work, whatever. And for me, I'm very much on that science side because I'm analytical, I guess. But, you know, I should be able to look at your numbers. Like there's a lot of successful general contractors out there, right? So someone's got this figured out. If your business isn't performing like you want it to, well, I'm going to go back to my initial statement where I said, one of the first things you do is determine what metrics matter. Okay? Because I can guarantee those companies that are doing really well, they know what metrics matter. And they're making sure that those metrics stay in line with their targets. And, you know, you could write books about better employee management or, you know, You have a profit first kind of stuff, different ways to look at these things. But it really comes down to you have 100% to work with of the cash that's coming in and you get to decide where it goes. And if you're inefficient, it's going to be sucked to places that it shouldn't go because you weren't making the right choices. So if you have all your data in front of you, you can make the right choices. You just got to know, again, which data matter and which don't. I like to look at like a chess game, right? If you're playing game of chess with a blindfold on, you've got to remember where all your pieces are, what their pieces are, how they all interact together, and just it's all got to be in your head. But if you can take that blindfold off and just say, here's everything, here's all the information, you've still got to make good choices, right? You've still got to make good moves. But being able to see all the data right in front of you is as different as trying to play chess with a blindfold on or off. It's trying to run a business that way. I mean, so many times I see people running their business really based on their gut. And some of them are good at it. Some of them kind of get away with it quite a while, but the data is there. So why not use it?

Yeah. And that's, that's part of the reason that I have the business model that I have now actually, because as a company grows, they need a CFO, but most, you know, let's say you have five employees, you can't afford a full-time CFO. You may not even be able to afford a fractional CFO. And that was, a big part of my business and it's still against sort of what i do on the side but i found that if i can create a dashboard that's easy to update uh people have the information in front of them all the time and they might need a little help here and there to hey help me interpret this you know how do i how to make a decision on this metric but over time kind of they stop needing that someone looking over their shoulder and they're like oh i know how to read my dashboard uh and i know how to make decisions off of it i've got a client that's in his dashboard probably to an unhealthy amount like every single day, probably a couple of times a day. And I'm like, your numbers don't change that often. Right. But he wants to know what, what have we invoiced? Right. Cause he's got a company of about 40 people and like four or five of them actually create customer invoices for their projects and things like that. And he just, he jumps in there to see how his business is doing all the time because he knows really, he knows how to take action on it. And he knows what's a red flag that tells him he needs to fix something right now.

Please don't say that.

I know I, look, I do a, I do a little model with people when I meet with them and when they're talking, you know, when I'm talking with someone about maybe they need a dashboard, we take them through four levels, right? You know, based on their financial reporting, I said, okay, how do you do your financial reporting? Is it what we call? checking account reporting, meaning I look at my checking account and see if there's money. Is it, I look at my P and L and QuickBooks. Is it, I look at my P and L and I kind of know what it's telling me. And, you know, I know if it's more or less than the prior month or then the fourth level is, Hey, I know my metrics and I know what they're telling me to do. So yes, way too many general contractors start out actually on that first level of checking accounts reporting, which is not a very safe way to do things. I mean, you're guaranteed to bounce checks that way if you do that.

Oh, I know, Brad, but that's the thing is it doesn't have to be that way, right? If you've got the data, if you've got a bookkeeper who's tracking your data, you should be able to look at your, whether it's QuickBooks or a dashboard or whatever, and say, I have this much money that I can spend. Not what's in the checking account, but what's going to be in the checking account after all my checks clear, after all this stuff actually goes through. You should be able to know that daily. Most of my clients start with me when they are struggling, right? Like struggling with cash. And that's the number one thing is like every day you should be able to, as a bookkeeper, you should be able to provide the owner of the company with a bank balance. Again, not just because you looked at the bank, but because you know what checks are outstanding, right? But see, for a contractor who is starting out or who's struggling, that's one of those metrics. What is my balance today? uh even more important what is my balance eight weeks from now right i should be able to forecast that um so it's really it's really just a matter of again knowing those metrics and knowing how to act on them i do i do think it's worth noting too there's there's two things that that as an accountant i know and love and understand but a lot of business owners who didn't you know go through finance school like i did uh it's kind of a different concept and that is the difference between profit and cash flow right uh if i invoice a client for 100 grand and my costs are 100 or let's say 80 grand my profit this month is 20 000 regardless of if i've received cash for my invoice or paid cash for my expenses and so i do look at those things two things very differently let's make sure you're profitable but then we've also got to make sure we're collecting all your cash and managing the cash flow it's kind of two different ideas yeah Sorry.

So if someone says, yes, I want, I want this. I want a dashboard, a financial dashboard. The first step is I do a little bit of research, which includes talking with them because they'll have some information for me as to what are the metrics that matter the most. Okay. So as an example, Someone who for who daily cash balance is an issue, that's going to be one of their key metrics, but someone who's got plenty of cash and they just want, you know, some help in and maybe general profitability, that metric might not be as important. And so that first step is saying, what is that? What are the metrics that matter? And again, I'll do some research. I know a lot about the construction industry, but if it's someone in a different industry, I'll definitely research that industry and find out what are the numbers that matter in that industry that most people are looking at. Once I have those metrics, I start building the dashboard. That includes me getting data from whatever sources they have. So again, it could be accounting software, it could be project management software, wherever their data is. I've just got to figure out a way to get it to flow to me. I build a dashboard. Once it's built, I then would reconvene with the client and we'll talk through targets, right? Because once the dashboard's built, I can say, look, let's use revenue just because it's simple. Your revenue has been here historically. In order to reach your goals, your profit goals, it needs to be here. So we start setting targets. Here's your target for your revenue metric. Here's your target for your net income metric. Here's your target for your utilization metric, et cetera. So we set those targets and then we start tracking. And so over the course of a few weeks, we have that set up. And within, say, the first month we've met, probably a time or two to review the numbers, make sure they're accurate, and set those targets, and even start to get some insight as to actions people need to take. And then at that point, after that first month, the customer's welcome to, like, you know, call me back and set some time up with me if they need further review. Or if they've got it, they can just run with it. But the idea is that, again, rather than... hiring me at a fractional CFO rate month after month after month, you can bring me in as needed, but you've got the data in front of you all the time and you know what the red flags are. So awesome. Yeah. Brad, I believe in simplicity. I think businesses, the more they can simplify, the better.

But in a general contracting business, there's only so much you can do, right? You can't, you've got a lot of moving parts. So I would say simplify your financial reporting.

Easiest way is the website, zerotocfo. com. That's Z-E-R-O-T-O-C-F-O. com. You can email me, nate at zerotocfo. com. If you go to the website, there's a contact form there. just as easy so it's probably the best awesome

going to tell you what i recommend and it was actually one of the very first that i ever read in terms of business not i ever read but in terms of business books that i ever read it was michael gerber's e-myth e like entrepreneur right because it's all about systems. He actually gives an example in the book of, you know, someone starting a business and they get too busy. So they hired this guy to do this. And then they hired this guy to do this. And suddenly he goes in seeing one guy, sees one, the one guy, like packaging a product to ship. And he's like, you're doing it wrong. Why are you doing it that way? And the whole point is like, you just hired people with no system in place. And people will always screw things up unless they have a system to follow. Sometimes even if they do have a system to follow, let's be honest. But the whole idea of systematizing your business fits right into this. This is one of the kind of the bedrock books for me because for me, it is all about systems. If you make a system, again, look at my dashboard, right? I'm going to identify those metrics. I'm going to put them on a dashboard. I'm going to put targets on there. And I'm going to make it easy for you to see those every single month. It's a system. It just flows. If you say, hey, Nate, we need you to create that, like recreate it every single month. One, it's going to be way more expensive. And two, I might do it differently the second month than I did the first month. And then the numbers are different or the targets are different or whatever. So the E-Myth, all about systems, I think it's a great read.

E-Myth. Absolutely.

for

My pleasure. Thanks, Brad.