Under The Table Trouble

Business Brain, episode 521 for Casual Friday, February 2, 2024. Greetings, folks, and welcome back to Business Brain. Or welcome to Business Brain. If this is your first time hearing us, we are the show where we take an idea or three, we dissect it, we analyze it, we use it to tune our business brains, each and every one of us, every single time we get together. Sponsors for this episode include gusto.com businessbrain, where you go to get three months of payroll, benefits, admin and more. Totally free and gosquared away.com contact. This is where you can learn about Squared Away, which empowers highly educated military spouses to become your trusted remote executive assistants. They all work on us hours. We'll talk more about all of this in depth in a few minutes. For now, here in Durham, New Hampshire, I'm Dave Hamilton.

I'm Shannon Jean. I'm still out here in California. We're getting ready for the big atmospheric river El Nino explosion that's supposed to start late tonight. And I find it fascinating that even the weather has like branded itself and marketing terms and all the it crazy. But yeah, happy Friday. Glad to be here.

Branding the weather. I think, I think Bodhi, our guest from Wednesday would be really like, he would be a good person to have branding the weather. He, yeah, he, he innately understands a lot of these things. Having that conversation with him on Wednesday, I hope you folks enjoyed it. And if you haven't heard it yet, go back in episode 520 and if you did hear it, let us know. Feedback at BusinessBrain Show. We want to know what you thought because that's our first interview in a while.

Yeah. And I, I, I think it's, I wanted to chat about that, you know, our first interview and kind of break down his, I love his concept. You know, he didn't, instead of going to work for some larger company, he had had some internships. He's a young guy, 24. Here they stepped in and bought a dumpster, you know, rental company, 10, 10 dumpsters, one truck.

20 dumpsters, one truck.

20 Dumpsters, one truck.

It took a lot to get there. Yeah, yeah, yeah, yeah.

And, and then built it up and this kind of thing. But along the way he started, he'd been in digital marketing before and he, you know, started sharing the process up on the X platform. He may be on other platforms I'm not aware of, but I followed him on X and, and then he started talking about his digital marketing so kind of bringing that together where look here's my business I'm running and I. My other company that I'm using to grow that business. You can also hire, you know.

Yeah.

Use our services and, and it's just so complementary. I read another, you know, post to a guy that I follow the other day, talked about being in the roofing business. He, you know, he's a flipper buying Philip, you know, fixing up houses and flipping them. But having a. A roofing business has helped his flipping business tremendously because he's like, couple times he's like, just in the last two weeks we've gone out. The roof isn't even worth fixing. And we wound up buying the house.

Oh.

And Right. And so it's kind of similar to bodies. You know, this. I rent dumpsters and then Stryker Digital. So he's able to drive all this business to his, the rental, you know, dumpster business and then sell that. The services that you're doing to grow it, you sell it to everybody else. So I really respect that. That, that flywheel concept that we're talking about between shows.

No, I thought it was fascinating. I mean, even just his comment about, oh yeah, I put these outbound links in and it's like, oh, I never thought about outbound links is good for SEO. I'm terrible at SEO, so that's good, you know.

Yeah, yeah, yeah, yeah. And you know, the one thing that he talked about that is just critically important is if, if you're not really in control of. I mean if you, especially if you're in the service business, but really any business, your Google my business page is just the gateway for you how people are searching because they're searching for things like dumpster rental near me or you know, deck build deck contractor near me or phone repair near me or whatever. And Google is using all that data in your Google My business to route that. They want the most relevant information to come up for their users. And, and all those reviews that you've got and pages and products that you've described in Google My business, that just has to be a focus of. For you to be successful.

I agree. I. Yeah, I agree. Yeah, it's. It's. Yeah. Do you have. So have you used this for like the businesses you have? Do you use Google My business pages? Yeah.

Oh, yeah. Yeah. And it's gotten better and better. It used to be really like for a long time before phone systems got kind of cloud based. You know, they would have to call you to confirm your phone number. But if you had like a big PBX system. Oh, yeah, well, you didn't necessarily answer the phone.

Right.

It just, it kind of got routed. So we would have to unplug, plug a regular phone in, do it really quick and then plug the phone system back in. But yeah, it's, it's one of the keys to the kingdom. You know, it's, I think the best place to send people to leave reviews for you. I think it's a great way we started. We used to give bonuses based on every five star review that a technician got. So if you got a five star review that mentioned your name, you got a $50 bonus.

Yeah, I've encountered businesses like that.

Yeah, it's huge because it just continues to drive and all that SEO stuff that you're directly in control of on your website and building out these pages, these near with geographical URLs.

Very important. Yep.

But let it. Getting all that good content. Content up on the, your Google. My business page is, is crucial. And I'm shocked. Some places you still search it. Google will have it up. But they're like, oh, claim this, this listing. Is this you? You know, so there's a lot of people there and that's a big opportunity as well. Like, like Brody Bodhi talked about, you know, he bought this business from an older gentleman, 65 year old. I think the guy's probably still running things on a fax machine or you know, his.

Oh yeah, well, you know, I like, I think we talked about it on the show. I was like half way down the path of looking at this dumpster rental business, what, six months ago or something? Yeah. Right here. Yeah.

And a guy saying, I don't have anybody to take it over. Correct. My kids don't want it. I gotta find somebody. I'm tired of it. That is, you know, the silver Tsunami.

Yeah.

You know that you hear about a lot of older business owners that, you know, maybe their business isn't quote, good enough to find a broker or whatever.

Yeah, no, this wouldn't have ever gone through a broker. It would have, it would have been half a million bucks. Like I think would have, would have taken the whole thing from him.

Yeah. And you probably could have made that back in the first, you know, two years or.

Yeah, yeah. The biggest problem was he wouldn't share. He wanted to sell it based on his actual cash flow, which makes perfect sense. Except his tax returns.

Yes.

Didn't show his actual cash flow. Right. He's like, well, I can't really show you that because a lot of it, I mean, in so many words goes straight into his pocket because it's a cash based business. And I was like, well, okay, but like, I can only pay what you like, what you can prove.

Yeah, you have to do that. And that's a huge. We could. Maybe we should talk a little bit more about this. This concept of under the table and cash and that kind of thing. I think that's a good discussion.

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Shannon. Yeah, I, you know, there's always this temptation. I like cash just as much as the next guy.

Yes.

But especially if you're starting out and if you're even in service business.

To.

Do things either, well, a couple different things. Do things under the table or maybe you're getting paid off the books or maybe you're paying folks to be in their contractors when they really should be employees. And if you looked at it, they really would.

They, they would qualify as employees. Yeah, exactly.

That's a dangerous thing because they're, you know, states and even the IRS are all over that.

Especially now.

Yeah, especially now. But it really hurts you in the long run because it holds you back in so many ways. And your example of the older guy that trying to sell the business here, yeah, he's probably led a great life. But because you didn't go, you know, make it official, if you will it, he just, he couldn't sell it because half the revenue or whatever just went to his pocket and. Yeah, that sounds great. And I'm living off the cash. I don't pay as much taxes. Well, not only it's, you know, illegal, but let's just put that one on there. I hate following rules, too.

It is against the law.

It is against the law. And we don't recommend that obviously here, but it, not only that, but if your employees find out about it, it makes you look terrible. And if you pay like I did some consulting just recently with a company in New York and just a great guy, you know, in the jewelry business. And he had all these guys working on stuff and everything. And I was trying to help him figure it out. And I was like, this just doesn't add up. I can't make these numbers work that you're giving me. And I don't know how to help you grow if I can't understand where the money's coming in, where it's going out. And it turns out he's paying probably half of his technical staff or designers or whatever, they're getting paid under the table. And you know, not that he was the revenue, most of it was coming in and being reported, but it was still some off the books. And I just said, listen, John, not his real name. I said, John, you're not going to be able to take this business to another level if you're operating in this manner.

Right.

Because your employees think less of you. It keeps you small.

It does, yeah, yeah.

And he's like, well, my employees love it. They get paid more and they don't pay taxes. I said, yeah, but not only it's eventually we'll, we'll catch up with them as well.

Right? You, even though you're not reporting your employees income and, and there are laws that, that you are in violation of there, your employees then have the choice as to whether or not they report their income or. But they are obligated by law to do that. So even though you're not forcing their hand in this, you are, they are choosing almost at your recommendation or by following your lead to also break the law.

Like individually, it's a bad framework.

Bad. And look, I get it. Like when I've run cash based business or a business that has some cash element, right. You know, and it's less and less these days, although a dumpster business, I can see where that, you know, it's more of it there still. But you know, it's tempting to say, okay, well let me take some of this and you know, just stash it in the drawer for a rainy day. If that, some of this is, I mean, none of it is legal. Right. But you know, if, if you're doing it with 2% of your revenue, 1% of your revenue, half a percent of your revenue, first of all, the IRS probably won't care. But don't take that advice from me.

Yes.

Like, you know, and also it's not going to significantly affect your books in a way that you can't show where the money comes from. An investor, a bank, from Whom you want a loan, right. Or a buyer.

So plenty of other ways to live.

Other ways to live life. Right.

And we've discussed it for nine years and, and it's, it's kind of short. Or not kind of. It's short sighted.

Yes. And even with my music business, right, Like, I mean I, I play, I play the drums. People pay me in cash most of the time. I, as much as I can remember. And that's not me being coy and cute, that's me being literal. I go back through my calendar and I report 100% of that income. Why? Because I almost always, at least, you know, three out of every five years, I wind up spending more on my music habit than I make. And so it all comes out in the wash. Yeah, that's right.

It makes you look shady.

Yeah.

Employees pick up on it and they don't trust you and, and you know, if you have a dispute and somebody gets upset, boy, that you're, you can be in just so much trouble. So don't do it. Just don't do it. And you know, bring it in, you know, through your regular channels so you can show that income and then focus on, okay, what write offs do we get and how do we, you know, bring in that revenue but then lower either your personal, you know, adjusted gross income or you know, okay, we need to go buy some more vehicles and we've got this. And work with your accountant, your financial planner to be prepared to take advantage of all the thousands of tax advantages of owning a business and owning real estate that are, you can, you know, bring into your life. You don't need to keep cash. I think it's, and look at the difference between like this old guy that approached you and then a young guy like Bodhi who's building this business and it's, it's generate doing really doing well enough to where, okay, now I'm going to hire another driver. I've got two drivers now. I'm home and I'm bored. I, maybe, well, let's start another business. And you know, that's what it should happen. It should.

Flywheel, that's what you want is that flywheel. And if, if, you know, like my flywheel is so dependent on people coming to me with ideas and doing things like I'm, I'm the king of business partnerships, right? Yeah, absolutely. I think most of those people would not come to me if I had a reputation as being somebody that broke the tax law. Yes, like, like you got it. You know, someone that understands the tax law. Has learned how to benefit from the law that exists. Like those things are great. Someone who breaks the law, that at the, at best that's going to attract a different type of partner that I don't want. No, I don't. Yeah.

Yes, it's a, it's a, there's a tough topic for casual Friday, but, you.

Know, just perfect casual.

So many other business or benefits that you can focus on. Don't worry about doing things under the table, off the books to two separate, you know, books, all that.

I mean, you might.

Recipe for disaster.

You might, especially if it's a hobby that's turning into a business. There might be a period of gray area that, that winds up in retrospect, having been off the books. Fine, whatever, you know, but like, like it, like taking my, like playing the drums, were there times where I got paid and just didn't report any income or expenses? Of course, of course. You know, but once I started treating it seriously, it was like, well, I, it's actually better if I just do this all above board because now I get to, I get the benefits of tracking all of this the way that I'm. And reporting it all the way I'm reporting it. Absolutely. Yeah, yeah, yeah.

So, yeah, I would love to hear your feedback on it. Feedbackusinessbrain show. Tell us, you know, share your stories, what works, what doesn't. Come up and tell us what you thought of the interview with Bodhi from Irent Dumpsters on the X platform. And if you think there's somebody we should talk to on the show.

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