Episode 202: The Blindness Entrepreneurs Have to Their Profitability with Danielle Mulvey

Like, if you buy a brand new any car today, I don't think they have that knob that you can pull up anymore. I wonder how they do it. It's electronic. You see these commercials where they say, you know, you call on your phone, you're like, I can't get my car. And you're like, oh, no problem. Exactly. In the car, the car explodes. Boom.

Oops.

Push the wrong button.

Yeah. My 2006 Corolla doesn't do that.

You ready? Rock and roll.

I'm ready. Welcome, everybody, to the Profit first podcast, episode two.

You're getting into the sound of McDonald. You were getting into it.

Did you pick out this music?

Yeah. Could you do the intro? You forget everything again.

Welcome everybody, to the Profit first podcast. I'm your co host, Kelsey Ayers.

And I am the host, Mike Michalowicz, the author of Prophet First, a brand new book that's out there. Tell me you have your copy of Clockwork. It's a game changer, doing very well in the market right now. And you should have a copy. That's all I'm saying.

You can find us on itunes, Stitcher, Tunein Radio, Google Play, profitfirstpodcast.com or any podcaster anywhere.

Hey, what's your podcaster of choice, Kels?

I think it's Castbox. It's called.

Are we on Castbox?

You know, yeah.

Add that to your notes. You're so funny.

There's so many now.

There's so many. But you're just funny. Like, oh, you can find us anywhere. But that's not where I listen.

Oh, boy.

So what have you been up to?

I've been reading a lot.

Okay.

I have book club once a month, but then I like, always supplement other books in between. But I finally just finished my book club book for next month and it is so sad. So sad.

Yeah. You said this morning you were crying.

I was like. I mean, sobbing. Like holding my head.

Sobbing.

Yeah. It's just crazy.

Where do you read the book? Do you ever read it in public or you.

Yes. So can I tell you same author. Last year I was at a Christmas fair.

Yeah.

Selling jewelry. And it was a slow day, so I was reading and like hysterically crying in public.

Really?

Yeah. And I was like, did anyone come up together girl? No, thankfully. It was like a really slow day, but I was nervous about the other vendors, you know?

Yeah.

So I had to stop reading.

That's funny. I bet you no one. I bet you would have been an amazing day. But everyone's avoiding your booth yeah, like, what's wrong with her?

Crazy girl.

I can't believe it. That's. You know, there's once there's a scam. I saw this in New York in person. A young woman bawling on the street. But what was peculiar about it is very public. Like, you know, she. If I. If I get very emotional, I think most people do too, is you kind of do what you did. You kind of try to bring it together or you put yourself where you're not exposing yourself to other people. She was very publicly bawling and in a very high trafficked area. So I just looked at her real quick, and she made eye contact, like, I need your help type of thing. And I looked away. I'm like, something's not right here. Other people were going up to her. You okay? Can I help you? Well, I read there's a. There's a scam. And what they do is, you know, I'm lost, whatever. They make a story up. I need money desperately. And people. This is. They give hundreds of dollars. I'm so sorry. Here's. I can help you. And people get scammed this way.

Oh, see, I was thinking it was like one of those. Not prank shows, but those. That guy, John whatever his name is. And so watching you, like, set you up in this situation to see what people do.

Oh, yeah.

You know, and they're watching you.

So they did that here in bon.

Yeah. On 23 too, at the Grasshopper.

Oh, did they really?

When they did the Grasshopper, they had. I think it was like an Islamic girl or a couple of people came in, like, to come get a table.

Yeah.

And the hostess was like, oh, I'm sorry, it'll be a, you know, 20 minute wait. Whatever. And then other people come in and they see the other immediately and. Yeah. Yeah. And so to see how the other patrons would react to, like, clearly these people aren't being served.

Fascinating. There was in Boonton, at the Reservoir Tavern, they brought a guy in who stole purses. You know, he was an actor. And to see how people reacted. And one of the patrons saw it and punched the guy in the face. Cold cocked him like, oh, my God, that sucks.

To that actor. Sign up for this.

$7 an hour and this is the crap I get. I thought I was being famous, not a busted nose.

What have you been up to?

Just traveling like crazy. Actually, I was just on a road tour with Danielle Mulvey, who's gonna be our guest in a second. Spoke at four different conferences with her. Had another conference myself the next day, Profit first has exploded in popularity, and I call the tiger by its tail. There's so much demand for my speaking right now. I'm just. I don't know where I am.

Yeah.

I'm at airports. I'm like, I have no idea what airport I'm at. I just know I supposed to be at another airport very soon.

Yeah.

And people like, what, you don't know where you've been? I'm like, no. And I don't mean, like. I don't mean it because I don't care. It's just. It's moving at such a fast pace.

Yeah.

I want to thank our corporate partners to make the show a reality. Fundbox, Nextiva and Receipt Bank.

Excellent.

Sometimes I throw in a superfluous sponsor every so often. So let's see who gets the bonus today.

Just like to thank those great companies out there.

Yeah, we gotta bring Danielle on in just a second. I wanted. I think we have a shout out, right? From a member or.

Yeah, we actually have a recording. Oh, he called our shout out line.

Listen to this. Who was it? It was Tom Kohlberger. All right, here we go. Listen to this. Pokes. Did I say pokes?

I'm gonna say, folks, I like when you said glut that gluttony.

I know.

Said glut instead of ditch.

I know. Is that hard?

We were thinking of rut, but you.

Were busting someone else's chop recently. I was so happy for using a wrong word. Maybe it was Billy Hand. I don't know. All right, here's what we got from Tom on our hotline. Tom Coburger with Comfort, Control, heating and Air. I've got about six counts and they are all working perfect. I have money in all accounts. I have money for my taxes. I have money for bonuses. I have profit. I have $67,000 in profit. I'm proud of you, my brother. So is the audience. Yeah. That's awesome, Tom. That message came in a while ago, and due to our inefficiencies and problems with our intern turnover, we just got to it now, but Tom, very, very proud of you, my brother. Keep it up. I'll tell you, that's the type of business I want to do business with, because I know they are sustainable. They'll be around. All right, let's get right to our guest. Her name is Danielle Mulvey. She's a wife, mother, and maverick entrepreneur. Along with her husband, she's crafted an adventurous lifestyle. The current business they're building is grossing $30 million in annual revenue while just working seven hours per week. That's like a dream come true. She's based out of Orange County, California and a grad of the Vanderbilt University, which I believe is in Tennessee, if I remember correctly. Nashville, Tennessee, graduate of Vanderbilt University's School of Management program. Couple things you may not know about her. She is into top grading and building team players or teams of a players who represent the top 10% of talent out there and that can have a massive impact on your business. She's also known for leveraging business intelligence to grow startups with $2 million in annual revenue to over $25 million in annual revenue in four years or less.

That's awesome.

That's Danielle Mulvey. Danielle, welcome to our show.

Welcome, Danielle.

Hi, Mike and Kelsey. Thanks for having me. Long time listen, first time guests.

Oh, yeah, yeah. And we're long time now travelers together. We just did the west coast tour on profit first together. It was a joy spending that time with you.

Yes. And it's always a treat to be in the room and see the aha moments when people get the profit first message for the first time. So always a treat.

And for me, you know, I'm like, I always got to find out new hacks. So I'm drilling you with questions. I'm like, why do you get rental? Because you rent a car every single time. Why do you have a rental car? Why do you do this? Where do you park your car? What hotels do you choose? Because I'm trying to find these efficiency things. And one of the hacks Danielle has is she always or typically you get a hotel that's local to the airport. Right, Danielle?

That's correct. Since I have early morning flights, I'd rather just be right near the airport than having to navigate my way there.

So I love it. So you have five ways entrepreneurs can be blindsided by accounting in their business. And we were actually talking a little bit in detail on our travels about this show. Give us a little sense of what that is.

Well, these are ways that entrepreneurs can be blindsided and they're ways that I was blindsided. I've been an entrepreneur for over 20 years now, and really this is me confessing my sins of how I just would keep my head in the sand like so many entrepreneurs do. I see the picture of the ostrich with the head in the sand and I've done that. And now working with other entrepreneurs, I see it's. It's sort of a common thing we want to hide from our financials. We want to kind of pass the buck and let someone else be responsible for it and pay them an obscene amount of money thinking, oh, we can just pay them more and they'll do a better job for us. They'll do the best job. But that's just not the case. So there's. There's really five things that entrepreneurs need to be weary of so that they're not blindsided. Because ultimately, if you own your business, you have to own your financials. So let's dive right in.

Yeah. Well, let me ask you a question before we dive into those five, I just want to understand the why, or at least your perception of why. Every entrepreneur knows your money. You're in business to make money. There's other reasons, but that is necessary. You have to know these numbers. Everyone knows. They have to know it. Yet what? Why do we still ignore them?

Well, it's funny. I think entrepreneurs get into business because they're passionate about what they do and what their business is and how they're bringing something different to the market, something unique to the market, et cetera. And they have never taken an accounting class. They are intimidated, honestly, by their financials and don't realize that it is really the most important foundation to their business that they have to embrace and not try to push away or shy away. And the other thing, too, is it's a real gut check. You have to be into your financials. I often see, too, entrepreneurs that they know something's wrong, but they don't want to face the reality. So if they're not looking at their financials, they're not seeing the truth. And you can't do that. You've got to own it, and you'll be successful and you'll be profitable. There's a staggering small business failure rate in this country, and there's a staggering number of more than 80% of businesses that operate check to check because they don't have their arms around their financials, Honestly.

Yeah. I think it reminds me of personal finance. I used to do it when I was struggling for a period of time, for quite a period of time. I was afraid to open Bills, so I almost declared bankruptcy. I was on the verge of it, and Bills would be coming into the house, and I just let them sit there. I was too afraid to open it because I knew I couldn't pay it. It's this avoidance thing. And it sounds like, Danielle, this plays out on an even larger scale in the business itself, not just personal finances.

Oh, exactly. And again, it's just, you know, you're putting your head in the sand. You're not opening up that bill.

Tell me about hiring bookkeepers. You mentioned that, you know, people hire bookkeepers, accounting professionals, they don't even really validate them. There's no testing. They just use the name bookkeeper and we're hiring them. Really? And why?

It's shocking. But if someone says they can do it, we believe that they can do it. But you know what's more important, Saying it or doing it? So someone can say that they're a bookkeeper, but they need to show you that they can do the job. And then be wary of people out there who live the adage of fake it till you make it. You don't want a bookkeeper to be faking it in your business because that can be devastating.

How can you gauge that before you hire them?

Well, it's really important in terms of how we go about our recruiting process for ourselves and when we help other entrepreneurs, we start with doing aptitude testing and assessments. Why? Testing strengths finders. And then if they pass that screening testing, then we bring them on site for interviews. And then if they pass those, that on site interview while they're on the on site interview, we'll give them testing that we can see them do. They're not getting any help. In our case, we're testing QuickBooks knowledge since we use QuickBooks as our platform and we're also giving them a basic accounting test to see show us, can you do it. If you can do it, then you can prove it.

How many people have not been able to do it for you?

Well, usually they don't get to that point with us because we've weeded them out in the aptitude aspect of things and the early screening testing. But here's an example. My former nanny who moved with us from Tennessee to California when we were starting our business in 2010, she did invoicing for us kind of as a side hustle. I paid her per invoice to do that in QuickBooks. So she got a little bit of exposure to QuickBooks, she was just doing the tedious work of entering the product into QuickBooks so it could create an invoice, et cetera. Well, when she decided to move back to Tennessee for a boy and start her, quote, professional career, she applied for bookkeeper positions and she, she, she was hired as a bookkeeper. And of course it, it took, it took a couple of months for both of them to realize that she really had no experience. God bless her. You know, again, it's that it's the point that anyone can call themselves a bookkeeper. There is really no official certification. A lot of people call themselves controller who have any controlling experiences. It's just giving yourself a title and saying, that's what I am. So it's really, really important to test the knowledge, test their expertise. And even when you're working with a controller, don't be intimidated by these people. You need to understand that they are capable of doing the tasks and the jobs that you need them to do.

You know what's funny? I found these with titles. The power of titles is two things. What you're talking about is someone just takes on the controller title regardless of their skills and their experience. We treat them that way. Just like saying someone's a doctor, they've never done it. We're like, oh, yes, we kowtow to them. Additionally, that person with that title starts to believe that's who they are. So I've had employees that have a title say controller, and they're like, I deserve a controller's salary. I deserve. And I'm like, you're not even close to it. So we gotta be very careful with titles. I think that was one of the five ways entrepreneurs can get blindsided. And if it is, what are the other four? And then we'll go into each one.

Okay, so the other four really quickly are assuming your financials are correct because you assume that all bookkeepers know what to do and that they just do it, or accounting professionals or people that call themselves controllers. Number three is bestowing massive trust with no accountability or checks and balances on the person who handles all of the cash in your business. Number four is waiting for your CPA bookkeeper or anyone else to tell you, the business owner, that your business is sucking wind and expecting them to be proactively consultative with you to make you profitable. They're not going to do that. You own the business. You have to own your financials. And number five is thinking that in order to increase profitability and cash in your business, you just need to increase sales.

Nice. Okay. Oh, these are juicy. Okay, so let's go. Let's start off with the assumption. So you said the second way we get blindsided is we assume the financials are spot on, that they're. They're correct. It feels like a good assumption. I hired a professional to manage this. Why wouldn't it be? And then what do I do to make sure it is?

Well, first of all, it's critical to have your accounting processes documented. And what needs to happen the where, the when, the how, the why. So that there's consistency in how your accounting functions work in your company. Because if someone screws up your books, there's little to no recourse, especially against an employee who called themselves your bookkeeper. As the owner, you are the one responsible to the government. And don't get me started on payroll liabilities. Your bookkeeper screws those up and you can go to jail.

Really?

Yeah.

So ignorance of the law does not allow you to circumvent the law.

No. And you can't point fingers. It says, well, it's her fault. She was my bookkeeper. She was an employee. You. You own the company. The government's going to hold you liable.

Okay, so they're saying just because you hired someone that doesn't know what they're doing doesn't mean you can blame that person. You're responsible to make sure they're. They're doing it right.

That's correct. And.

Okay, but now. But I don't know how to do it right. Danielle, I have a bookkeeper here. I have no clue what's going on. Well, that's hypothetical. I totally know a little bit.

No, you're right. And you need consistency. So I always. My favorite question that I always like to ask people, ask entrepreneurs or kind of how I live by, is the question of why do airplanes not fall out of the sky? Seriously. Commercial airlines are one of the safest form of transportations out there. And there is one reason why it is the safest form of transportation.

Because they're designed well. I mean, is that it?

No.

What do you think, Kelsey?

There's a lot of checks and balances.

Lots of checks and balances. Checks and balances. What do you.

Very good. So airplanes do not fall out of the sky.

Nicely done.

Pilots have to follow a checklist for every aspect of the flight. From pre flight to takeoff to landing, to parking the plane for the night, they're following a checklist. A commercial pilot with more than 5,000 hours of flight time experience always still has to follow a checklist. And that provides accountability, consistency, and accuracy. So, for example, in our construction material supply company, where we do about $30 million a year, we have checklists in our business for various functions, including the receipt of accounts receivable that walks through all of the steps to successfully post the ar, including sweeping the sales tax dollars collected into our sales tax hold bank account. We have a check and balance on the checklist to ensure that activity happens at the bank and in QuickBooks. So things are happening in Multiple different places. Not everything happens just in your accounting software platform. And this checklist is stapled to a copy of every check that we receive to make sure that every step is followed. And the other thing about this too is it gives not only consistency in our business, but it allows us to be more efficient too, because things can't just be processed all at once from beginning to end sometimes. And so by knowing where you left off, you can batch things and get everything to a certain point and then come back to that stack and do all of the banking side of things instead of processing each accounts receivable check received as steps one through 20 done. Now you can do steps one through five. Stack it, get a stack going, and then continue with that stack, completing the subsequent steps.

So when it comes to assuming the financials are right, can I, I mean, do I have to know all of my accounting or as an owner of the business? I mean, to get into the minutia is really what I want to avoid. Is there a way to, for me to keep control over it to some degree but not have to know everything?

Yes. I mean, you should put the responsibility and you should understand how things are done in your business, but not necessarily be the one that does the documentation process. So you can work with someone else, use someone else's best practices, but make that person responsible, but you have to hold that person accountable to make sure that you have those processes documented, those checklists done. Anyone could get hit by a bus. I mean, to be honest, there was. Our bookkeeper's sister was tragically murdered last year and she had to drop everything.

Oh my God.

And you know, I'm not. We. And we have a small accounting department. I mean, with $30 million, we have a full time bookkeeper and a part time controller. So when she had to drop everything, I had to step in and do it. And you know, I'm not an accountant, I'm not a bookkeeper. I know enough to be dangerous, but I was a little bit slow, but I was able to follow the checklist. I was able to do what needed to be done. And during that time, because family comes first, she had to do that. So, oh my God, be prepared in your business because someone could get hit by a bus and, but I didn't, I hadn't created the checklist. I knew how to do things, but I just had to follow a checklist which anyone can follow.

Yeah, yeah, yeah. So the system's in place so you can do it. And there's, there was some form of redundancy that you had a fallback plan. You can go and step right in. But what about the small businesses? And this may go to your third tip. I got a small business here, our company, we have seven employees, I think, or eight of us. And we have one off site bookkeeper. We've bestowed magnificent trust in her. I mean she manages the dollars going out and ensures that dollars are coming in. Now I'm a little bit fearful, maybe I'm trusting her too much.

Yeah, I mean this latest statistics on fraud should make small business owners very scared. So According to Hiscox 2016 Embezzlement Survey, 80% of embezzlements occurred at small businesses and 30%.

80%.

80% of investments occur at small businesses and 30% of embezzlements involved a loss of more than $500,000 at these small businesses.

Oh my God, that's devastating. Is it when this happens, is this that bookkeeper just writes a $500,000 check to himself or herself and run away? Or is it, is it kind of.

Over time it usually starts off slowly and then gradually builds as a sense of entitlement. And so one reason that small businesses, businesses are victim to this is because they often lack checks and balances. It's friends and family members working in the business as you're getting started and you think that they are people that you can trust. But sadly it's not the case.

When, so, so what do I do? How do I prevent? Because I feel I have to bestow trust in my accountant, bookkeeper to manage this stuff. Like that's their job. But I'm at the same time hearing like I'm putting myself at massive risk.

I mean, I've seen daughters steal from their fathers when the daughter's the bookkeeper and the father is the business owner to the point of the father having to file bankruptcy in his business.

And I've seen my daughter's very blatant about it. She goes, dad, could you pay for this, dad? You pay for that, dad. Please pay for this, dad.

So you just keep saying yes.

Yeah. I'm like, yes, yes. Yeah, no.

And I've seen his embezzle from a brother over the course of 15 years of being their bookkeeper. So, so, oh my God.

And they all feel that the person stealing feels that they're justified in doing it. Clearly.

Yeah. And I, So here, here's, here's, here's, this is no joke. It's a true story. I was given access to a client's bank account to review their canceled checks because Their in house bookkeeper, whose only prior accounting experience was working as their payroll clique, took over the in house bookkeeper position because they said, oh, I can totally do that. And the owner of this ironically or thankfully profitable multimillion dollar company thought, great, they already know us. They are familiar with our systems. So they doubled that person's previous salary because this person's now doing payroll and the bookkeeping job.

Oh, no, here we go.

And so, long story short, they were writing checks to themselves because they were given the signature stamp and the account.

When I had payroll and bookkeeping.

Yeah.

And when I logged into the account, it was overdrawn by more than $100,000.

Oh, my God.

Overdrawn.

In fact, it came worse. In fact, they had more than $24,000 in overdraft fees.

Oh, my God.

Oh, that is unfathomable.

I'm actually having heart palpitations.

I know.

Now, now, lucky for this.

Why would a bank support. Go, go, go.

Yeah.

So lucky for this owner, they were profitable despite all of this nonsense. But it was a true wake up call for the owner. And surprisingly, he took complete, maybe I think, too much responsibility because he, he at least knew as the owner, he's ultimately responsible for the company's books, whether he touches them or not. So he blamed himself for not setting the expectation that overdrawing that account was not acceptable. And it was a wake up call that made him realize the person who writes the checks for the business, the signature stamp, he had totally removed any accountability, let alone checks and balances in his AP process because he never even signed the checks.

I'm shocked the bank would still allow you to overdraw. I overdraw a dollar and I get shut down. My cell phone starts going like crazy.

Well, this is a highly profitable. This is a highly profitable client to this bank because.

Oh, I got it.

This year alone, they made over $24,000 in. In.

Yeah, exactly. They're like, oh, we want this guy to overdraw. This is. This is our.

But. The bank said anything but, but. And then tragically, too. You think someone's going to tell you. You think your CPA is going to tell you, hey, there's something wrong. No, they don't even. The bank didn't tell the owner that something was wrong.

No. That's so crazy.

Crazy. And that hits on your fourth point. You said, people, one of the sins is waiting for the CPA to tell you that your business is in trouble. And you're saying even the bank doesn't do that. Why Aren't the most important individuals outside yourself as a business owner that are responsible for the money of your business? Not saying anything.

Well, they're not really responsible for the money of your business. They're responsible for putting things into the right boxes.

Okay.

On, in, in your accounting platform. So CPAs, for example, like the kind who do your taxes, typically have hundreds of clients. You're paying them to do your taxes. They don't care if you're profitable or not. You are one of 300, 500 clients in tax season. They're not paid or compensated related to your performance. So it's about the expectation that you have. Now if you say to your accountant, hey, I need your help. I need you to work with me. We need to sit down monthly, or your, your part time controller. We need to sit down monthly. I really need you to walk me through these financials. I really need you to show me these red flags. You have to set the expectation. You cannot expect someone who you pay to do your taxes to tell you how you need to fix your business from a financial standpoint.

Hmm. All right, let's go on to the fifth sin. It says, you said, we think that an increase of sales. This one fascinates me. An increase of sales people think translates to profit. And I see it played out all the time. Danielle, we just need to grow. We just need to grow. It seems to be the drumbeat of every business. We just need to grow. I believe it ain't true, but most people believe it is true what's going on here, Right?

And of course, I, I was guilty of this too. And, and thankfully I didn't get too far down this path. I, I was going through the, the archives of my early maverick group days and I saw that, that my BHAG, which can be dangerous, was to open up 10 offices. I mean, ridiculous. Thank God I didn't get that far. So in terms of accounting, the only two ways to increase your profitability is to, number one, decrease expenses and number two, increase margin. You don't add employees to get ready to scale up. You do more with less for as long as you can. You don't give a 10% discount to every customer. That's just killing your profitability. You have to take your margin back. You need to make sure you're making enough with each transaction to stay in business and be profitable. So, of course, Mike, I'm a huge fan of Profit first and everything you teach in that book is the cold hard truth. It's a great cash management system. And when fully Implemented, that's how you accumulate the cash on hand that correlates to your profit. That allows you to have the cash to pay your taxes and the cash you need to scale up your business for capital expenses, etc.

Well, thank you for that. You know, but one thing I see people run into is I've literally gotten messages from people who've implemented profit first, said they're more profitable than ever, but the business is now running healthily, which means it's actually smaller. It doesn't have those 10 offices, but their competition does. And then jealousy kicks in. They said, but you know, the other people are bigger than me. So there's still this ego trap. I think, how did you come to the senses? Like, you know what, it ain't about the size, it's about the health.

Yeah. And you're exactly right, it is an ego trap. And I think that's why my BHAG was 10 offices. I thought, wow, I'll be really awesome with 10 offices and I'll impress people. So I don't know when it happened, exactly what the moment in time was, but it just, every dollar matters. And when you put profit first, if you're mindful of all of your expenses and you try to do things differently than your clients, than your competition, then you'll end up on top. You shouldn't be doing things just because your competition's doing it. So in our construction business model, for example, we do things totally different and we only have a small niche of types of projects that we'll work on and types of customers that we'll work with. And our competition serves everyone from people walking in to make a hundred dollar purchase to people making $300,000 package purchases. We specialize in $250,000 up in a package of materials for specific projects.

So of these five deadly sins of businesses that are not profitable, right. These are the things that trap them. I suspect some of our listeners are saying, oh my gosh, she just nailed all five for me. Or those three are me. Where do you get started? Which sin, if you will, do you start with and fix first or do you have to tackle them all at the same time?

Yeah, you know, I mean, I would say that if you have the wrong person in the seat in house as your bookkeeper, that's probably where you need to start first because you don't need to document their processes if their processes are inappropriate, ridiculous, nonsensical, like I've seen with some of my clients that I advise. So you really need to start, start with that person. And so I've actually put two websites that have resources that help entrepreneurs. We've got some testing on there that you can download for free and utilize when you're hiring bookkeepers. We provide resources for entrepreneurs to get some more familiarity and understanding and education around their financials. And so you can pick either of these two websites. The first one is profitable all star.com and the second one is pullyourheadoutofthesand.com a.

Little more appropriately named. Yeah, that's wonderful. So, okay, well, it's actually perfect time because we got a rock and roll. Danielle, you've been a wonderful friend of mine and supporter of profit. First, I know you're, you're building more and more expertise in the construction market. So any of our listeners, regardless of the size business you have, if you're in the construction space, you got to reach out to profitableallstar.com or pull your head out of the sand dot com. But quite frankly, I think you can help with any business that's experiencing these sins. Danielle. So thank you so much for coming on the show today.

Thanks, Danielle.

And thank you for continuing the mission of eradicating entrepreneurial poverty.

Ah, thank you for being a big part of it. All right, thanks for joining us. What we're going to do in just a second. Kels, there's a little punch. What we're going to do in just a second is we're going to recap what we learned from Danielle. We got a little listener mail that came in. You have. You've got mail pattern baldness. And I think that's it. So first I want to thank our corporate partners. I'm gonna say who. Which Superfluous. I'm gonna start doing superfluous.

Just throw in.

Throw in. Yeah. So, okay, I got one. So first, don't do it. Yeah. What. What are you pointing to? Them? Really? We don't like them.

We don't. We're on the outs with them.

Oh, really? Oh, I didn't know that. That's so funny. All right, I'll do a different one. Okay, I got one. So our superfluous sponsor will come up and embedded in you won't even notice. First, I want to thank Fundbox as a cash flow accelerator. If you have any invoices due to you, but you need that money sooner, Fundbox releases the funds to you in its entirety. Go to fundbox.com nextiva voiceover IP phone system and communication mecca. So that's nextiva.com. yeah, we use them ourselves and love them. Now for multiple years, sealed products from Jiffy Utility.

Oh, wow.

Yeah. You would not know that they. We use their little Jiffy mailer things to ship bucks.

Yeah. So, yeah, fantastic company.

Unbelievable. Unbelievable. And then receipt bank is a one stop scanning system for all those receipts. No longer have a shoebox. Just scan in anytime you have a receipt for your business. Any type, it sorts, it does everything for you. Syncs it up to your accounting system. And make sure that you're. Make sure. Make sure that you're compliant with your taxes. All right. Did you see that? I threw a sponsor in there. Did you even notice?

I didn't.

I know.

I thought they've been there the whole time.

Oh, my God. Jiffy product things. All right, Kelsey, what did you learn?

So what'd you learn today?

Today? Oh, I like that voice. Very Kermit. Can you do a Kermit? Intimidation. Intimidation. A Kermit. What's the word?

Oh, and now that you.

Imitation. Imitation. Oh, my.

I think I can't.

I like that voice. That's kind of funny. Okay.

Oh, that was good.

Oh, thank you.

Okay.

So what did you learn today?

I learned that 80% of embezzlements occurred at small businesses. Usually they were over $500,000.

Unbelievable.

Literally unfathomable. And her story about that the bank overdrafting $100,000 is absurd to me. I cannot believe it. Literally.

If we had.

How many people were aware of that and said nothing of it? That's bizarre to me.

It's bizarre.

And how does a bank let that happen? I mean, I get it. I get they made 24,000, but really.

Really, that's sinful for the bank.

Yeah.

I mean, because that means every time there's an overdraft, there's someone physically approving it. Someone say, okay, let it go through at the bank, they get a notice. That person, I think ethically, as a responsibility, say, I see a systemic problem that they don't see pick up the phone. So shame on the bank, Shame on the owner. Shame on the bank, Shame all around.

Agreed.

Agreed. My takeaway was people avoid the truth by not looking at it. The head in the sand. I think her domain is perfect. Put your head in the sand, because that's what people are doing. I also was. Yeah, the 80% of. I wrote down the same thing. 8% of small businesses are the ones that are affected by the embezzlement. That blew me away. If we had 1/10 of that amount of investment happening here, it would put us under 1/100th of that. It would Be devastatingly painful to the business and hard to survive. That so unbelievable.

And it's sad. It's sad because it's like, I feel like in our company, you want to trust the people that we work with. I mean, we're so close. But in the example she gave, it was their brothers, their daughter.

I mean, it's like, oh, my God, my sister.

You can't trust your daughter or your sister. I mean, that's wild.

It's sinful. My sister is. She has her own business, but. But she's a client or she's a vendor to us.

Yeah.

So we're sending her money regularly. And I trust her emphatically. Not that she has any access to the accounts here, but I trust her emphatically. Yeah, I couldn't imagine that.

But I would say too, the caveat, even when people are trustworthy, there's still human error. I feel like.

Oh, yeah, that's true.

No matter what, you always have to double check because there is human error. Like, I will be the first to admit, I mess up all the time. I want somebody else looking at it. Yeah, that's right.

I just withdrew $2,000. Mike. I was wondering. The money went.

You didn't even catch it.

Jeez, Sorry. I bought jewelry with it. I didn't know what to do. That's now at my house. All right, I heard we got listener mail. What is it? I gotta ditch that thing. It's not even funny. It's so unfunny.

Ready? So this comes from kino. M. Clark. Www.millionaire millionclark.com sorry.

Nice million Clark.

How do I handle processing fees within my profit plan? These fees, like PayPal, are taken out of the funds before it is available in my income account. I'm confused on how to tell my account how we process these.

Oh, I got you. Okay, so here's how it works. Say you collect a PayPal fee, say $1,000 from a client. PayPal will automatically take out their service fee. Say it's $40. They give you a check. They give you the money of $960. You never see the 1,000. So the transaction is a thousand. You actually get 960 in profit first. We're cash based systems, so you only recognize the cash as income. So you actually take that 960, put it into your income account, and then transfer the money out. So it's that simple to manage it. Here's the insidious problem or thing that PayPal is doing, and I'm not picking on PayPal. A lot of companies do this. By taking that money out first, we actually become blind to the expense we're incurring. They charged us $40 or $60, but you see the cash of the 960 go in. So we assume, oh, I made 960 bucks. You have to work closely with your bookkeeper and accountant to account for your fees. You will be blown away by the fees you incur with PayPal or Square or your credit card company that they're charging you. That we don't see because we're only recognizing the cash that comes in. Profit first in the base system does not address that. Profit first will simply say how much money you have to pay your expenses. And if you don't have enough money to pay your expenses, you'll notice that. But there's these insidious costs that happen behind the scenes that you don't see on a cash basis. That's why you gotta work so close with your bookkeeper and accountant. That's why actually points back to Danielle. You have to know what's going on through finances. Okay, that came in loud.

Well, everybody, please leave us a comment and your ratings on itunes. Stitcher, castbox. Yeah, you go any podcaster.

I was going to. I wrote that down. Like she doesn't say freaking pass.

And please go to profit first Podcast dot com.

Yeah. And become a subscriber. Don't miss a single episode. This is some juicy stuff we've had in these last few weeks. And more juice coming. But you'd miss it if you don't subscribe. So, you know, subscribe and, like, Kelsey directed you to go to profit first. Professionals.com. we have a gaggle. You know what a gaggle is?

Yeah.

Geese.

A group of geese.

I think you're right. Yeah. It is a group of geese. I knew it was a group of something. I didn't know it was geese. What's a pride lion? Nice. A murder.

I don't know that.

Crows. I got you. Finally. A group of crows.

Every animal has a different name for their group.

Yeah, whatever. Oh, let's call them a group of. Let's come up with a unique name for each.

Every single thing. Yeah, like, what was a cloud? Kittens or something. I said it once. A cloud.

A cloud. I don't know what that is.

You said that on the. It was a podcast a long time ago. You said it. I was like, do you know what I did? Yeah, like, know it all and you forgot.

Do I really talk like that? Do you know what a murder is? Because I do. You Don't. Well, here's what you gotta do. Don't murder. Go to private first professionals dot com. That was. I was trying to bridge in murder. It didn't even make sense.

But don't, don't, don't murder.

Don't murder, please.

General rule of thumb.

General rule of thumb. Dump murder. But go to proffers professionals.com and crush the profits in your business. Finally make it. Make it the best profitable year you've ever experienced. Here's how you do it. You go to profitfirstprofessionals.com. that's step one. Step two is you like that. You step two, you click on the find one and our team here will seek out a profit first professional for you. We'll make a match. Now, the profit first professionals are independently owned businesses. They are members of our organizations, are certified in our process and they run their own company. So you then vet them out like you would any other vendor of yours. But we'll make a recommendation who we think is the best fit for you. You then identify if they are. And if they are, you're off to the races. Now you have someone that can work hand in hand, arm in arm, murder and murder with you on driving your business forward. That's a group of crows. And a group of crows. Okay. All right. I think I'm done, right? Stick a fork at me. Yeah, all right. Take a fork. I mean, we're done. We'll see y' all later.

Bye.

Comes the energy. Here comes. Yeah, you're playing the drums. Cow scout. Go, go. Yeah, there you go.