Episode 39: Cash Flow and Niche Focusing with David Knowles and Kacee Johnson

You are listening to the Prophet first podcast episode.

Oh, man. I timed the Chewbacca to throw you off Episode. They said it would take a long time, but we're here at episode 39.

Oh, long time. You try to rhyme it all the time, brother.

Yeah.

Awesome. Welcome, everyone.

The first episode ever that we're doing across the Internet. We're taking the most advantage of this technology, right?

Welcome, everyone. We are the Profit First Podcast. I'm Chris Curran, founder of Fractal Recording.

And no idea who you are. And I'm like, you know, here's the problem. Because we're not in studio anymore, we can't point to each other, so we really got to get in sync here. You're. You're the. You're the founder recording.

That was our main form of communication. Pointing, pointing.

I'm going to cover me, cover me. And I'm Mike Michalowicz, the author of Profit First. You know what we do in this episode, what we do in every single episod is we talk about profitability now, not from the just cash management side, because that can get a little bit stale. We talk about it from every single angle. And today we're going to talk about credit. How does that affect profitability? And we're going to talk about marketing strategies. And how does that affect your profitability?

That's right. And you can find our podcast on itunes and Stitcher and Tunein Radio and of course, the. Sorry, I almost said the, but it's Profit first podcast dot com. That's the website. Go there. All our episodes are there.

Yeah, we didn't have enough money to pay for the, so we just did Profit First Podcast. Yeah, dude, Episodes are cruising. There is tons of people listening in. And the question is, will they stay after this fumbling start that we had, bruh. So I don't know.

Hey, doing things virtual is different. I mean, I have a client who is starting to do her show virtual, and, like, she's in the middle of an episode and, like, her family came home and opened the door to her office and she got all full flustered and weirded out, but it sounded fine. So you'll get used to doing things virtual and knowing that it's still good. It's a little different. That's all.

Change is scary, but it's good.

Yeah, change is scary, but it's good. And this is the way that actually, we prefer this format for the convenience of the office. Because Christina's here, Ron can pop in, folks from the office can come down the hallway and join Us. It's just a little clunky initially, and we'll get through it. Okay, I think that's enough excuses. Let's get down to what we got going on today.

Totally.

So listen, dude, we got two killer killers. Not. Not like they're killers, but killer guests. And maybe they are. I don't know. We'll find that out. But we've David Knowles and we also have Casey Johnson. I'm gonna be introducing them in a second, but first, I want to thank our sponsors and I want to hear what Europe you've been up to. Chris, who are the three? I'm pointing to Christina. Who are the three sponsors we've got?

Who are they? They are T Sheets.

Boom.

Fundera.

Bam.

Next Teva.

Ouch.

Oh, wow.

There's a fourth, like, Hanging Chad sponsor that's like, oh, we want in. We don't know we want in. I don't know. It's getting a little frustrating now, but if someone joins us, I'm not going to admit or deny that that was the company that has me a little bit frustrated. You know what I'm saying?

Are we ready for Hanging Chad?

Are we ready for the big bucks? Is it Coca Cola who wants this box?

It's a major player. It's a major player. They want to put major amounts of money into this. So not true at all.

Yeah.

Okay, dude. So. So before we go over a guest, I just want to know what you've been up to. I know it's.

Well, it's the changing of the studio, really. It's. Now I'm set up temporarily, actually, in the house I grew up in, which is kind of weird. My parents moved away. The house is empty for about a year. So I'm able to stop here on my way to wherever I'm going, which is. Looks like now it's going to be Colorado Springs do.

That's awesome. They're going to Colorado Springs. Do you still have the sage? The sage. This was that long. Ha. Carpet. What do they call that? Starts from S. Shag. Yeah, you saw the shag carpeting going on over there?

No, not that. It's not that sage.

The sage. The sage carpeting.

All right, Sage.

Call it there, cracker boy.

I'm not finished. Dude.

Listen, what have you been up to?

I just got back from Europe. Literally got back from Europe. I was in Germany for 10 days. So not all of Europe, just Germany. And once in Munich, as in Hamburg, I went to a small town called STADA and went to a wedding out there. And guess who was the best man? Michalowitz.

Really?

Yeah. And it was an all German wedding. And I speak sprechen kind Deutsch means I speak no German. And I found out here's the greatest international travel tip I'll ever give you. You know, I know like 10 words in German enough like, you know, danke schun and bitterschun schussen. So I know enough words to be gracious. I go there and this hostess comes up to me and says something, and I respond. I go, ichsprachen, ein bischien Deutsch, which means I speak only a little bit of German, which is a fatal flaw. Never say you speak a little bit of German, because if you do, they think you actually speak German. So the rest of the conversation for the rest of the day was all in. In German, and I could understand nothing. And I couldn't tell her that I didn't speak German at all.

It's probably more pointing going on there.

There's a lot of point. Yeah. Yeah. And as David Knowles will know, our next guest we're about to introduce will know the weather out there is hot as all hell. I thought New York was burning up. Europe is on fire right now. So. All right, let me introduce our guest. Does anyone have royal horns? I happen to. He is the group marketing director of Credit Safe. David Knowles creates and drives the company's brand and marketing strategies throughout the US And Europe. And what we're going to talk. Talk about with David today is about credit. Keep your. What's so funny?

No.

Come on. I'm in the middle of an introduction.

Wait, the horn, though, was way too loud. I couldn't even hear you.

Are you serious?

Yeah. Just do it again without the horn. We'll.

All right.

Or turn the horn. But the horn.

No, no, no. Okay. Oh, my God. It's a disaster. All right, so with no further ado, I want to introduce our newest guest, and his name is David Knowles. He's the marketing director of Credit Safe, and this is a firm that has a European and US Presence. And he's going to tell us all about credit, keeping your credit safe. Hence credit Safe and how to do. How to manage your credit in a way that's profitable. With no further ado, Mr. David Knowles, welcome to the show.

I'm delighted to be here. I'm delighted to be introduced as a mass murderer living in a Living. Living in kind of like some kind of dust bowl heat wave. As I look out of the window at the rain lashing down in from the Atlantic. Here but yeah, it's a pleasure to be part of the show.

Oh, it's absolute. Absolutely pleasure.

Royal treatment. I love it.

Yeah, I wish I could play some of these sound effects, but my sound effect machines messed up. I would be doing some crazy killer music right now, like some suspense stuff, but. So tell us a little bit about Credit Safe. Give us a little bit of the background, what the company's all about.

So what about Credit Safe? We started off in 97, so we're relatively new kids on the block in terms of what we do. I wish I hadn't said that, but we are now actually the world's most used provider of online company credit reports. We're in nine countries around the world. Last year, we delivered something like 75 million individual company credit reports to 80,000 subscription customers around the world. And what we're trying to do is to help them make better business decisions so they know who they're dealing with. They know whether those people are going to rip them off, hopefully or not, and they're going to make sensible decisions about when they do or don't extend credit to them.

So who are the clients of yours? I mean, who are the businesses that use your service?

Well, we're working with all kinds of companies, really big and small. The vast majority of our companies are honest to God, small businesses that we're working with. People who are trying to turn an honest dollar, who are small businesses who are working hard, have never got enough time, never got enough money. And hopefully we can give them a bit more of those two things or protect those two things. And we work right up to big corporates. We're working with some big names, some big sort of listed companies working on both sides of the Atlantic, and people who are operating in all the different countries in which we're working in.

When a company is going to extend credit to one of their clients, why do they need your service or any kind of credit analysis? What's the value of it?

Okay, well, let me go back to the old basics. I'm sure, Mike, you've said this a hundred times to other people. When you talk to somebody who's starting a small business, a sale is not a sale until the money's in the bank. You know that's true. If you give someone your products or services and they don't pay you, they've stolen it from you. You've done all that work, you've gone out, you sweated, you found the business, you've delivered the service. If they don't then pay you, you've wasted your time. And it's the money that comes in from your customers that enables you to pay your suppliers, that enables you to pay your staff if you have any. It enables you to keep pay to keep your lights on, to keep your phones working. It even enables you to pay your taxes if you want to do that as well. So, you know, it's absolutely the most important decision that you can make. And I know plenty of small businesses and I've worked in, you know, I've run my own business as well in the past. If somebody hasn't paid you all the time you're thinking about that, are they going to pay me? Is he going to pay me? If I got to phone him up, I got to go and ask for that money again, you know, and if you're not in that, if you're in that situation, you're not doing what you're meant to be doing. You're not going out, you're not finding new business, you're not doing your business, you're not making money for yourself and you're losing profit. And it's as simple as that. And what we want to do is give people the information that they need to know whether the people they're doing business with are going to pay them, whether they're going to pay them on time, indeed, whether they are who they say they are. And I'm not always saying, you know, when you look at a credit score in a business, it doesn't say do business with this person or don't do business with this person. But it gives you information to make a better decision. So you can look at that, you can look at someone and you can say, I can see this guy on average pays all his bills 20 days late. But he does pay them, but he pays them 20 days late. Well, if you're going to do business with him, if he's somebody who calls in via your website, he's a brand new customer, you don't know who he is from anyone else in the world. If you find out, you know exactly who he is by looking at his report, you know when he's going to pay his bills, okay, he's going to pay 20 days late. So you say to him, I would like you to pay me up front or I'm only going to give you 10 days rather than 30 days. Enables you to make a sensible decision so you can get your money because at the end of the day, that's what you're in business for.

So I have another question for you, but First I want to add a thought. And it's, it's a doozy, you know, it's a heavy, heavy thought. When you have a customer that doesn't pay you, not only all the stuff you shared, you're worrying about it. You have to take actions to collect that money and it kills your profitability. You've spent time and money, which I guess is your profitability, but you spent time to deliver that service. So there's a cost associated with it. A customer that doesn't pay you is costing you money. Now here's my question for you, David. Does history repeat itself? Just because a customer didn't pay me in the past or other people in the past, why does that mean they won't pay me?

It's the great thing, isn't it? You see the person. How many times do you see it? If you're a one man band, you're deluding yourself. But if not, it's the classic situation. You've got a small business, you've got an excited salesperson, and he goes down and he says, I've met this fantastic guy. I met this wonderful guy. I've been at a chamber of commerce lunch, I've been on the golf course or whatever. He's going to do this business with us and there's the sale and then the next one comes along and he hasn't paid you. Yeah, but he must have been in trouble. He's great guy, he'll do it. And it's that delusion of chasing the sale. If you know that the guy hasn't paid you before or he hasn't paid somebody else before, he might well pay you on time, but at least you know what he's up to. If you believe he's paying everybody else on time, if you've got the facts as to whether he's paying people or not, you can make decisions based on those facts rather than whether he's a. He's a nice guy who's got a nice car and, you know, is very friendly and has wonderful sound effects.

All right, all right. Cute. So. So if a customer has a problem paying historically, what are the actions I can take? You know, I'm a small business owner too, David. I gotta, I gotta bring money in. I know someone's now a risk. What are the actions I can do to mitigate that risk?

Okay, so the first thing you can do is you can have an open and honest discussion with the guy. And that's all. It's tough. And people don't. Those are the conversations People don't like having because it's like you don't trust them. But at the end of the day you're supplying him with the good or service, as you said, that's costing you money. And you have every right as part of your contract and you have every right to ask for the money. And so why don't you look at it and you say, okay, I can see on average he's paying people this late, but he appears to be who he says he is. He's been in business for this long, et cetera, et cetera. So you might say to, he might say, I would love to buy your. Whatever it is. And you say, well, that's fantastic. In order to do as part of the terms, I'd like you to pay me in 14 days or I'd like 50% up front or something. And he would say, oh, I can't do that. But have that negotiation as soon as you hand the guy the goods, if you haven't got an agreement or you don't know that you're going to get paid, in effect you've given him the money. So have the conversation, set out the terms, get a written contract if you want to. Then you're in a situation where you're starting to build from a position of trust. And it works both ways.

And you don't have to, well, you don't have to extend credit, do you? I mean, why do so many businesses extend credit? Is it for the competitive advantage? Is it just because they think they have to, but they don't really have to? It's just this is kind of the way all businesses behave, I think in.

The real world, isn't it any small business, you go and look in your bank, you're not often sitting on a big pile of cash that you can afford to give out to other people. The give and take, the flow of the real world is I've sold something to you and I bought the raw materials from Chris and I need you to pay me before I can pay Chris. And then I've got to pay the person I've got sitting behind me going to actually make the stuff. And it's that day to day flow. I'm not sitting on all the money to be able to pay Chris and quite happily sit back and pay my folks and wait for you to pay me. So it's the day to day cash flow. One of the things that drives me nuts, and I'm sure it's the same in the US as it is over here in Europe, is The way in which politicians always go on about why aren't the banks giving more money to small businesses? Small businesses need money for capital expenditure or if you're building a new factory or something like that. But it's the day to day trade credit between businesses. It's cash flow or the lack of cash flow, the lack of cash that kills businesses, not whether your bank will give you a loan.

I agree with that. Why not though make the issue or why not place this problem on the banks? When I'm talking about banks, I'm talking specifically about credit cards. Why not accept credit cards and say hey, if you want 30 days or you want more, I'll accept your credit card. And now the problem is the credit card companies. What do you think about that?

I think it partly depends on where you work and how you're doing it. I think if you're working in an environment whereby you are dealing with end consumers rather than business to business, that's quite often a very healthy approach to take. I think also, let's face it, an awful lot of small businesses try and juggle and survive with their cash flow by juggling their personal credit cards or their business credit cards. The banks and the credit card companies aren't always as generous as they could be. It depends what you're doing and what you're supplying, isn't it? I mean, if you suddenly got an order from a big corporation, it'd be very hard to go to Walmart. If you're supplying stuff to Walmart, be very hard to ask them to give you a credit card.

Right, right. No, I totally agree with that.

But also, if you ran the report on Walmart, what would you see? You'd probably see they're a huge company that have money, they pay their bills, or am I wrong?

But they might. Well actually Walmart are probably not the world's best example. But if I look at the large grocery retailers over here, you know they're not going to go out of business in the next year. But you also know that they're not always that good at paying their bills. In fact, the Walmart subsidiary here in the UK is one of the better of the supermarkets are paying their bills. But the fact is if you know how late it's that thing they're going to pay me, but are they going to pay me late? How long are they going to take to pay me? Even if you go, well, I can't go into battle with Walmart. I'd like to stay in business with them, but I know they're roughly going to pay me 15 days late. And if anyone's listening from Walmart, I have no idea how late you do or don't pay your bills. I'm sorry, don't come around and, you know, go sue me or anything.

Well, they, they already found out you're a murderer. I mean, you are a killer, so they're not going to touch you.

But they know I'm a mass murderer, so I'm fine, right?

Who's gonna touch you?

But the key thing here is, okay, so take our previous example. I know Walmart are going to pay me what, 10, 15 days late. That means I can already go to Chris, who supply me my raw materials to make my beautiful things to sell to Walmart. And I can say, look, we've got this contract with Walmart. Here's that, let me share with you a copy of their credit report. You can see roughly when they will or won't pay me. Therefore, for you, I'm afraid, my friend, I'm going to have to pay you on these terms. And Chris will go, fine, I know you're going to get the money from Walmart and everything's fine and dandy. If I don't tell him that, I might well be in a situation where I'm sitting there waiting on Walmart to pay me. And he's getting more and more frustrated with me because I haven't paid him and haven't told him and he's going to cut off his supply to me. Next time I get another order from Walmart, I've got to go and find another supplier of sound effects or whatever it is I'm selling them.

Now I got to throw another sound effect at you. So it's nice that you know how quickly you're going to get paid by your client and you can talk to your other vendors. If you don't communicate with your other vendors, here's the sound effect you'll get. Sweet mother of God.

What is the. Hold off.

That's the phone call you'll get. Where's my money?

That's it. The one phone call none of us want to make is the one that says where's my money? You know, I mean, otherwise you have to end up like you're some extra from a gangster film.

Exactly. What does this cost? If someone's listening in, they want to use Credit Safe or any kind of credit reporting service. What does stuff like this cost? It sounds expensive.

Well, I think one of the reasons why we've been a success and the way we've Reached out to small businesses is that we've moved away from the old model of paying for each report. You know, there was a time when people in our industry used to charge you by the report. And people would go, no, I don't want to. I've got to take another one. What is it? So what we offer is a subscription service. So we'll say to people, all you can eat. Take it. You know, you don't have to worry about how many you're going. So if you want to, when you take a report and you find the company's part of a bigger group, take the report on the bigger group. You find they've got a foreign subsidiary, Go and have a look at them. Find out the structure of the people you're dealing with. What we offer is unlimited access. On average, a small business customer will pay us around about $100 a month, and, let's face it, $1,200 a year. You only need one bad debt, one person not to pay you that $5,000 invoice. And you've got all the hell and everything coming down on you as you run around and try and chase it. As you say, you're not just looking to cover that $5,000 in terms of sales. You're looking to cover it in terms of profit. If your profit margin is, what, 10%, that's an awful lot more than 5,000 bucks, right?

Right. It absolutely is. David, if people want to find out more about your business, specifically, what do they do?

They log straight on to www.credesafe.com and then go on there, and we'll give them a free credit report so they can see what's in it. They can see how it can help their business and hopefully help them make smarter business decisions going forward.

And I bet you everyone runs a credit report on themselves first, right?

They always do. Either that or the company that their ex wife ran off to join.

Oh, it's always the X Y. Oh, Christina just rolled her eyes.

I'm sorry. Ex husband.

I'll read the ex husb.

Yeah, ex husband.

I just walked into that one. I'm sorry.

No, no, it's okay. We'll blame it on the weather and the fact you're a killer. All right, David, absolute pleasure having on the show. Thanks so much for all this great information.

It's been. It's been a lot of fun to be part of it. And, you know, it's. I just hope that people can. Can realize that. The importance of making those sensible decisions.

Yeah, no, I agree.

Thanks.

David.

Thank you.

Hey, Chris, a little shout out for David from the U.S. check out this. Remember that dude. Name that show. Name that show.

David. Do you know?

Do you know? I remember.

No, I'm too old.

Bo and Luke Duke. That was.

Of course. I didn't think. I didn't think. We're allowed to mention them anymore because they've had.

That's right. We got to be all PC. Anything.

Yes.

Flag. We can't even. Oh, wait. What did I just say? I don't know what I just said.

I don't know. I don't know what you just said. So. So, Chris.

Thanks, David.

Thanks.

So, Chris, I just stopped myself saying something very inappropriate there. So it's just. So get me off the line.

See you, David.

Chris, did you notice in that sound effect. Listen one more time, there's a. Something's wrong with the horn. Listen.

That's not the official hazard.

Someone tried to make it over and they.

That's David. Serial killer.

It's one note. That's way.

Yeah, way off. That's a serial killer.

Good to hear. Mike Michalowicz.

Yeah, thank you very much, dude. Before we go to our next guest, write this down on that big notepad in front of you. Ask me about the three types of customers. That's how I want to wrap this show up the three types of customers. I got something juicy for you.

Sweet.

Okay. You ever hear of Blue Ocean Strategies or Blue Ocean Principles? The book the Blue Ocean Strategy.

Yeah.

So the philosophy behind this book is that there's red oceans and blue oceans. Red oceans are full with the blood as all the sharks that your competitors are attacking customers. And it's very hard to be successful in that environment. And this book argues, move into a new space that makes you stand out. So you read a book and you're like, oh, great, now how do I actually do this in the real world? Well, there is an entrepreneur, her name is Casey Johnson, who founded a business called the Blue Oceans Principles. Not Blue Oceans. Blue Ocean Principles. She took the strategies from the book and actually brought it to the real world. Has worked with countless clients in implementing this. She's a regular speaker and commentator on the subjects of technology, business, and accounting for the exact same markets. She focuses specifically on business development, sales, and the use of cloud technologies to find your own blue ocean. With not much further ado and no sound effects this time, Ms. Casey Johnson. Casey.

Well, Don Quichon. Mike, I appreciate you having me and Chris, if you end up homeless in a year, I somehow ended up with a professional Recording studio in this house I have no idea what to do with. So you can come on down to Southern California. You just can't use any water.

Oh, bring bottled water.

We have a little drought going on if you want.

Wow. So you just take some pictures and send them to me. I want to see what kind of studio you got.

Yeah, I have no idea what to do with this thing, but.

Right.

So I'm in Germany and pronunciation is like really important. And I went to Munich where you wear lederhosen. Right, the lederhosen. And I'm with my brother in law because it's a big family wedding going on, lots of stuff. My brother in law comes, he's like, where's the lederhosen? And the German person he's asking starts cracking up like boogers coming out of the face type laughter. And he's like, what? I'm just looking for lederhosen. Well, later translates to leather. Leader translates to singing. So if you have leader hosing, you have singing pants. Singing trousers. Little tip there. Okay. With no further ado. I said no further ado. There was a lot more to do. Casey, tell us about Blue Ocean principles and what you're doing over there.

Yeah, absolutely. So I learned about Blue Ocean Strategy when I was in business school and I absolutely loved it. It just made sense to me. Why do all these people come out into the market, you know, basically with the exact same message in the same product is there already are people with that, there's already brands of that into the exact same demographics. So it just made sense to me. And I started this company a little over a year ago and I've been loving it. And I just kind of help companies that are trying to really differentiate themselves, think outside the box. And not only differentiate themselves, but try to come up with an either new market that doesn't already have parameters or a new offering that isn't already predefined. So it's been working well and people like it and hopefully it continues to grow and people get the message out there that you don't have to just copy what everybody else is doing.

You know, that's what happened to me. After I read Blue Ocean Strategy. I was like, I loved it so much because I'm sort of like a visionary and a futurist. I took that whatever test that tells you what strength, strength finders test. And it's like all to do with vision and future. And I love Blue Ocean so much. Here's the problem I had. I needed help to work through My ideas and I didn't have any help. So that's. So we might have to talk later, Casey.

Absolutely. And there's certain exercises and things because people always think, oh, okay, well, come in. Let's just, you know, in a day think about a new, a whole new product, you know, as if Southwest or Cirque du Soleil just, you know, spun out of, of a four hour meeting. And so there are exercises that get you to that point for sure.

Well, let's talk specifically about accounting practices. That's a good portion of the folks listening in have a bookkeeping practice or accounting practice. How can they be different? I mean, there's so many people doing this and it's a very specific thing. You do accounting, how do you become your own little blue ocean?

Well, I think that most of them, it's about figuring out how to get a target niche or provide a service offering, expanding things a little bit better. A lot of them are really taking on, especially my clients because I was from technology for accountants in, you know, embracing the technology that automates for their clients and becoming more of, you know, I hate this like trusted business advisor and all these things that everybody's tagging them with, but really more than just their CPA or accountant. And so we're seeing a lot more of that, but definitely, you know, either picking the target niches, picking new services to stand out that other accountants aren't doing, or grasping onto technologies that can really set their firms apart.

So let me throw a doozy question at you. There is this movement toward trusted advisor, but you said, I think the words you said was everyone's moving this way, if everyone's moving that way. It doesn't sound like a blue ocean, it just sounds like a race to a new spot. How do you differentiate from in that environment where everyone's moving to be a trust advisor?

That's what. You know, it's funny, it's not that I'm against being their trust advisor. I think that they should be. It's just that that slogan everybody's using now. So when you go to these accounting websites, it's your trusted business advisor or your partner and everybody's doing it. So what again, is differentiating yourself from it? So I like that now I'm seeing some, that, you know, they're the guru or the rock star or the hero or whatever it may be, but they just can't. Everybody needs to stop following what everybody else is doing, I guess is my point.

And now you said also pick a niche. How do you pick A niche.

A great question. So I think there's two ways either a look at your current client base, what's working and really specialize in that. So whether that be construction, real estate, dental, veterinarians, whatever it may be. Another would be looking at demand. And there's a lot of software out there that can show you like Profit Sense by sageworks or anything like that, that can show you how many businesses there are in the US or in specific geographic areas and then targeting them that way. But you're also going to have to see how popular it is of the service industry already servicing it. So like dental is extremely popular for accountants. So I would actually tell somebody not to go after that, but instead find something different where there's not full associations just for CPA that service, that profession.

How do you know there's so many accountants in there? I mean does that software show that, that there's.

No, it doesn't. It's just if you even like Google search, dental cpa, it's unbelievable. And Google Analytics will tell you how competitive that keyword is. But on top of that there is are literally associations for the CPAs just to serve as dentists. And which that tells you right there, there's so many and you can't even get on the list anymore. They say that there's full. It's just too red for me.

So I love it. So I heard step one, pick from your existing clients who's your best. There's an opportunity there potentially for an industry niche. Step two, identify the specifics around the industry. Step three, then measure the demand. Step four, measure the competition through Google Analytics. Is that basically the sequence?

Absolutely. And I would add into that figuring out in the specialization how you can go further with them. So knowing their application. So since we're on dentist, Dentrix is a very popular software for them, knowing that application inside out so that you can understand their pain points. And now you can also do practice management consulting and you work with them on every aspect of their business, not just their taxes.

I love it. I love it. So one last question is if you have a new accounting practice that you're working with, how do you get started? And let me just kind of couch this for you. We have accountants that come in all the time. They say, oh my God, I need more sales, I need to get more efficient, I need to do they have so much going on their plate that they're frozen. How do you assess what they need to do first to really get the business moving forward, specifically in the marketing?

Well, first really understanding exactly what their initiatives are, because everybody says they want to grow, but then when you start, you know, diving real deep into it, they're not real sure what exactly it is that they're trying to accomplish. Some of them will just give you a round fuzzy number in the sky because they think it sounds fun. But in reality, we need, we need to better, you know, define that as well as quantify the numbers of how realistic it is to even get there in what time frame. But from there then just. I usually do a SWOT analysis with all of my clients and then grow from there in different exercises to really figure out where, not just. Okay, if we look at a client list and these are all of the different industries we serve, where do we have the most. That's not necessarily the best though. Which ones are the most profitable?

And now you're talking my language.

Yeah, so. And which ones have the most opportunity for growth as well? Maybe you've already tapped out a market in your, in your area. So those are all the kinds of things that we want to analyze and then build a marketing strategy, design and plan as well as a calendar from that point and then execute. And I'm all about automation. So the more that we can automate internal as well as for your clients, the better.

Okay, so I said last question, but now this is last question plus one. How do you know? You said pick the ones that are most profitable. How do you know which clients are the most profitable for you?

Well, if they're an accountant and they don't know how much time each of their, let's say bookkeepers and staff are spending on each client to be able to see how much the client has cost them. Or if they have write downs versus write ups, then they have some internal work they need to do first.

Okay. I love it. You know, we want. I gotta have you on our other show. We have another show we just started up called Grow My Accounting Practice, or as the people in the know call it, GMAPs. So we gotta have you on there because this is specifically for accountants and I'd love to dig in deeper. Would you be up for coming on the other show with us?

Absolutely. Would love it.

Cool. And there's a lot less of these sound effects and stuff like that, so it's a little more tame.

And maybe we can get you in your, you can join the show from your studio.

I will try. I'm gonna send you pictures of this thing. I'm telling you, it is legit.

I love it.

Well, I bought the house From. Do you guys know the band Weezer?

Yeah.

Yeah.

Okay. I bought the house from the drummer of Weezer. So he built this recording studio in here, and I'm just like, do I turn this into a Pilates studio? I have no idea what to do with this thing.

Do you drum?

So he left drums, but, no, I do not.

We got a place down at the beach. Are you familiar with the artist Billy Joel?

I think I've heard of him.

Yeah. So I once saw his house down on the beach. It's nothing near my little shack, but, yeah, no, I think I saw it once. I don't know. I thought you were totally gonna say that. Like, oh, Weezer, you know them? Like, yeah. You'd be like, well, I know the guys there once, you know, but whatever. All right, this is going nowhere good. Fast. So, Casey, if people want to learn more about you and people. I'm talking to you, listener. You do want to know more about Casey. You do want to use our services. Where can they go find you?

So visit our website, blueocean principles.com. it's P, L E S at the end. Not pal. Principals.

And so not like teachers, but methods.

I didn't realize that was going to be so confusing when I created it. Should have thought more about that.

Say it in German, Mike.

Ich bin ein principal. Guten tag.

Sorry, go ahead.

Jesus, this is going over fast. All right, so, BlueOcean principles.com. any other. Anything else you wanted to share?

No, just. Thank you so much for having me.

Yeah.

Thanks for coming on. We'll have the links to your site on the show post as well.

Yes, we will.

Yeah. And thanks for dealing with our insanity. But, yeah, listener, definitely check out what Casey has going on. Definitely read the book. It was a really. Kind of a good eye opener. And then if you haven't read it, once you do read it, give Casey a call. She doesn't just work with accounting practices. So if you have another type of business. Business. She can help you too. All right, Casey, thank you very much.

Thank you.

Thanks.

Thanks.

So, Chris, cool. Yeah. Total train wreck show. I mean, we have guests going, what the hell's going on?

Yeah, no, you're. You're. It's. My other client said the same thing. She finished the show. She's like, oh, my God, I think that was horrible. And I'm like, no, it wasn't.

No, it wasn't. It was.

It's a different experience.

Let's cut you some slack. It was our first one. Split up. It's a little emotionally Damaging?

Yeah. I mean, there's. There's a couple lessons here. You don't. Well, here's. Here's the lesson. It's like parking your car in certain neighborhoods in the Bronx. You just don't do it. Now think about that. Isn't that deep, right? Isn't that deep? Just think about that. Mind blown, dude. You had a big question for me, Chris. But before you ask it, I want to talk about our sponsors, and I want to get a little singing going. All right? Christina's, like, eye roll. First sponsor, the player of the day, Fundera.

Yep.

We talked about credit, Right. That's one side. You need to get money from clients. Now, a couple people said, mike, you're all about profit first. It's all about profit. We should never borrow money. And I talk about that in the book about borrowing money and the risks of debt. But when something is working, when you're making money doing something, that expense becomes an investment. If you put money into something that's working and you have a quantifiable high degree likelihood of return, that's an investment. And Fundera does that. So if you need money, use Fundera. Here's a little song for you about Fundera.

I'm actually gonna opt out because I'm recovering from a cold.

Oh, my God. That's the song in the middle of the show.

That was my rap.

Oh, my Lord.

I see. Okay.

Yeah, she was sick yesterday, and I'm like, dude, sorry.

That's okay, Christine.

Fundera sponsor number two. Then say their name at least. T sheets.

T sheets.

T sheets. Tracking time. So we had a near calamity here at the office because Christina somehow miraculously worked for 47 hours straight.

Oh, Lord, here we go.

Right? And so I'm doing. I'm doing, like, salary. I'm like, holy cow. I owe her $80,000 for this week. I mean, I've never seen someone work so hard. And then I'm like, hold on. I was in the office. She wasn't. I called her, and she couldn't talk because she was out in the town. I'm like, were you here? And she goes, oh, no, I forgot to check it out. Check out for the end of the day. And the T sheet system notified her. The T sheet systems emails Christina and says, you sure you're working this hard? 48 hours straight? That's pretty much unheard of, you slacker. Yeah. So the truth of the story is Christina reached out to me in advance saying, oh, my God, I forgot to check out. Here's the Correct time entry, and it's fixed automatically. That's pretty cool.

Wow.

Pretty cool.

T sheets.

The uncool part was Christina's salary for that week was not $80,000. It was the usual. What? What?

She owed you money.

I know, I know. I actually called T sheets, if they're willing to do that, to change the system that sometimes it says, oh, sorry, the hours were not good enough. Can you pay the employer? And then my bank cries, yeah, that would not be fun. And then the third sponsor, nextiva. Nextiva. Dude, Chris.

Yes. Love it.

Hear how good this call. We're over the Internet right now, right?

Yes.

Now, the quality is tremendous. Insanely good now, right?

That's right.

This is the quality of sissies. If you compare it to nextiva. Now, when you want great quality, use nextiva. It's a voiceover IP phone system. And they. The quality of the calls is, you know, you call up on the old landline, it sounds like you have, like, two tin cups with that one string across.

Exactly like.

Yeah, exactly. Verbatim. Well, I couldn't hear you.

My can is tinted.

Oh, my God. I shouldn't have used a Campbell soup one because it still has the soup in it. Pick up your can, for God's sake. Nextiva, they use buckets instead of cans, so the connection's that much clearer. So next season. That was supposed to be fun.

Fantastic.

Yeah, let's get some. Let's get some more sage advice. Yeah, it's like parking your car in certain neighborhoods in the Bronx. You just don't do it. I love it. If you live in the Bronx, you're like, oh, my God, he's so right.

Yeah.

So, dude, you had a question to ask me?

I do. And are we gonna give our. Our takeaways from our guests?

Oh, my God, no. Let's do the question last takeaways.

All right, but takeaways. Mike, you want to go first?

Yeah, I do, actually.

Please.

So when David was talking first, he says he's a killer, so my handwriting got all, like, scratchy, and, like, I was like, oh, my God, he might be, because that's what killers do. Killers say they're killers.

He's running checks on all.

He's running checks on Mike McCallowitz right now.

Killer checks. How easy of a victim would he be if I killed him? Him. I'm just saying killers. If you're a killer, you say you're a killer, because then no one thinks you're a killer, and that's how you kill. But the other thing I Learned from David is he said that you don't have the sale until you get the money for. Christina's pissed off. You don't have the sale until you get the money for the sale. And, dude, it happens here. It happens here. We get fired up. We're like, oh, we got the biggest client ever. This is so fantastic. And then a week later, it's like, oh, you never got the money. They backed out. Yeah, don't count your chickens before they're hatched. What I learned from Casey is don't interrupt her with stupid comments, because it'll throw her off. The second thing is, everyone says they want to grow. I go, casey, what's the biggest thing you get? What's the. Everyone wants to grow. I'll tell you, that's what you've been wanting to do your entire life, but you're not profitable, so clearly that's not working. Focus on something different. Focus on profitability. Did I totally throw you off, Kristina?

Well, you saw my big one. But, I mean, they both just had a lot of good points. And what I liked when David said, I have to look at my chicken scratch here. I mean, common sense. Make sensible decisions to get your money. Having an open discussion with your clients to make sure that communication is on the right page. And, you know, the lack of cash is what kills the business. Which I was like, boom, there it is. And for Casey, I like that she was reiterating the fact that you need to think outside the box and to be your own person and put that in your company. People don't want to follow the same thing all the time. They want to find what fits them.

Be you. Right?

Be you.

Be you. And it's not gonna turn on everyone. We're a little crazy here at this office, and I gotta admit, I'm kind of the leader of the insane ones. But it doesn't resonate with everyone. Some people are like, mike is the biggest tool in the world. World. And. But other people resonate with it. And I will tell you, I and our company here, we're comfortable in our own skin. And so it resonates with the people that want you. Don't try to appeal to everybody.

So, okay, so now let me ask you about Mike.

What do you want to share your three things?

Well, it's similar to your guys. I could share if you want.

No, no, no. If it's the same thing, let's.

Similar. I mean. Yeah. So. So tell us, Mike, about the three types of customers.

Yeah. So here's. Get close to the speaker For God's sake, pull over your car. Stop your little jogging around. You're not impressing anyone anyway. And listen. And listen. You have three types of customers, and here they are. You have a customer that pays you. You have a customer that don'ts. Don'ts. Oh my God, I'm so angry I can't even use the right words. You have a customers that pay you. You have customers that don't pay you. And the third customer is no customer at all. Now here's the funny thing. Here's the sequence of the value of those customers. A customer pays you is the best customer. No customer at all is the second best customer. And the worst customer is one that doesn't pay you. Because think about it. When you don't have a customer, what you do have is time. You see, when you have a customer that doesn't pay you, you have to spend all this stinking time doing the work, concurring expenses, having your colleagues do this, all this stuff, and then you don't get any money for it. It actually costs you money. It costs you time, and you get squatola. So go for great customers that pay you well, or no customers. What I mean is, if you have one of those bad customers, you got to get them off your customer list. Go to no customer. Because now, yeah, you're not getting money in the moment, but you're availing yourself time where you can focus on finding more great customers. That's the three types of customers. The worst is a non pen.

And now you know.

And now you know, right?

That's valuable. Thanks, Mike.

Oh, dude, I feel safer already. Yeah, I know. I totally get it. I totally get it. So, dude, I think it was time to get out of here. Not. Not too shabby for our first one.

Yeah, it was good. So again, our website is profitfirstpodcast.com. you can find us on itunes and stitcher, all of our previous guests. And yeah, I'm the founder of Fractal Recording and I produce podcast guests for business authors, so.

And you forget to do the fade out music sometimes too. Dude, give it to us.

Oh, you want it?

Getting there.

We're fading, right?

Oh, now you like it. Anyway, that's why the recording. Mike Michalowitz, Profit First Professionals.

Yeah, so. So Profit First Professionals. We are an organization, a membership of accountants and bookkeepers throughout the globe. I mean, we got people in the US Mexico and Canada, North America. We got people throughout the continent of Africa. We got people in Europe. We have a member in the Caribbean islands, drinking a Pina Colada right now as she's bringing profitability to business. So if you're an entrepreneur, if you own a business and you want to be more profitable, you have to have an account or bookkeeper. Anyway. Go to profitfirstprofessionals.com, click on the find button. We'll hook up it with one of our members. They are extraordinary. They bring profit to you. Of course. You're an account or bookkeeper. Why aren't you a member right now?

Why? Why?

Why? I don't know. There was something else. I got thrown in with that one.

A double hit.

Not bad for a remote. We'll. We'll get better on even great one.

See you guys soon.

Later.

Dude.

Did you cut me out there or just look at me in on that?

We're actually still in. But I can remove this.

No, you gotta keep it in. Oh yeah, that's right, keep it in. End with a piano crash. No, did you hear him?

You guys are not Clinton.

That's the taste we wanna leave in people's mouths.

Yeah, I like that. You end on a big ass old piano crash. One more time. Time.

I don't even know what that is.

I don't know. I don't know. Later, dude.

Peace.