Cash flow management in startups

Good afternoon and happy Friday, everybody, and welcome to a Friday afternoon. I should get a beer or something. Friday afternoon happy hour, we'll call it version of the Drink Up. Podcast with our obligatory free bird. Shout out to Jay Williams and Sam Anderson and Alicia Vargo with Bev Assets and Frontline. Shout out to Ryan, who's at softball with his daughter right now with On the Rocks Advisors. And then myself and Alias Advising. Our guest today, Anthony Domenici with, oh shit, I had it up.

Basecamp Consulting.

Basecamp Consulting.

I had it memorized and then it left me. Basecamp Consulting. So welcome, Anthony.

Yeah, thanks for having me.

It's Friday and Adam's already had like 5 shots. He's deep, some cannabis as well. So, you know, that's how we roll around here.

So welcome, Anthony. Give us just a little bit about you and we'll get into it.

Yeah, my background is generally accounting, treasury, and finance. CFA charter, kind of advanced finance certification, but I really have spent most of my career Um, kind of in diverse private public company situations. I worked in private equity, I worked, um, in real estate, alcohol distribution. And then the last, uh, you know, 6, 7 years I've worked with startups mostly. So I went into California cannabis, which, you know, I thought was gonna be this amazing opportunity. All the alcohol guys, you know, told stories about the '80s and '90s and I, we kind of thought that was gonna be our opportunity.

Right.

Which it really was not for the most part. And out of that, we ended up starting Basecamp Consulting Group to work with brands. We love brands, I love brands, and I think there's a particular skillset that we have that adds a lot of value with those types of companies. So, you know, I selfishly do get a lot of joy out of it, but I think there's a clear value prop with that. So that's kind of what I've been working on for the last, you know, and maybe the rest of my career. That's a pretty short period. I have 3 kids. I live in Southern California with them and my wife, um, you know, and, uh, yeah, I like to play golf, swim, get outdoors, go to the beach, all that kind of stuff.

What is the product on your right of your shoulder up in the mid-shelf or towards the top? What is that? Yeah.

Cilento Tequila. Uh, it's one—

what tequila is that?

Cilento is one.

Okay.

Yeah.

Nice.

Cool.

Uh, so I have to ask, cause I'm trolling LinkedIn as we talk, how did you go from a BS in management science doing skiing and snowboarding to running a financial services company?

Yeah. You know, I think—

That's a loaded question.

The person that, that was doing that degree and, you know, on that team probably would never have thought that I would be doing this now, I guess is the short answer. It was a pretty, pretty big evolution for me personally. I mean, I started my whole, I guess, career path when I started was working for large companies. You know, I felt like I wanted the W-2 and have stability. I kind of tried to make conservative decisions, I thought, which is really, I think, a false sense of security when it comes down to it, but Well, go back on that real quick.

I know you're telling your story, but I always thought that having a W-2 job and that the 15th and 30th is promised. The reality is I actually think there's more stability if you do something for yourself.

I think I've learned that over time.

Took me a long time to get there too, by the way.

Yeah. I mean, it's a lot easier to do those kinds of things now, for sure. I can basically pull up LinkedIn and You know, find any company that I want to find, see, you know, contact the owners, whatever you can do. There's a lot of things you can do now that were a lot harder back then, which maybe ages myself a little bit, but. Yeah, I mean, some of it was forced, honestly. I think, you know, I going into working in cannabis, um, from what I perceived to be, well, I kind of was seeing the cracks, but like what I perceived to be a stable kind of environment really almost was like a nervous breakdown making that decision. And then kind of the reality of working in a startup in cannabis was also really difficult and kind of broke me down quite a bit. Like learning how to cash flow a business with literal stacks of cash. And—

You literally had bags of cash? Yeah.

I mean, there's a safe with cash in it and, uh, you know, I'm glad to be kind of past that kind of environment, but, you know, that whole process kind of really rewired my brain in a different way. And then, you know, when that ended, COVID was there and it kind of created, I don't know, kind of a now or never situation of like, it's creating a really big door. All I had to do was kind of walk through this door and kind of take the risk and take the chance. But really I didn't have much else going on, like much else to choose from at the moment. I was interviewing for jobs. I was doing different things kind of during that time, but all that stuff kind of closed and there was a lot of consulting projects around. A lot of opportunity for project work. So, you know, going back, like, I don't know if I ever would've just like quit my job and started a company out of the blue, but I, you know, saw the opportunity. I called up my friend who, you know, we started—

So can I, can I go back? I just said, I'm thinking like the picture, just go back. Cause it's really important what you just said, by the way. And I think Adam will relate to this as well as me. I didn't become an entrepreneur because I wanted to. I became an entrepreneur because I had to. I always felt like I had the job and the whole bit, but I had the point, I had no other options. I had to put food on the table. Is that what you're saying? Is that you were pushed over the ledge and you had to make that decision?

I pretty, I mean, kind of, yeah. I think I was doing temporary work through like recruiters and I started to find more direct consulting work. And during that time, yes, that's what I had to do. And I think, you know, there was a time where I could, and there has been many times probably in the last 6 years that I could have said, hey, you know what? I'm just going to get a job. But I think in the short term during that window, it was a necessity. At some point I made a decision of this is actually what I want to do. And, you know, I have to kind of go all in on this and have faith in myself and our team and that we have a business that, you know, people actually want and get value out of. And it's a real thing. And Like we're, we're doing it. So I think when I started—

You have no, at this point the ship has sailed and the, uh, and you have your, you're headed, you know, they burn or they burn the boats. You can't, you're like, you're on the island.

I burned all the boats. I did. Yes. Yeah, actually, I mean, I bought out my partner about 9 months ago and that was like, there's no going back after that point. So, I mean, I was already there anyway. It was just more of like a bigger financial commitment for myself. But yeah, yeah, there's no going back. I'm here.

Man, Anthony, if it was easy, everybody would be an entrepreneur, right?

Yeah.

Like, like, I mean, it's, and I don't want to say arrogant when I say this, cause this shit's hard, but it's fun.

Yeah.

But if you're not constantly building the pipeline and talking to people, the business will dry up pretty quick. Like, you know.

And the interesting thing during COVID is I felt like any opportunity I had to show up and, or maybe that 5-year 3 or 4 year period, anytime I had the opportunity to actually show up in person, I would do it and good things would happen, which is a really weird kind of like you took that for granted at some point. But I still feel like that's a thing today. There's a million reasons to cancel a meeting or not show up, or, you know, it's easy just to not do it. And if you follow through and do what you said you were going to do, I think good things happen.

I think so. I mean, that's half the battle, right? You know, information's flowing so quickly. So I know Adam's supposed to be leading this thing and I'm just like being the Chatty Cathy today. I started at 7:00 AM this morning with my partner, but I'm very curious what base, what do you do? Like, what is like, you have these clients, you've made this big bet, you've burned the boats and you bought out your partner. I just caught that. What is it exactly that you do?

Yeah, we provide accounting and finance services for brands. I mean, we work with other companies, but for the most part, I think the value prop is working with consumer brands companies. So, you know, food and beverage, wines and spirits. We do some apparel, like other types of products, but I think the real thing that we try to help them understand is cash flow. Cash flow is the lifeblood of a business, and if you really have, and if you have inventory, it just makes it that much harder. We kind of, you talk about like having the payroll responsibility and the financial responsibility of a company. You layer inventory into that, it's just another massive variable and kind of material swing month to month that you really have to plan for. And I think when we started, we found that our clients didn't have accountants, like accounting teams that really understood that, those dynamics. So we, we really provide specialized accrual accounting for brands. And I think what it comes down to is the, like, financial operating systems. So the systems that we implement, you know, AR, invoicing, AP, bill pay, inventory, COGS, deductions or chargebacks. Like all of those things are really important to have set up in a way that allow you to understand your cash flow cycle. Most of our clients also are selling in multiple channels. So direct-to-consumer, Amazon, distributors, um, you know, B2B direct, depending on the product, there's different platforms and different things that they're using to sell. So each one of those also has different cash flow cycles. So we kind of really have to dig into the details there and help them understand if you have finite resources, like most companies do, they don't have a never-ending supply of cash for the most part. Where, what's the best place for you to put those dollars? Um, and where are you going to get the most return and the quickest turns on your inventory too? I think every time your inventory turns, you're, you're multiplying cash, or you should be hopefully, which is also not a given, I guess. So, um, yeah, so that's, that's what—

Where do brands like, so you talk about all these different channels and you're talking about cash flow, right?

Yeah.

Like, and one, one of the questions we put in the post is, can you share with us where you think brands break financially? Like, where's the, like, where's the warning signs? Like, I'm a brand, right? I'm talking to you and you're keeping me outta trouble, right? And, uh, we talk to brand, like, we're commercial guys. So like, you know, Adam's operations, we'll take the brand and say, hey, we'll go get you a distributor. We'll go get you a customer. We have boots on the ground, right? By the time they arrive with us, They're asking us to work on commission because like I spent all my cash with Anthony and Adam. Well, you guys do it for free. And we say, no, we will not. So where, where, where, where do, where do they break financially in this whole mix? Like, how do you manage that? So by the time you arrive with someone like me, you have some cash to spend with us too.

Well, I think there's a couple of things that I see. One is there's a counterintuitive thing I think sometimes with You know, consumer brands is if when you open new doors and you, you're crushing sales, all of a sudden you have no cash. And I think if you don't really deeply understand the economic drivers of your business, how your supply chain works, where your deposits are going, how quickly it takes you to turn cash back into cash, that can happen. And there's a couple things that, where that happens. One is going too wide too fast. I think if you open too many doors and too many regions or too many different places and you don't have enough cash to drive velocity and you don't understand how to drive velocity in an efficient way, then the doors are worth very little.

Do you tell your clients, hey, look, go an inch wide and a mile deep, and this is why? Do you, do you actually tell them when they have a conversation with you?

I've had those conversations, but I think it's easy to say, because if some, you know, if Whole Foods calls you up and they want to go nationwide, is that— most people are going to say no to that? Not really. So it's sort of a weird Dynamic of, you know, and that's the famous last words probably. But yeah, I think what we often talk about is, do you understand how to drive velocity? Do you have a playbook? So when you open those new doors, do you know exactly where you're going to spend your dollars? Who you're going to hire? Where are your demos going to happen? What trade spends are you actually going to agree to? Or did you agree? Did you even know what you're agreeing to? So like, if you get these chargebacks, Are you not prepared for that? So I think, yes, I think there's definitely a body of work around staying narrow and understanding that, but it's really easy to say and hard to kind of, I mean, I can't hold anybody to do that really. Like it's not my company. And most of the time they're already there when we come in. So—

It's funny. I have a client and he sends me his pro forma. Okay. Here's the pro forma for Georgia. Take a look at it. There's how many cases we need to sell, and then this is how much I have money to spend to help sell those cases. And I want to— I don't want to sound terrible. I'm like, look, I don't have a crystal ball. I promise you activities. I have no idea how many cases you're going to sell.

Yeah.

You know? Um, and they all want to know, everybody, even you, how many cases we're going to sell this year? And I'm like, I don't know. But you I mean, I'm just being honest. Like, I don't know how many cases. Now the category is worth X, but no one knows who you are, right?

Yeah.

So when you have that conversation, do you see it as more like an investment? I'm a new brand. I developed this cool cocktail in a can, RTD, that Adam helped bring to market, Adam Smith. And now he's arrived at my desk and I'm like, okay, let's go an inch wide, a mile deep. Let's go into Georgia. And I'm gonna open up, I'm gonna get you a distributor, and that distributor's gonna make, you know, 25 to 30% margin, and the retailer's gonna make 30% margin, plus they're gonna want free goods. We do all the math. We're like, and by the way, um, you're gonna have to do like at least, you know, once a month of tasting in that account to create velocity and volume. And then they start to like, oh my God, I have to spend all this money. What does the distributor do? I'm like, that's the toll and ticket you have to pay to get over the bridge to get distribution.

Yeah. I think, yeah, I mean, working in distribution, you know, you, it's like the 80/20 rule, like the 80% of the suppliers that are in there, the long tail, you basically have to really drive your own velocity and your own, uh, depletions to get the attention really. 'Cause I think, you know—

Thank you for saying that because we had Vible Tea, um, with Dan Levinson. Dan, if you catch this today or an episode, Dan's been working for 6 years building Vible Tea outta New Jersey.

Okay.

And he said exactly that. He said, if you're gonna come in this category and if you're not willing to put 10 to 15 years into it, don't come into it. And if you're not willing to build yourself, don't come into it. And then he said, I did 200 tastings last year myself.

It is, it's a grind. And I think people really underestimate the amount of cash you need to drive and build a brand. I mean, there's these unicorn stories out there that, You know, I think, I don't know, it feels like there's a little bit more of like a reality check lately, but, you know, 5 years ago everybody thought they were going to start a brand and just exit in 2 years. And it was just going to be, you know, this Cinderella story.

3 to 5 year exit. I'm going to be the next lollipop. My brand tastes better than everybody else's. I'm sure it does. Look, someone's going to punch through and do that for sure.

Right.

Plenty of brands that I think are going to be successful, but I just, you know, I, I think people really underestimate the amount of effort, cash, time, blood, sweat, tears that need to go into really—

So let's get, what does it take? What is it? So take a beverage brand. Let's just take an RTD or a functional brand. Walk us through what it takes financially to bring a brand to market. I think people, I don't know what it is, I guess.

I mean, honestly, yeah, I think it's somewhat dependent on a lot of different variables and what they're trying to do, what they're trying to accomplish. Like also, what are your goals? So, you know, there's a whole thing around like bringing on investors and what that means for you and your company. That's a different dynamic. So make it easy for you.

I wanna launch a brand in Minneapolis, Minnesota. So here, it's a true story. So Adam Corner, you know who he is?

CarBless.

We always talk about Adam. Hopefully Adam sees it. We talk about him all the time. Eventually Adam will come here and, uh, see us. I know Adam personally, but, but Adam started in Wisconsin. He started in one city. Then the city went to the community and the community went to the state, and then he built his brand out an inch wide and a mile deep, right? So, and then he, you know, I was talking with him at NBWA and he's like, hey, to another supplier we had, Nico Tequila Copa Cocktails. He said, Nico, you could be Surfside though. Surfside had a lot of money, a lot of investors. They went a mile wide and an inch deep, but they had the money to do it. Yeah. So I think that's what you were saying. That's why I chimed in.

Yeah.

So, but take a brand that I just, I just wanna start in Wisconsin.

Okay. Well, I mean, you definitely need some seed investment, right? I think there's, I do see people trying to raise money. They're like a first-time founder trying to raise money to start a brand based on an idea or a concept. And I just don't feel like that is happening.

So that's friends and family or mortgaging your house. Like you, like you said, hey, my partner mortgaged his house to make the first payment. Then I got a bank loan.

Yeah. You need to save it yourself, come up with some seed capital. Your friends and family, parents, whatever. Um, you need to have some capital to develop a product. I think it's really important to find the right supplier, um, and understand what their capacity is. And if you can kind of get to a place where your COGS makes sense initially, it probably doesn't make a lot of sense, but you definitely need that seed capital initially. And then I think you need to get product in the hands of people like as quickly as possible and not try to make it perfect. Because I think if you, if you overdevelop your product and it's not really a great fit, you end up wasting money before you even get sales. So I do feel like, I mean, I guess I'm trying to figure out how to answer your question completely, but I, it's, there's, there's a couple of stages. I think one is like getting the product ready, which you need to come up with yourself. Then you can get product in market and get some proof of sales and concept, but you're going to still need capital to get inventory into the hands of people. And then depending on the product, if you need a distributor or if you're— what state you're in too. I mean, this is kind of— my brain is going down this rabbit hole, I guess, but you're going to need cash to drive marketing and brand awareness as well. So, I mean, to launch a brand, I just feel like you need a few hundred grand just to start. And then realistically, I mean, at least probably a million just to like Get to square one. I mean, and then—

Yeah, it's like I had a, I had a brand, uh, based outta Minnesota here, lovely friend of mine, and they were in 38 states with, uh, an N/A beer. And, uh, the problem was every time BevMo or Total would come to order, they'd only have maybe a couple types available.

Yeah.

And they were in 11 states with distribution, and every time the distributor showed up, they'd only have a couple flavors available. Guess what happened?

Got dropped.

They got dropped and they're out of business. And I tried to convince the investors and they had money, they own hotels and stuff, the whole bit. I'm like, look, we need $500,000. That's all we need. That gives us a runway to make the product, to get it into Total. And they said no. Therefore, they got dropped. And matter of fact, this great little craft brewery that was in downtown Minneapolis, Closed down. Now they are part of, they still exist, but there's part of another little craft brewery that they kind of, that came together, you know, to kind of survive the brand and everything she stands for is awesome. Feed the hungry, the whole bit. But they ran outta cash. They couldn't, and they, and they were, they weren't keeping up with their payments at their facility where they're at. You know, it was just, you know, the bills were piling up and they, and then they just didn't have the, the systems in place. But I think in that case, they went way too big, too quick, and they couldn't fill those orders that came in.

Yeah. Yeah. I mean, you need to go wide fast. I feel like you need like $10 million or something crazy. Just—

Do you know C Talent, uh, Gina Cicalone or whatever? I was on her podcast and she had a brand and Mark Cuban was her partner. She closed the brand down after 9 years.

Wow.

Because they couldn't, It was, it got to the point where they started trying to get funding in, funding in, funding in. And she's like, she was working 24/7. She's like, I'm a minority owner now. It's not worth it anymore.

Yeah.

Now, I do, 'cause everybody's like, is the, what's like, does the cash come in at the end or the beginning? I mean, do you like, reality check here. I'm a founder, I'm selling products. Sorry. And then, um, Adam, you gotta take this over the last few minutes.

No, I'm good.

But I'm a, I'm an owner, right? And I'm building this brand. Am I expected to make money from day 1, year 1, year 2, year 3? Like what's the reality check?

Well, I think it depends on how you staff it too, but really you're going to need help. No, I don't think you're going to make money for a couple of years at least. I mean, you gotta be getting up to like $3, $4, $5 million in sales probably to start breaking even. Especially if you start to like work with brokers or, you know, Consult sales consultants or, and you got commissions. So you're, you're starting to take percentages off the top. Right.

Uh, right. They look at us like we're vampires. Like, you're taking all my money. Yeah. Like, I need money too. I'm like, yeah, but I'm not gonna go out there for free to work your product. But I need more. You need to get me more so that I can pay my bills. I'm like, it's foundation building as, um, Adam would call it. Right.

So it's a, it's a difficult grind. And, uh, yeah, I mean, you definitely have to have investors and a mindset of like, this is gonna to take years and a lot of cash. And we all have to be cognizant of the fact that we're probably not going to make money for a while.

And so Buzz Balls, let's just take Buzz Balls. Buzz Balls sold to Sazerac, right? Buzz Balls called on me in Minnesota and we told Buzz Balls, no, it doesn't fit what we're trying to do. Right. It's one of the hottest brands in North America. How long did it take Buzz Balls to get where they're at?

I don't know the story.

For them?

15 years.

Wow.

They didn't just like magically, like they called on us in 2014, '15, over 10 years at least. I mean, they, I mean, they went to the distributor. We as a distributor told them no. I'm sure 15 other distributors told them no, no, no, no, doesn't fit our profile. They hired some brokers, had an account, used that account, watered that, grew the plant. The whole bit, but I think they made their money on the out. Yeah, on the sell.

I would bet. I mean, every time you're in a thing and I can market.

Anthony, I'd be curious to get your opinion, and I do have one question I've been.

I think we lost Anthony. It's frozen.

Oh, good call. He is frozen.

Anthony, can you hear us? Shit.

I think maybe I scared Anthony off. He's like, "What is he saying?" Hello?

There we go.

Uh, I'm gonna, I'm gonna add to Sam's question for the folks you work with. I mean, is it more of, and I'm sure it's a mix, but is it more of kind of, you're working with them in the early days, you help them get an understanding for things, kind of set a foundation for cash flow rhythms and stuff like that, and then kind of help them march forward? Or is it more of—

Sorry, my phone.

You come in and they're kind of keeping their head above water, but you're like, I gotta fix this shit. Right after the fact and then help them march forward. Because I have to assume either way, and I'm curious to the answer to that question, but I have to assume either way, just based on what I've seen in the last 9 years, the best brands are keeping a head and maybe a shoulder above water until they exit, whatever exit looks like. But there's really not— I mean, even Cardless, right? We talk about them all the time. I'm sure Adam would tell you like, yeah, we're making money, we're paying our bills, but we're not swimming in it by any stretch. Does that make sense, Anthony?

Sorry, my internet keeps doing weird crap here.

That's okay.

You're good.

When we, uh, when we curate this off this awesome episode, I kind of love it. We'll have you stay on with us, by the way, so we can make sure we download. But yeah, sometimes, but it comes back in 4K when we actually post it on, um, Apple iTunes and Spotify. But, uh, you're, you're definitely, your internet's coming in and out.

Yeah. Like the last couple minutes.

Yeah, he's frozen. He's probably talking and we can't hear him. But you know what? You get where I'm going on this while we're waiting for Anthony to come back is what he's like. They're talking to Anthony, the financial person, right? And I love it that he's being truthful with them. Hey, you back?

I switched it to my phone, so hopefully that will be more stable. Okay. My wife—

Did you turn your phone this way, by the way?

What's that?

Turn it horizontally. Are you on your phone?

I'm not on my phone. No.

Okay.

Okay. I just connected my computer to my phone, so it would, uh, Fancy.

Adam had a question. I don't know if you want to re-ask that question, Adam. Yeah, yeah.

I'll see if I can get it going. So I'm curious, like for the folks you work with, is it, is it, I'm sure it's a bit of both, but is it more kind of folks in the early days that you help kind of understand things and then march forward and set up a good foundation for, or is it more folks that you're coming in and maybe they're 3, 5, 10 years in and you're like, holy shit, we got some stuff to fix and then go from there. Right. And either way, so that's question A. Question B is I have to assume regardless of which one it is, good mostly looks like just keeping your head above water. Like you're never really swimming in it by most standards, right?

Yeah, I think, um, so the first part, we kind of have 2 profiles, I think, that of our clients that we work with. One is generally first-time founder. Yeah, we're probably coming in like 2, somewhere between like 1 and 3 years in. They've started working with somebody that is, they probably were on a cash basis initially, which is fine. And they started working maybe with their tax accountant or somebody that doesn't quite understand exactly how their business is working. And then things start to go well, and then now they don't feel like they can trust their financials. Things are moving fast. Visibility to cash flow is not there. Inventory COGS, AR, all the things are kind of difficult and not There's not much clarity. So then in that situation, we are coming in and cleaning stuff up usually. And that involves a lot, a lot has to do with like AR and inventory. Probably the companies are getting cash net and somebody might be trying to relieve AR incorrectly. There's partial bill, partial invoices all over the place. There might be credits on their AR report. Deductions are not being booked or booked incorrectly or chargebacks. So there's those, those types of things. And then the balance sheet is off. A lot of times a big thing where it's just black hole accounts in there that people don't really know what's in there and those kinds of things. So those are kind of some of the major things. And then I think too, a lot of times companies will set up their SKUs to be, they want certain SKUs to hit certain accounts for whatever sales channel or whatever, but that, that is not really a scalable setup. So if you, if you need to implement an inventory tool, which we also do, uh, probably half of our clients end up moving to an inventory tool because they have trouble keeping track of all their raw materials and everything.

Mm-hmm.

You need to set your SKUs up to hit essentially one revenue account. So we might actually have to do like setup adjustments of how they set up their chart of accounts and kind of the underlying components. And then we'll also implement like a class tracking system where if you want to track revenue streams or different states or those types of things, we'll set it up. So you're basically, your chart of accounts gets a little bit simpler, but then we can break your P&L out by whatever sales channel makes sense. So that's a lot of kind of like setup things that we end up fixing or are working with. The other profile is a second-time founder. So the second-time founder actually is a great customer for us because they get it. They've already been through it. They know that if they don't do it right, they're going to pay to clean it up eventually. And, you know, they might also have a little cash and they're willing to pay for it a little bit sooner. But they don't want to, they don't want to like worry about it. I think what ends up happening is when I talk to those people that have that pain is that you, you can kind of see it on their face. Like it's in the back of their mind all the time. Things, these things are not right. And, you know, I'm not saying that we're perfect. It's impossible to be perfect and do everything correctly at all times. But I think it's, if you just don't get it and you don't understand what it's like to be in their seat either, it's just really hard to relate. So I think part of what we really—

Do you guys, do you guys do like file tax returns and stuff?

We don't do tax. Yeah. Um, it's really operations, accounting operations.

So would you consider yourself more like a RevMan operation?

I don't, I'm not sure I get what you mean by that.

Revenue management, like you're managing revenue and cash?

Um, I mean, we're like, if you had an internal accounting team, we would be that team. So we're kind of like accounting and finance operations. We're a fractional team of people. You know, our team, the payroll for our team for a company, if you had a, you know, a CFO and a controller and an accountant and an AP clerk, you know, you're Up above $500,000 a year on that. Um, pretty quick. Yeah. So, but you're paying, you know, maybe like $36,000 a year for all those people and you're getting all of their knowledge and their capability, you know, you're renting it basically. Um, I think what it really is, is, you know, it's a, it's a high-performing team that you don't really have to pay the whole thing. You don't have to pay their benefits. You don't have to deal with any of that kind of stuff. Yeah.

That's, well, that's, that's our whole sell too, right? We got 100 sales agents. We've already vetted them. We have experts. We go build your brand. Exact same thing for the fraction of the cost that you have to pay a full-time team to go do that.

Yeah.

Let's say with the last, uh, I'm assuming we're wrapping up at 5.

Yeah. Yeah.

Yeah.

Okay. Last few minutes we have, you want to ask, uh, Anthony the million-dollar question?

Sure.

I can take it. We always ask everybody that comes here. It's the most important question we ask is what is the difference between success and failure?

I think in a lot of ways, The difference is the resilience and the grit to just keep going. But I think if you're, but some of it has to do with how you manage and set up your business because you need to be able to absorb the shocks and, but also capture the wins. And there's kind of a, I don't know, a little bit of like a guide rail that you need to stay in between. I think for us, for us, that really was around having financing and debt to help us get enough cash in the business to weather some of those things that happens because somebody is going, like, bad things are going to happen.

Yeah.

I had a week once where 2 of my managers quit at the same time and I was just like, how does that happen? And, you know, that's stressful, but at the end of the day, you will get through it. You'll, you know, you'll solve the problems, but it, you have to kind of keep a level head and re— and know that it will, you just have to keep going and keep working on it. And I think for me, I've gotten a lot better at weathering those things. I've also gotten a lot better at anticipating those things. And, you know, as you move along too, I think you build systems and institutional knowledge and things like that that really help drive growth in the company. At the beginning, it's a little bit of a tornado. You know, you're kind of building it more when you're flying it. You react to things and the more you can learn to be proactive, I think you create your own luck basically. But you know, some of it is luck. Some of the things, sometimes just the right thing falls in your lap at the right time. But the reality of it feels like luck, I guess. But the reality of that is you probably did something along the way. To make that happen.

Sure. I don't know.

I don't know how to answer that question directly, but I, you know, I think there's a thing that, uh, I think Alex Hormozi says that is like, you just have to keep going basically.

Okay.

But you do have to be in business and have money and keep it going. So there's a little bit of both, like preparing, being prepared and, you know, prepared for those shocks and Negative things that can happen, but keeping the dream alive, keep, keep positive, keep confidence in yourself, the ability to execute. You just gotta have faith in yourself too.

Totally. I love the, uh, I'm gonna see if I can work that into conversations next week of just, um, the shock absorber phrasing, right? Like the, the, and Sam and I go through this in our own way, but it's a, it's a good reminder to use that as a paraphrase. 'Cause I think that every brand, I mean, There's not one of them that falls outside of this. Every brand I work with, and I would argue most of the brands probably, Sam, that you work with is, it's, you know, well, which it's a fair question of, oh, how lean can I be here? And how, you know, tight can I stay to this? And so on. It's like, well, yes, you should be asking that question, but you also can't be consistently riding a razor's edge because then if one thing goes wrong, you're fucked. Right. Um, so you have no opportunity for shock absorption, right? That shock will completely derail everything. And to your point, And we talk, I mean, we hear it from everybody. Persistence is a very common theme in the answer to that question. And it's the, how long, it's, I mean, it's a war of attrition, right? Like how long can you outlast suffering the slings and arrows that everybody else is suffering, right?

Yeah. I mean, I think there's a thing too around like, it's, I don't know, I kind of hate it, but it's like, if you're not growing, you're dying, but it's sort of true because the expenses, everything is continuing to go up. You know, as the further you move along, the more you probably need, you know, higher level talent to support your business.

Mm-hmm.

You know, I think you really have to have kind of like that drive, like to continue to grow and to continue to improve. And, um, there's, I don't know, there's another like thing that I think about of like, are, is your, is your goal too low? Because I think if you have a really aggressive goal, even if you can't achieve it, that forces you to make decisions that you may not make. And I've even done that in my own businesses. You know, if I need to get from here to there, what are the things that I need to change? Like, could I just optimize what I have now and keep moving it along? Yeah, I could. But if I want to get to the place I really want to go, what would I really have to do? And I had to make some of those decisions of, you know, like the operating systems that we're using, the software, like those kinds of things. Like it's a pain in the butt to change those things, but if you actually look at it from that lens, you have to make some of those tougher decisions a little quicker, probably.

Totally.

But I do always say that, that, uh, the kind of like the guide rail thing of like, you do have to absorb that shock. It's going to happen. Like you, if you think it's never going to happen, then you're going to die probably one day unexpectedly. So you have to be prepared for that.

Well, I also, I mean, again, one of the things you called out and again, every brand owner I work with falls into this bucket of, of wanting to take on, and don't get me wrong, again, I applaud part of it, but I talk out of both sides of my mouth pretty commonly, right? Like wanting to take on as little investment as possible, right? For the sake of, you know, not being beholden to others, not giving away equity, so on and so forth. I mean, kind of what you and I were BSing on before the call, which, you know, as a very frugal person myself, I'm like, well, okay, like I can applaud that, but I also will tell people that I grew up in a, in a, community and a family environment where like any debt was seen as bad. And that's simply not true, right? It just isn't. And so to your point, right, whether it's, it's you're doing it because you're reaching for a goal or you're doing it because you're trying to weather a storm, the attitude of like, not all debt is bad, knowing when to pull that lever and how and exactly why is a superpower that most brands never learn to use. Right.

No, you're right. We didn't talk about that too much, but, you know, equity is the most expensive cash you'll ever raise. And it, and it may not feel like it today, but one day it will. And I think the thing that I always often say is you should get debt when you don't need it. If you think you don't need it and you don't want it, that's the perfect time to go get a line of credit because the bank will give it to you. And then when you actually need it, you can pull on it. Because if you try to get it when you're in a, I don't want to say desperate, but when you're in more of like a tough situation, they're not gonna give it to you.

Sure.

So I think that's a counterintuitive thing that it seems like it's pretty logical, but like a lot of people don't think about it. But I, I think every company, when they don't need it, should go get a line of credit and just let it sit there. Even if you never draw on it, uh, that is something that I think saves a lot of people's butts. Um, another thing you touched on I think is really important too, is like a business like this will need debt. Like if, if you open a bunch of doors, if you have a big order come in, you're, you're gonna need it. So understanding how to use it at the right time and pay it off and get that cash flow flywheel going is really important. And it's not exactly the same for every company, but, and you can do like PO financing and AR financing, and there's different things you can do, uh, or line of credit, which is probably the cheapest, but, you know, there's a lot of options out there, but I do feel like that's a really important dynamic for consumer brands business. Is understanding how to use debt when and where and how, you know, and figure that out.

Are you GoBass?

Are you? Yeah.

I was going to say, as we're wrapping up, we got to know, we got to tell people where to find you. There it is.

Yeah. And I also, I, you know, I created an Instagram handle, The Cashflow CFO. So I think, you know, usually I would say if someone comes and subscribes and DMs me, uh, you know, drink up, then I will share our Chart of accounts for, um, you know, whatever kind of consumer brand they're in that we have. So we do, you know, wines and spirits and food and beverage and—

The Cashflow CFO?

Yes.

On Instagram?

Yes.

I love that, by the way. That's, uh, really good.

I do too. I like, I like the ring to it. It's nice.

I'm Beverage Man Sam.

There you go.

So that's my tagline. And, uh, your, your fees are really reasonable, by the way.

I'm looking at your—

I was just going to say, I'm looking at that on the website and it's a lot more affordable than some of the CFOs that I know are getting paid right now.

Yeah.

I mean, 100%, you get a, you get a whole team, you get a whole team for $5,000 a month. Yeah.

I mean, that's starting accrual accounting for us is $2,000, but that's, that's a pretty simple business. You know, our average ticket is probably more like $3,000 to $4,000.

Still.

Okay. But yeah, I mean, we—

Yeah. That's the Drink Up discount, by the way. So we're gonna start doing some live social selling. Hey. If you catch this episode and you put in basecamp.co, maybe there might be an opportunity for you. It's co, it's not— I had to put it back in. It's not com, it's co.

Yeah, .co. Yeah.

Very cool. Well, we are at 5 and I know we need a minute to download, so don't leave, Anthony, because we got to make sure that the video uploaded. But yeah, any final thoughts before we let you go for those out there listening?

Um, yeah, I think, you know, if you don't trust your financials and you really feel like you don't understand what your cash is, then we can definitely help with that. I mean, I love working with small businesses and helping them figure out those nuggets. Um, we really try to be business partners and help people grow their business. That's like, for me, the accounting is a necessity and we have to do it, but I get more joy out of helping people grow their business and partner with them in that. That's the fun part, you know?

So, very cool. Awesome. What about you?

Find the Cashflow CFO on Instagram. I haven't figured out that Medium yet. And then obviously go basecamp.co. And very reasonable in terms of, I mean, we pay a bookkeeper around that fee just to let you know. So that's interesting to probably be calling you.

Well, and I'm gonna, I'm gonna layer on at the end here. One of the brands I work with who shall remain nameless, they were paying their CFO and a bookkeeper.

So 2 people.

$10 a month, which don't get me wrong, God bless, but felt a little heavy to me. Feels even heavier now knowing what you charge and, and, you know, no knock to this other person who should remain nameless, but you seem to have a more thorough approach. I'll put it that way.

I think, yeah, to be clear, like that K does not include me.

For sure.

For sure. A lot of what we're doing, I'll do a lot of hourly work. So with our accounting Clients, I do hourly work. If I do work outside of that, then it's a fixed fee. And you know, that varies kind of depending on the level. But yeah, I think, you know, you'd be surprised at what people think they should pay. And I don't use the B word really. We don't do bookkeeping, you know, like we do specialized accrual accounting for brands and we help them understand their cash flow. And that's kind of the value prop. I had a call this week with a brand that told me that they thought they were paying way too much for accrual accounting. And I was like, We charge more than that. So I don't know.

Touché.

Fair enough. With bookkeeping and that.

People, people will definitely shop you around, right? That's smart, I guess. Get your, you know, what do you charge for it? I mean, we certainly know that they ask us like, the first thing is, what are your fees?

If that's the first question, then it's probably not a good fit because that's the— you know, I actually—

I love that.

It's funny you said that. It's like, you should probably ask me like, like, who are the, what's my talent? What markets are you in? Can you give me an example of success and failure? And we get a lot of questions like that too. So, but this was a great conversation to talk to the, the Cashflow CFO at Instagram. So I'll be following you, Anthony, on Instagram. And I'm glad we were able to pull this off. I know we were supposed to be on last week, I believe so, or earlier in the week. I can't even remember what happened.

No, thank you for, you know, coming together on a Friday. Yeah, it was a really great conversation. Love to stay in touch. Yeah. Thank you for having me.

All right, cool. Well, thank you, man. Uh, like I said, stay on, hang tight real quick. We'll get it uploaded. But for everybody else, uh, thank you for joining us and enjoy your weekend.

Peace.