The Chris Voss Show - The Chris Voss Show Podcast – Nathan Hirsch, CEO of EcomBalance

Episode Date: July 25, 2022

Nathan Hirsch, CEO of EcomBalance Ecombalance.com

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Today we have an amazing gentleman on the show. I believe he's been on the show once before for one of his other startups that he's doing. He's got another one. He's a lifelong entrepreneur, and he's going to be talking about that today. Nathan Hirsch is on the show with us today. He's currently the CEO of Econ Balance and Outsource School. He's best known for co-funding FreeUp.net in 2015 with an initial $5,000 investment. And he scaled it to a $12 million in yearly revenue, having it acquired in 2019. Was that after you appeared on the show, Nathan, that it got acquired? Yeah, last time I was here, we were talking about free up.

So we basically got your company sold. Well, we'll take credit for it. No, I'm just kidding. We won't. That's rude. Anyway, today he leads e-com balance and online i'm sorry buddy and i'm looking for e-commerce and digital businesses and outsource school a membership teaching business owners how to hire effectively online nathan has appeared on

400 plus podcasts so wow now i really feel small He is a social media personality. Him and his wife live in Denver, Colorado with his two dogs where they're foster parents. Welcome to the show, Nathan. How are you? Yeah, good to be back. I always love chatting with you. You bring energy. Usually I'm the one that brings the most energy, but you could definitely top that. Definitely. Well, we could go back and forth. We could share the energy staff or gauntlet or whatever. I love guests that have lots of energy. Every now and then, we have usually the best guests on the show,

but every now and then we get somebody who hasn't had their coffee in the morning or their hit of meth or whatever the hell it is they need, damn it, to get up. Don't take meth, kids. That's a joke. We do comedy on the show. Remember that. So, Nathan, give us the dot com for your company so we can take a look that up on the interwebs yeah it's ecom balance dot com ecom balance like balance beam dot com um and yeah it's a monthly bookkeeping service and we came up with that after we had sold free up the original plan was take a few years, travel the world. Unfortunately, the pandemic hit.

We sold the company in November of 2019. And we ended up starting Outsource School as our course to teach people our unique hiring process. And that really bought us a lot of time to figure out what service we wanted to offer next. And just like hiring and processes were the core to all of our businesses, so was great financials and making great monthly decisions based on real numbers each month. And so we set out to build a great bookkeeping team and build a great monthly bookkeeping service for online entrepreneurs. So it helps people with their e-commerce business owners better master their finances and stuff.

Who are your customers usually that you find utilizing your website? Yeah. So my partner and I, we're pretty well known in the e-commerce space. So we definitely target there and we have a lot of partners there and our bookkeepers know e-commerce very well. At the same time, we have a separate team that handles non-e-commerce businesses. So our core customer is probably doing $500,000 to $3 million a year. We've got some bigger ones, some smaller ones, but that's usually a good range and a lot of e-commerce companies, but a lot of online businesses that just need reliable bookkeeping. And our whole thing is you should have a monthly setup where the month ends and within 10 to 15 days, you get income statement, balance sheet, cashflow every single month. And

you can use that to make decisions on what you can do with your business. It's definitely really important because if you don't know what's going on with your business, you don't know if you're not growing, you're dying. That's a factor. So you've got to know that things are getting better. You're making more money. Your revenue is growing, et cetera, et cetera. And if you're not keeping your eye on the ball, you can find yourself sometimes in bankruptcy court if you're not paying attention. Yeah, absolutely. And I'm also under the mentality that no serious entrepreneur should be doing their own bookkeeping. I mean, first of all, it's not a good use of your time. You got to focus on sales, marketing, expansion, big picture decisions, hiring. But second of all, most entrepreneurs

are just not very good at bookkeeping. And it's way more expensive to clean up a mess you made later than to just do it right from day one. So I think a lot of entrepreneurs need to get into that mentality and you need to find someone who can get it to you every single month, not once a quarter, not dumping on your account at the end of the year. It's a monthly process where you have a meeting on your calendar in the middle of every month with your husband, your wife, your business partner, your team leaders, whoever it is, and you're reviewing the numbers of your business. You don't need to take a course on how to use QuickBooks. You do need to learn how to read an income statement, a balance sheet, and cash flow, and how to make decisions based on what the numbers are telling.

So let me ask you this. Do you guys also handle taxes, tax filing, all that stuff like a regular accountant? We don't. So right now, you would need your own CPA. We're happy to refer ours. He's great. But right now we're just focused on the monthly bookkeeping and we might add taxes later, but we want to perfect the monthly bookkeeping first. And to be honest, in all my businesses for 10 plus years, I've always had a separate CPA and bookkeeper. I let each one of them do what they're really good at. The bookkeeper is for giving me monthly information. The accountant is for tax strategy and filing taxes. And it also gets two brains working together and really forming a finance team for your business. There you go. There you go. You're right. I mean, it's almost like, I don't want to say

mindless because there is some mind that goes into it, but doing the bookkeeping, tracking all the stuff, it's something it's, it's something that, you know, people need to not focus on, you know, that's something that you need to hire somebody else to do. And you need to work on the vision, taking your company, increasing sales, you know, that good stuff. And there you go. What are some tools and aspects that people can utilize in your services that maybe you guys really excel at? And what separates you from having a local bookkeeper? I know that in my day and age, back in the brick and mortar day and age, when we went to sometimes bookkeepers, they didn't really understand us sometimes. And I imagine even harder for them to understand online.

Yeah. I mean, online and e-commerce is its whole different beast. You'll get a lot of bookkeepers who are used to that, have no experience with that, don't know how to read Amazon settlement reports, stuff like that. But I mean, our unique value proposition is we're entrepreneurs first. We're online business owners first. We're not bookkeepers first. And a lot of bookkeeping firms are run by bookkeepers who speak bookkeeping and don't know how to put things in a way that the average entrepreneur can make decisions on. And we're good at hiring. We're good at processes. I would put our bookkeeping team against anyone out there. We spend the past six months building a great team, but we speak entrepreneurship and we know what entrepreneurs need in a bookkeeping service. So that's a perspective that we're coming from.

Nice. Nice. Well, that's important because you've got to be able to, you know, so many people don't understand like online e-commerce, whether Amazon sales, eBay, Etsy, what are some other ones? Walmart now has an online reseller thing, you know, and people don't understand the costs. And of course, working with those platforms to understand what they're doing and how they're doing it and, you know, okay, well, here's all your fees that you get, you know, we've been Amazon seller for, I think, a decade. And you get, like, fees and stuff. And, you know, there's all sorts of stuff that you need to make sure is written off and put in the right columns so you can get your write-offs, the tax time, and stuff like that.

And you know this, too. Being a seller, like, a lot of bookkeepers will take the net that goes in their bank account and put that at the top line of their income statement when that's incorrect. And you have your Amazon sales you got your fees your terms your shipping whatever oh yeah and you need a tool like a2x or there's a few other connector tools to connect from those marketplaces to quickbooks if you want to get accurate data and be able to reconcile yeah it's it's really important you're able to do that because you you don't want to be declaring any more money in revenue that you know it's not expense that you're going to be taxed fully at that's a that's that's not a good place to be. You're basically overpaying your taxes at that point.

Now, let's talk about outsource school. Did you want to cover that today? Yeah, definitely. I mean, we built an eight-figure business with no office, no U.S. employees, a team of 30 virtual assistants in the Philippines that handled everything from sales to marketing, to writing blogs, to customer service, to bookkeeping, all sorts of different things. And so when we sold FreeUp, we set out to teach people how we did it. We have a unique process for interviewing, onboarding, training, and managing. If you can tell by the way I talk, we move quick. The whole idea is to be able to interview someone and get them started and set expectations as quickly as possible without spending hours and hours interviewing people, but also know that you're hiring A players. And that's really the key to business. If you're able to hire A players, you succeed. If you make bad hires, a lot of times

you can fail. So we created Outsource School to make an easy system that entrepreneurs can plug into their business and make better hires. And it's an area that isn't the most sexy topic, just like bookkeeping isn't the most sexy topic. But, I mean, hiring and processes and finances are so important. And Outsource School is your key to making really great hires. I love that. You know, there's so many different people that go hire people in the Philippines. And you're like, I don't know, this sounds like this can end badly if I don't, whatever. And, and hiring is so

important. I mean, to me, what I found with all of our hires is if you spend the quality time interviewing and setting it up right, you can, you can hire well, but you just can't hire people and just be like, we'll see how it works out. And if you just invest that time from the upfront, you can do well. What's the dot com on that? Yeah, it's OutsourceSchool.com. Exactly how it's spelled. There we go.

So do we want to flip back to the e-com balance and touch on any more services? What have we covered in the different things that you offer and stuff? Yeah, well, I can kind of show people how we go about starting a company. So it started off as an idea. We thought, hey, we can offer bookkeeping. And we did a ton of market research. We interviewed 200 different e-commerce sellers, online businesses, research competition, learn what people like, what they don't like, what they're getting. And from there, we learned that there was a market and definitely a lacking need of people that have bookkeepers that understand entrepreneurship and understand online businesses. And we set out and hired our financial controller, which took a good month or two and hired a great controller here in Denver and started to build a team around her while also

launching our beta round where we offered people two free months of bookkeeping to give us a shot and give us feedback with the expectation that they would bear with us and know that our systems need to improve. And we had a great experience with those 30 beta clients and started to hire more people, build out our systems, build up our processes, and finally turn on marketing and sales. And that's where we are now. We're six months in. We have almost 60 clients right now. We have a team of 10 bookkeepers. We're adding clients. Anyone listening to this show that wants to try us out, we'll still offer you the two free months of bookkeeping to give us a shot. And that's kind of how we go about building a business to make sure that people are happy, that we know there's a market, that we can build systems and hire people without the pressure of getting it right on the first try. And I think we're in a great spot in the first six months to hopefully carry this over for the rest of the year. That's freaking brilliant. That's awesome. So when's the right time for, you know, if I'm running my own e-commerce business, my own online business, when is the right time to pass it off to someone else for their bookkeeping?

Yeah, well, you heard me before. You should never be doing your own bookkeeping. That means on day one, before you launch, after you launch, that should never happen. Now, our monthly minimum is $249 a month. So maybe you're like, hey, that's crazy. I can't afford $249 a month. And you start off with a different bookkeeping service that you can always upgrade later, but you should never be doing your own bookkeeping. Those first six months of any business are so important to get it off the ground and make the right decisions and focus on the right things. Anytime that you're spending on bookkeeping, it is not worth it. And like I said, you'll probably just end up paying someone to redo it later. So that's my overall thought. In FreeUp, one of the best decisions we ever made before we were even profitable is we hired a bookkeeper and we'd get

a report every month. It wouldn't show profit, it would show expenses, but we made decisions on what we were spending money on and what the ROI started to become. And that's what helped us get off the ground. And not only did it help us make good decisions, but it made tax season less stressful. It allowed us to pass due diligence and sell the company down the line because we had four years of immaculate books going back to day one. And it's very important that you get the mentality that you don't do it yourself to start. You get someone else from day one. Well, yep, definitely. You definitely want to, you know, not get lost in the minutiae because you can just spend all day long, you know, typing out, doing data entry and all that stuff. And I think you guys have a lot of it automated, right? Where

it will pull the data. It's not like somebody's got to send you their receipts. Yeah. I mean, our goal is to make it as hands-off as possible. Every once in a while, someone will be using some crazy bank that doesn't cooperate with bookkeepers and will need to get manual statements. But our goal is to get the access we need and to take it off your plate. And there's obviously a process. We need a little time to learn your business and what your transactions are. But after that integration period and onboarding phase, then it's really good to go. And it's on autopilot every month and you spend minimal time on your books. Awesome. So what financial is the most important for a business owner to know and pay attention to? This seems kind of obvious, but let me have your thoughts. Yeah. I mean,

a kept statement is usually the one that people understand the best and that they can make decisions on. You can segment it so you know what marketplaces, what brands, what different services are profitable and what the margins are. So you can make sure you're focusing on the right things. A lot of entrepreneurs have a shiny object syndrome where they want to try advertising this way, or they want to get on that new platform or start selling this new service when really their focus should be spent elsewhere. So that's incredibly important. But I think the cashflow is incredibly underrated. A lot of companies go out of business, not because they're unprofitable, but because they're cashflow negative and they can't sustain that. So all three are equally important, but I would start

with the ink of saving the cashflow. And if the ink of saving looks good and the cashflow looks good, figuring out your balance sheet and how to make that look good is fairly easy. There you go. There you go. So let's see, another question I had for you here. How important are financials if an entrepreneur plans on selling their business? We've had, you know, you've sold your business. We've had Exit Rich, one of our friends of our show on the show a couple times. She wrote a book about how to prepare your company as you're building it for sale.

How important are these and how is it important to make sure you got your books in order? Yeah, I mean, it's incredibly important. I have a lot of friends who buy businesses and they're not touching a business with bad books. And the due diligence process is stressful enough. I mean, we had immaculate books and it took us six months and it was the most stressful six months of our life. There's lawyers involved. I mean, for us, it's the most important time of our life. For the lawyers, it's just another Tuesday. So they're moving at their own pace. But the last thing you want to do is have a potential

buyer and you have to hire a bookkeeping firm to just redo all your books. And they're not going to do that in a week. That takes time. But to me, one of the underrated parts is knowing your numbers. I remember the first call that we had with the potential buyers, they asked us a lot of questions and we had answers to all those questions. We knew our numbers inside and out. We knew our clients, we knew our services. And that's because we had that meeting on our calendar every single month and we were going through our books every single month.

So when they actually got to due diligence, they were digging through our books, everything that they mentioned in the, everything we mentioned in the call matched exactly what was on our books. And that built a lot of trust, which helped us along the way. And so that having that financial meeting is so important. It's going to help you be more confident with your numbers when you get to that point. And if you go to econbalance.com, you can actually get our finance meeting agenda that you can just go through every month with your partner. And that should be on your calendar every month without being skipped. One of your more important meetings and stuff like that is going to really help you down the line. That definitely. I mean, if you don't know what's going on in your own business and people ask you

about it, it's kind of embarrassing. You know, people will be like, hey, you don't really know what's going on in your own business and you want us to pay for it? You know, you definitely need to know what's going on. If you're not growing, you're dying. So what are the two to three year goals for EconBalance? What do you see happening there? Yeah, I mean, anytime we start a company, our goal is to build it bigger than the company before. So I mean, right now we're focused on getting 150 clients. We're at about 60 right now. Our goal is to eventually get over that $12 million a year mark and to build a really good team, probably the size of FreeUp, which is around 20 to 30 people. So that's what we're focused on right now. We want to be the go-to in the e-commerce and online space. We're building

a team right now to handle non-e-commerce businesses. We'll have a separate domain for that, but we really want to be the go-to for good, consistent monthly bookkeeping that people know about. So that's where we're focused. Awesome, Sauce. Anything more you want to touch on before we go out? No, I mean, go to econbalance.com. You can get a quote from us. You get two free months if you decide to work with us. You can grab our finance agenda that you can go through with your partner every single month or go through yourself every month. And feel free to connect with me, Nathan Hirsch, on any social media channel. Awesome, sauce.

Well, it's been great to have you on again, Nathan. And hopefully this business will sell now because the last one sold after you came on. I'm just kidding. And hopefully we helped give it a little bit of a push or something, I don't know. But it's been wonderful to have you on. Give us the dot coms for the Outsource School

and Ecom Balance, if you would, one more time. Yep, it's just OutsourceSchool.com and Ecom Balance, if you would, one more time. Yep. It's just OutsourceSchool.com and EcomBalance.com. There you go. Guys, be sure to check it out. Also, go to Goodreads.com, YouTube.com, LinkedIn, all the different places we are on the interwebs. Thanks for tuning in. Be good to each other.

Stay safe. And we'll see you guys next time.