The Home Service Expert Podcast - Developing a Positive Money Mindset to Achieve Profitability in Business

Episode Date: January 22, 2021

Shawnna Weber is the CEO of Edgewood Business Solutions and the host of the Faces of Finance podcast. In 2011, she started the company, which specializes in business consulting, accounting, and bookkeeping. Collaborating with entrepreneurs, her team has managed over $60 million in assets across their client base, and have negotiated and implemented strategies saving companies over $1 million over the past 6 years. In this episode, we talked about accounting, strategic planning, bookkeeping...

So, there's a lot of things that can cause a scarcity mindset, and it can stem from your early childhood. Maybe you didn't have enough money, your parents were talking about that, or they fought over money, or they just didn't talk about it at all. Or in adulthood, maybe you struggled, you're just trying to pay your rent, or you lost your job. There's a lot of scenarios that are related to money mindsets. Sometimes people are told that if they ask for money, that it's rude or unprofessional. And we really see this come out when people are undercharging for their services or they're afraid of growth. And to really combat that, it takes practice and effort. It's not a one and done,

but you have to take action. That's the first step. If you just take no action, you're going to be in the same situation. And I think reminding yourself that you're in business to make a profit and that profit supports you, it supports your family, and it supports your community. You're not a nonprofit. You're a for-profit. Welcome to the Home Service Expert, where each week, Tommy chats with world-class entrepreneurs and experts in various fields, like marketing, sales, hiring, and leadership, to find out what's really behind their success in business. Now, your host, the Home Service Millionaire,

Tommy Mello. Welcome back to the Home Service Expert. My name is Tommy Mello, and today I have a guest visiting us from California. Her name is Shawna Weber, and she's an expert in accounting, strategic planning, bookkeeping, invoicing, and marketing strategy. As I said, she's based in, I believe it's Lodi, California. You're the CEO from 2011 to present of Edgewood Business Solutions. Also in the past, five cubits, formerly very pro systems. You were the operations executive from 2001 to 2011. Burlington business founder from 2000 to 2003, and Pearl U.S. management company,

the staff accountant from 95 to 2000. Shana Weber is the CEO of Edgewood Business Solutions, as well as the host of the Faces of Finance podcast. In 2011, she started the company, which specialized in business consulting, accounting, and bookkeeping in order to collaborate with entrepreneurs and small business owners in the pursuit of financial security and profitability. Her team has managed over $60 million in assets across their client base and have negotiated and implemented strategies, saving companies over $1 million over the past six years. Sean, it's a pleasure to have you today. Thank you for having me on the show today, Tommy.

Yeah. So I'm sure the podcast guests are wondering, why does Tommy have, it seems like probably one out of four people come on, they talk about accounting and we talk about financing. And I think it's the single most important thing that business owners reject. It might not be advertising and sales and marketing are so important, but it seems like there's something that we just, it's like going to the doctor when it comes to financing. It's so true. It's not only home service business, it's all business, but it's especially home service business. So you've been in the accounting industry since 95 and you've witnessed the difference up and down. I mean, there's been a lot of them over the last few decades. Talk to me about what you've seen happening in the last decade and where you think the

future is going. And just tell us a little bit about your past and where you're going. So in the beginning, when I was going to school and working, I had a boss who was a mentor to me. And once I hit the salary cap at that position, he encouraged me to open my own business and connected me with a CPA. They had originally encouraged me to be a CPA, but I found that that was not the niche that I ended up being in. But once they connected me with the CPA, I'm a little competitive. And so I asked for feedback and I wanted to be better than just the normal transactional bookkeeper who was given a box of receipts

and then just handed it back without any communication. I wanted to organize the data in a manner that was easy for the CPA to understand as well as the clients. And we also built a business by networking. I went to a lot of networking meetings and I asked for referrals and I met a lot of really great people. And so speaking of the home service business, I met people in HVAC and plumbing and electricians. And while not all of those people became my clients, they became a really good referral source for me to refer to my clients. When they had an issue with their heating and air, I knew people who were serious about their business who I can trust

with my clients to offer them a service at a fair price. Were they the most inexpensive service sometimes? Absolutely not. But you know what? I knew that they would get the job done for my clients. And they became a referral source. So then my clients also continued to refer me to their friends. And when their businesses grew, or they had other investments, that's really how we grew the firm with integrity, reliability, communication, and a willingness to improve with feedback. Because feedback is really important. You have to listen to the good and the bad. We are consistently learning and we utilize the

knowledge that we learn in other industries. So maybe I learned something in the medical industry that I can apply over to the home service. We utilize that information across industries to service our clients. And our CPAs found that we were easy to work with. We provided the documentation and information that they needed. And that created a higher margin for them. And then of course, I don't do it alone. I do it with a team. And Tommy, I love what you are telling your audience about how you hire because it's really important to hire the right people and mentor them as well. Yeah, yeah, it's absolutely, for me, it's everything. It's the people create the outcome. It's crazy how backwards I used to be is I need to create leads.

I need to figure out how to get the reviews. And now I'm like, wait a minute, the good people get leads. They always get good reviews. They're always recruiting. They're always making people smile. If I get the right people, the business runs itself in a way, as long as I do my job as a leader and build a culture. So I think that that's a

great point. And when you established Edgewood, your goal was to forge a long lasting consultative relationship with the clients and allow them to decrease their expense while driving profitability. Let me ask you, how does one pandemic prove their business finances? Because a lot of people, I've read the book Profit First, Michael Michalowicz, and a lot of people, I've read the book Profit First, Michael Michalowicz, and a lot of people are going through a lot right now with this whole thing. I completely agree. This really kind of showed who was prepared or could have been better prepared and those who weren't prepared at all. And I have three steps that I'd like to share. And it's really having up-to-date financials. It's important

because you need those to be able to forecast some what-if scenarios. Like what if service drops, your service sales drop 50%. You're going to need to make some decisions on that. It's going to reduce your payroll. And you may have to make decisions with your employees. But if you don't have those numbers, it's really difficult. And then you need to know what your fixed expenses are, your rent, utilities, your phone. How many months can you continue to operate if you had no sales? And this allows you to take advantage, the up-to-date financials of grant programs that'll ask for your financials, the Paycheck Protection Program that we've all heard about, the PPP, and even the Economic Injury Disaster Loan, the EIDL. It asks for financial information, so you need to have that up to date. So the second one would be have at least one month

of operating expenses in savings, preferably three, and even better, six months. And that savings doesn't have to be in a savings account in your business. If you have it personally, you need to just have a savings account that you can rely on if something like this happens in the future because lending tightens an economic uncertainty. So you may have heard of the company Cabbage who was lending funds and they completely switched to just offering PPP, the Paycheck Protection Program, and cut off everybody's lines of credit. So people were counting on that when the pandemic hit. That wasn't available to them anymore. So then number three is you want to be agile. You want to review your finances and adjust. And I say, don't let your financial flex get flabby. You

have to stay agile and get creative. And you mentioned profit first, and I totally agree. When the money is good, everybody's spending and they're not really thinking about the what-if scenario. But you really need to start today with what-if and plan for it. Like the oh shit fund? Absolutely. Whatever you want to call it at the bank, that's up to you. They'll let you change that to whatever name you prefer. I like it. So, you know, I used to fly by the seat of my pants. I used to really reinvest everything.

I didn't have enough money. They say, on average, you have enough money for three months to cover basically all of your operations. And I didn't have enough for... I had about two weeks worth. And I always tell people to reinvest in your company, but I think you got to slow down and smell the roses. So let's talk a little bit about having a positive money mindset versus a scarcity mindset and how you apply that in business. So there's a lot of things that can cause a scarcity mindset and it

can stem from your early childhood. Maybe you didn't have enough money. Your parents were talking about that or they fought over money, or they just didn't talk about it at all. Or in adulthood, maybe you struggled. You're just trying to pay your rent or you lost your job. There's a lot of scenarios that are related to money mindsets. Sometimes people are told that if they ask for money, that it's rude or unprofessional. And we really see this come out when people are undercharging for their services

or they're afraid of growth. And to really combat that, it takes practice and effort. It's not a one and done, but you have to take action. That's the first step. If you just take no action, you're going to be in the same situation. And I think reminding yourself that you're in business to make a profit and that profit supports you, it supports your family, and it supports your community. You're not a nonprofit. You're a for-profit. And you also need to remember that

your clients want your services and they're going to pay for the value for the work performed. You don't have to be the cheapest on the block. You need to provide the value for the work performed and you need to collect your money. So that's another way we see mindsets creep up is collecting money. But you also have to remember your client hired you for a price you agreed on. So asking for the money that they owe you, that's a reasonable request. And we also believe that mindset comes from knowledge. What we see a lot, you asked what we see in the industry, but we see a lot that if

people don't know their numbers, they create things in their head. And usually it's a lot worse than what it really is. And then they stress about it and they hear these voices in their head like they're stupid, they don't understand the numbers. They're not good enough. But the truth is, and this is a little harsh, but we just need to take our heads out of the sand and face the reality. And you don't have to do this alone. One of the things I think is if you provided me with a garage door kit and handed it to me and told me to do it, I would say like, okay, I'm so overwhelmed. There's no way I can do it. But the fact is, I don't have to. I know an expert who can get it done for me. And I have to have a basic understanding of how it operates, right? But if I run into trouble, who am I going to call? I'm going to call the expert.

It works the same in accounting. People get overwhelmed and I think their mindset goes negative when they think they have to know everything about numbers. That's not true. They don't have to know or do every transaction. They need a basic understanding and an expert to guide them. The hard part is getting a business fixed, is getting it on the right credit cards, getting a system, making sure the payroll's correct really getting numbers that you could count on because this is business it does well but you know i'm not as involved i'm actually a silent partner pretty much and the thing i hate about it is he has such a hard time charging people and collecting money up front and i'm like dude

you got to do this stuff. You know, and the hard part is it's such a tiny, tiny, tiny, tiny fraction of what my main company does. So, you know, I love to say I could go hang out there for hours and do it for him and show him. But ultimately I'm like, look, we're providing a service. We're doing vehicle wraps. We need to get paid 50% up front. And that just makes sense. It's so hard for people to ask for money. And I'm going to tell you, after 90 days, the chance of collecting that money goes down. Do you have a stat on that? I don't even know. It's ridiculously low. I don't have the exact stat, but I agree with you. The longer that your error goes uncollected,

the less you're going to receive, if any. And even collections, good luck. You're going to spend a lot of money and time collecting something that's not going to be worth it. If you can just alleviate that by asking the beginning. But I think that the person who's collecting the money up front, if they're not comfortable with it, I think it is how can you help provide that training or the mindset exercises and just start with little steps. Start with one client. Or maybe they're not the right person to collect the money because that's the reality too. If they're just horrible at it and you're losing money, you may have to put someone else on the money collections.

I never had a hard time in a garage asking for money, but it's not my favorite thing in the world. I love sales, but the one thing I teach is you gotta ask, but you gotta feel like you're giving a good value. I think the reason why he probably doesn't love to ask as much, and he's a perfectionist, but he says, it's practice. And I'm like, no, I'm paying for the bills on the back end. I don't know.

You know, like you're robbing from Peter to pay Paul for the practice. And I got to say, he's excellent what he does. And I'm not, it's actually just one of the things I find is when you walk in a business that doesn't know what they're doing is they're so unorganized. There's no time management. And they've got a minute managers. They're like, ah, I got a minute, got a minute, get a minute. Their time gets stolen from them. There's crap everywhere. Their desk is overwhelmed. I mean, what would you say? And listen, some of the people

out there, you're listening, you're going, that's me, but I'm not making fun of you. I'm just telling you there's a better way. Look, this isn't to get mad at people and tell them you're doing it wrong. It's literally to say there's better ways out there. But what does the avatar look like? I mean, that basically you're like, oh my gosh. How do you even start with that, Shauna? Well, a lot of times if we see that someone's AR is significant, we have a conversation on who's collecting

and what are the processes from the time that the sale is started to when they collect the money? Where is that gap? Because again, if they have someone who's not comfortable collecting money and they're just not willing to do it, okay, if that happens, what's the next step? So they don't collect the 50%. They're not comfortable. Is someone notified? Is someone in accounting notified so that they can call the client and get the credit card and charge it instead of waiting until that job is done? Because you're probably putting money out for your employees and everything else. And now you're waiting to get your money. So we look at where are the gaps,

who is in charge of doing the collections, and are they the right person to do that? So you just have to take a look at the full cycle of how the money comes in, in order to address the issues. What does it mean to be transactional versus relational? Well, in our firm, what we define as transactional versus relational is like in traditional models of like accounting and bookkeeping, people are handing over their box of receipts

or I'm done for the year and they meet with their tax preparer and the tax preparer discusses what they could have done. And then you get a bill. And that's really unfortunate because it's just very transaction-based. It's just like a one and done. And in our model, we're consistently communicating with the clients and the CPA at least a few times a year to really help plan, advise, facilitate, create action steps.

Again, if they're having this problem that you see that the AR is a problem, you can address it instead of waiting till the end of the year. Like, why is your AR so high? Well, that was AR from January. Well, good luck getting the money, right? So really relational and being communicative versus just the traditional transaction model. It's really

being involved with your bookkeeper and your CPA, accounting department, whoever, to really help guide you through some of those stumbling blocks you have. And being able to ask the questions. Maybe it's, I'm having a hard time collecting the AR, people aren't paying, I'm not sure why. And getting that feedback from somebody else outside of your organization. I've got specialists in every department now and it's really, really nice. But one of the things we started realizing is there's a lot of trends. I love seeing a P&L per market so I can analyze the differences. And so I challenged myself to hit a higher profitability percentage every quarter. I tried to raise the bar.

And I guess at some point it becomes, there's only a couple of ways to do it. You could reduce expenses. You could raise revenue. You could become really efficient. Or you could screw your customer over and charge too much you know i always say the three ways to make money is you get more customers you keep them coming back more or you charge them more per transaction but it seems like to get the higher percentages what i find my secret has been is creating efficiency through software and really

getting lean lean lean, and organized. The more lean you get, the more organized, the more simplest you get. Not with software. I love software. But I mean, I go into people's offices and I'm like, man, you see dust everywhere on everything. And it's like, when's the last time you even touched that? But do you see a big amount of clutter with people that are bad at finances?

What are some of the cliches of somebody that's just not doing it right? Well, I think a lot of times business owners are really great at what they do for their business. But the numbers scare them. They feel like they have to do it all. And then they just procrastinate it. So those piles just gather. And then when they try to do it, they don't understand it. They just plug things wherever they think they should go. And it creates a bigger mess than what's needed.

And again, it's the stories that they're telling themselves. And my advice is really spend the money to get help. Even if you're a small business, there are several bookkeepers with great rates who can get you started. They can help teach you a little bit. But I'd say most of the time, the business owners that we see are just procrastinated

because they don't want to do it. They don't know how to do it. And they're really overwhelmed. And until they make that move to do something about it, that's where they stay. And they really can't make informed decisions about their business. Yeah. I would say that you can't fix what you don't know is broken. When I really got a good CFO and we really started to look at the real deal, you know what's nice is hiring people where

you want to go. Hiring people that have been where you want to go. And what I realized was, man, we started shopping all of our bills. First of all, we started shopping the manufacturers, the distribution centers, our insurance, our cell phone bill, everything. And we started negotiating better pricing and volume discounts. We learned more importantly what to cut first. And then we saw the drivers of revenue. But it's amazing as you start to cut frivolous things that you don't use, software, maybe websites that you might have bought, and all these extra things that are just kind of sitting, oh, yeah, we haven't used that in two years. Do you have an efficient way to kind of go in and help a company realize, whoa, let's go through this line item by line

item. And did you realize that you had a manager spending this amount of money on whatever might be restaurants to buy his guys each day? I don't know. Is that something that you're able to easily identify? Yeah. So once we get that data organized, because that's the key, is if we can look in their accounting software and see where they're spending money, the biggest leak is recurring expenses. People are... Their cards are getting charged automatically on services that they're not utilizing. And then there's things like their credit card processor. That's an easy thing to negotiate. But sometimes people just take the word of the credit card processor that that's the percentage and that's what they pay. And we have clients that utilize Square.

We negotiate a price for that. It's not a flat fee. It's based on volume. And we look at even down to your lease of your space. If you're leasing your space for your business, you can negotiate the term, you can negotiate renewals, and you can negotiate the price.

So you really want to take a look at that. And then, like you said, internet, if you're using Comcast or any other internet provider or your cell phone bill, those are all negotiable. And those are easy wins. I mean, you're going to pay less for a service that you're still getting. Just you're going to utilize the negotiation of those. I've been screwed left and right when it comes to contracts. So I've gotten really, really good at them. The first thing I do is say, okay, we've got 130 users on this. What happens when I get the 200, 300, 500? How about let's just have a fairytale. Let's say

I get to a thousand users. And then the next thing I do is say, you guys want a five year, I want to pay the two year and I want to have a cheap opt-out because what if another technology comes along? This isn't fair to me. So let me know that you stand behind your product enough to not make me sign on to a technology company that could be obsolete in two years. I know you guys are doing the best you could. And then I say, if there's any hardware updates, I want to know what the hardware is going to cost for a place such as a dual camera system in the trucks.

And I want that extremely discounted since I'm on the SaaS model. You don't make money in hardware. I do not want to be charged for the hardware. So I've got all these things I look at when I get into these contracts. And what I recommend, and this is going to be so hard for a lot of people listening, is print out all your credit card bills, all your debit card bills, and highlight anything that's reoccurring and say, do I need to have this? Is this something I'm using enough? The general rule is if you don't use it in 90 days, I mean, whether it's in my garage, I could imagine, you know, sleeping bags, stuff like that, that you just, you use when you go

out. If you don't use a software, if you don't use something for a long time in your office, you're creating a, it's almost, I look at this show, it's called like a hoarders. And I'm like, how do they keep that stuff? And then what I realized is it happens all the time. I went to a shop not that long ago and the guy had openers that have been obsolete for 15 years. I mean, the manufacturing date was over 15 years ago and they're brand new on the shelf. And for some reason, when I spend money, I feel the same way. Like there's a pair of shoes that I don't really love, but I know I paid a lot for them. And I know one day I'll wear them. It just doesn't make sense. So get rid of it. And I don't know. I feel like that's a lot of stuff for people when they've got stuff and

they've got these documentations and things. It's like the best thing you could do is clear out all the clutter and get organized. I'm telling you guys, you clear out everything and get organized. And then you work on your time management skills and you have to start, you know, you got to get go with someone like Shauna because you got to understand where the holes are. I always say we've all had leaks in our boats. Some of them are huge leaks. And if you know where those leaks are, it tells you where to spend your time. And Shauna, is there anything that's kind of universal in the home service? Like I think a good EBITDA number or profitability is around 15%. I've seen all the way up to 30. I've seen as low as negative. But as far as universally speaking,

is there a number that we should be spending on our rent in comparison to our revenue? And I know it's really subjective. It is subjective based on your area because it's going to really depend on some places are higher rent. So it's really on your area because it's going to really depend on, you know, some places are higher rent. So it's really knowing your area and speaking with someone who can either research that for you or who is local and understands those numbers. Yeah. What's one thing that every single business owner should know right off the bat about managing their financing or financing.

That knowledge is power and it will set you up for success and give you a competitive edge. So if you know your finances, you can make informed decisions. And these decisions aren't just for growth, but they're also for reduction. Maybe you have a service line, maybe you are HVAC plumbing and electrical in your business, but your plumbing is really not making you any money. And you really need to focus on the HVAC portion. You need to know that. And when money is good and money is in your bank account, you're looking at that thing, you know, my business is great. But really, the knowledge is power on knowing what lines of service you should be offering, or if it's a gateway to your other services. So maybe when you go out on the plumbing jobs,

someone will say, oh, my AC hasn't been working. And that really gets you that business for the HVAC. That's fine. But you need to know that. You need to know those numbers instead of just closing your eyes and saying, I have money in the bank account. And it's fine when you're just, something in your business is draining you. You know, it's crazy. This is kind of pivot right now, but I had a technician text me recently, just earlier. And he said, Hey, I'm at 17,000 for the day. I'm going to get used to getting over 20,000 a day. Now he does high-end door sales and we've got enough volume to support that. But what we've created here is a competitive environment that we show the leaderboard every

day and we discuss wins and losses. And I feel like there's a lot of business owners out there that they just don't want to share. They're so afraid of losing their employees and they don't want to say anything. And all my top five managers, the top five of our executive team know everything. They know what's in the bank. They know how much credit cards we have. They know how much we owe enterprise. Every week we have a financial quick check. What do you suggest? Because I've seen people get burned over and over by sharing information. I've

seen people literally live in this hibernation mode that stunts their growth because they won't share anything. So what's the happy medium? Well, the thing is that people that are going to burn you, they're going to burn you anyways, whether you share the information or you don't. So by not sharing, you're not encouraging people who are probably going to be your top performers who want to be employees.

They don't want to own their own business. They want to work for you and they're excited to share in your mission and vision. But if you don't share that with them, they will go elsewhere. And that's really the downside to not sharing the data. And again, if people are going to burn you, they're going to do it regardless whether you're sharing or not. But now you're missing out on those key employees who really have your back, who really want to grow with you and be successful with you and create opportunities, but under your brand. I love it. Yeah. The one thing you got to be

careful of though is in states like California, no offense, is it seems like there's more plaintiff attorneys than there are anything else and you got to pay all the legal fees. So maybe these employees don't want to work for someone else, but they see And you got to pay all the legal fees. So maybe these employees don't want to work for someone else, but they see that you have money. And then you've got, you know, the lawyers, I'm not very fond of the way this country works with lawyers and lawsuits. It's kind of like you burn your leg on McDonald's coffee. You shouldn't have the coffee. I'm sorry. I just, I'm just not a big fan of, of suing businesses. And I know McDonald's has enough to spare. That's a bad example, but I'm just not a fan of like, look, there's so many

employees that depend on us to be successful. Now, if I was just buying Corvettes and Ferraris, every angle, it'd be another story, I guess, but that's just because of the leadership team. I don't know. But then I care about the small guys that are just getting crapped on all day. And literally, they got to sue these guys because it's an unfair work environment. It's crap. There's no training. There's no hard hats. There's no goggles. There's nothing. So I kind of see both sides. I'm definitely pro-business because that's what I am. But at the same time, the reason unions exist, the reasons a lot of these laws have been passed is because employers have exploited their workers. So I don't know what your stance on that. And I don't need to make this, this isn't political or anything. It's just tough because it's hard for me

to operate. I can't go to California because everybody I know, even Megan likes who I think is awesome. She got sued three times. She won, but I feel like she's a good business owner and she takes care of her employees and she's still been sued three times. So where's the happy medium? I'm sure other people are wondering the same question. Well, it's a challenge and California is definitely employee friendly. And we actually work with a lot of employment attorneys. So we get to see the backside of that. And so that's very interesting. But what I can tell you is if you operate in California, or really no matter what state you operate in, you want to operate within the guidelines. California has harassment training that is now required. and compliance and that you have your HR down. It's kind of like bookkeeping. If it's not your favorite thing, then hire an HR consultant. Get someone on your team who understands the rules and can protect you. Are you going to have frivolous lawsuits? You might, but your risk

is going to be a lot or exposure is going to be a lot less if you are doing the things that you need to be doing following those HR guidelines. But I agree with you. California is definitely a challenging state because they're very employee-friendly. And same with, say, unemployment here. If an employee is terminated, they can go get unemployment. Usually, it's really hard to... Even if they were not doing their job and you have documentation, I mean, the effort you have to put in to fight the unemployment claim, it's very difficult here. So I would say if you're

California home service-based business, make sure you have a good HR consultant and make sure that you are following the guidelines and getting advice when needed. I just hired one of my first... I've had people, Adam fills in the role and a lot of people do, but first pro HR person and HR, it's not like, Ooh, we've got HR now. It doesn't mean you can't have fun. It just means, look, got to make sure our shoes are tied, our T's are crossed and our eyes are dotted. I need to make sure there's safety laws and requirements and signatures and COVID things and all kinds of stuff. And I think the advantage of a small business, a very small business, is you can't sue somebody that has no money. You're not on the radar. The

lawyers won't take the case. Anybody with a company vehicle is starting to get big. You need HR. You need the finance department. You need, I don't know exactly when the right time to get a controller or a CFO is. Do you have an opinion on that? I would say whenever you have at least, somewhere in 70 to $100,000 of net income, somewhere in there, I would say get a contracted CFO. You don't have to have a full-time

CFO. And when you continue to grow, your CFO will tell you, okay, now you need to hire someone. And that's the great thing about people in the numbers industry, whether it's bookkeepers or CFOs, they will tell you, okay, now you need a full-time bookkeeper at your site because that's what needs to happen and will provide oversight to them. So that would be my kind of rule of thumb there. Okay. What are the numbers? So I've got the balance sheet, the income statement, the P&L. Those are ones I commonly look at. We actually highlight certain things that are outliers and we study the good ones and we'll fix the bad ones. And some of them are because we got cotton leases of cities that we thought were going to grow bigger,

all of which I've learned to negotiate upfront. But what are the numbers that you really are like, let me walk in the office and see these and look at these few lines and I'll tell you how we're doing. Obviously profitability, but. Yeah. I mean, at a minimum, I really want to be looking at the net income. That's what I'm going to look at first. But I'm also going to take a look at your cash. I'm going to take a look at your sales. And I'm going to take a look at your payroll expenses. And I'm probably going to want to see some of your sub reports to see what you're spending in overtime. I'm going to talk to you about turnover. I'm going to look at your accounts receivable and again, see how far your aging is and seeing how your collections are. And I'm also going to look at your accounts payable to see if you're

paying your bills timely. Because when you pay your bills timely, that offers more opportunity to negotiate with your vendors. Oh man, there's nothing better than negotiating with vendors. It's like my favorite. You know, this sounds stupid, but it really is. It's my favorite thing. It's like, look, give me a stretch goal. Tell me what I can't do. Okay, here you go.

And it's like, okay. And I go to them and I ask for more every day. And you know what? I look at it though. I say, what's in it for them? What do they get out of this? And I always say, okay, give me your most profitable items because you've guys got new machines to make these

garage doors. Right? So I'm like, you guys got efficient. You guys should get, make a lot of money on it. So tell me how we can make you the most amount of money. The thing I do is ask questions. What's your record? What's your best market? Where do you guys need our help? And I make a whole list of what's in it for them. And then I work on my list and I say, okay, if I do this for them, I want this. If I get this much done, I need this. So I build my whole negotiation stance based on what's good for them. And so no one loses. If you got any party coming to the table that takes a huge loss, it's almost impossible to come up with a good compromise and leave that vendor for the good about you. I don't know if you have any strategies that you've implemented. I've done, even though like one of our vendors

is massive. We said, if we pay within five days, can you do any better? They said, no, we don't need your money for 30 days. You days. That's not big to us. But I've had other ones, smaller vendors that are like, if you could pay us within five days, we could do a ton for you. So what is your take on that? Absolutely. I think negotiating your terms is really important. And I would say if a vendor wouldn't take terms, would they even take something like a credit card? That would be a strategy without you having to pay a fee because you can earn points on that. So you can figure out another way

to essentially pay for that bill. The vendor's still getting their money, but you are getting something on the backend. Terms is really important. I mean, a lot of times, yes, cash is king, but if you don't need that money for those 30 days and you can get a discount by paying within 5, 10, 15 days, you should absolutely take advantage of that.

Yeah. So what is your rule of thumb? Because a lot of people I see get a 3% discount for paying with a check, cash, or wire. We always take that over the points. Some of them don't do anything. They won't allow anything. I think it's a bad idea not to take credit cards. I think even not offering financing, if you look at my largest, most profitable jobs is because I offered financing because a delayed effect of they spend money is going on in their minds. But is there a rule of thumb that you say this percentage off or use a credit card if they take it? Well, I would say rule of thumb that you say this percentage off or use a credit card if they take it? Well, I would say rule of thumb is somewhere between, I mean, minimum of like 2%. And it

depends on your volume, right? I mean, if we're talking, you're spending hundreds of thousands of dollars, 2% is going to feel a lot different than if you're spending 10,000 and getting 5%. But I would say rule of thumb, minimum 2%. Some vendors will give you up to 10% just depending on sometimes it's pay on demand, they'll give you 10%. So you really want to start high and then negotiate down. So maybe start with, hey, if I pay you within 10 days, can I get a 10% discount? I mean, start there. And if they say no, that's too much, then kind of start that negotiation between what they think and what you want. So maybe they say it's five percent and just say, oh, five percent doesn't really feel like that's really worth it to pay in 10 days. Can we

go to seven? And just it's that art of negotiation back and forth so that it's comfortable for both parties. Yeah. You got to find out at the root cause of what makes them tick. And it's amazing what happens when you do well, how much you get done when you understand what the other party's looking for. So I was wondering, I use this tool, it's called Expensify. What are some of the tools and tricks to stay organized and make things simple for business owners to kind of understand their numbers and make it easier to work with a company like yours? service software, and something like a Dropbox or Google Drive or SharePoint to be paperless. That's really important in this day and age and makes it really easy for all your employees to communicate when you can share that data. I like using bill.com with QuickBooks online because you can put in your bills, you can pay them, and everything is integrated. While I'm a huge

proponent of software and technology, I also think it's important, and we kind of touched on this before, to use it where it makes sense. You don't want to be paying for a software you can't utilize or you start to utilize it and then you abandon it and you pick another one and abandon it. So you want to try to do best practices in the beginning

and then also use something like Google Sheets or Excel just to have a dashboard of your important KPIs. A lot of your software, QuickBooks, online, or even like your Service Titan, they will have your KPIs on a dashboard. So those are really important to look at and understand. And if you don't know how to read them, reach out to your resource. So your customer service person at Service Titan,

they can help you understand what those numbers mean. Yeah. Service Titan, I love them. But when you're small, you don't get the support that we get. I mean, I guess you could start your own podcast and get a ton of customers for them and they'd listen to you a little bit more. But I love service 10. I love KPIs. I've actually built out separate dashboards within SSRS is what it's called. It's a SQL server database mining tool to give us a much deeper insight into the company because we want to arrange the data how we think it should be valuable to us. There's not a one size fits all, I don't think, depending on the company. But one of the things I've learned the hard way, and when Ara came on, the CEO of Service

Dining, he said, you know, Tommy, we took the best of the best. And now, you know, I believe A1 GarageBars is one of the best, the best for them. But he says, we spent a lot of time, effort, and energy studying the best. And everybody says they come in from another industry and says, well, our industry doesn't do it like that. And his whole philosophy is, well, if you don't do it like that, and this is the best way of people making 25% EBITDA, why don't you start to figure out a way to let our software work for you? Or don't use our software

because you can't automate it if you got hey that gets a 15 dollar spiff oh that one's a free pizza oh this one if you get this and you get five stars on this it's like some people's let me just tell you guys this if you're gonna do a payroll plan, keep it simple, Simon. I've seen payroll things that it's like, take the denominator, take the quadratic formula, move that into the matrices. A TI-83 is not going to help you with this one, bad boy. I'm like, what is going on? You could have contests and that might take a little bit of your time to develop and understand, but have you seen some crazy ass payroll? Oh, yeah.

It's nuts. Well, the issue becomes it's crazy and the way the pay schedules are crazy that the employees can't understand it and they have a hard time being successful to earn those specific rewards and then nobody wins because if they don't understand

how they get to make more money and it's complicated, how are they going to perform the way you like them to? So I like it. Keep it simple, Simon, is really important and communicating out what your expectations are. That's critical and definitely making it easy. Make the software. I think my main point is you get on a software platform, do what it's designed to do. You don't go into Excel and try to, you know, build photos. You know what I mean? Like there's just software designed to do certain things. And I think what people need to understand,

I don't care what you're using, go up there and say, how was it designed to be, how was this designed to be built? And then you say this, you build a Trello board and you put your top 30 things on for the software. Then you build a top five. Okay. And then from that top five, you say, what's going to make the biggest difference. And then you could pay the software company to develop that for you. A lot of them, what they'll do is they'll charge certain clients to forward develop because it's so big for them. Now, ServiceSite doesn't do this, but what I do with ServiceSite is I'll call up 25 big users and basically have them sign on that this is super important. And we go there and plead with them saying, look, we've got clients paying you

cumulatively hundreds and hundreds of thousands of dollars a month. We'd all like this. And here's the signatures and the timestamps of what we'd like to see. So I guess I'm a manipulator. No, no. You know what? I have a background in software with 5Qbits and software development. And it's really what you're doing. I mean, they're getting a benefit out of you paying for those changes that you want, but they're getting a benefit out of you paying for those changes that you want, but they're getting a benefit too. And that really keeps their clients happy. It keeps them on the forefront

of what's happening in the industry. And what you're looking for matters. The fact that you're willing to pay for it is very helpful. But I would say as far as another tool and resource that you're mentioning is know what your software can do for you. Because I think people... This is what we see too. Software does a ton of things, of which you probably only use, I don't know, 40% to 50%, let's call it.

But you're struggling doing something outside of the software that your software can do. So I think it's great when you're making this list of, does the software do this? Or you have a conversation once or twice a year with your software company, like, show me the highlights, what's new? And so that you're staying abreast and keeping your company on the forefront of the technology. We have five people with an hour-long talk. It's bi-weekly. And we learn about what's going on with the software and how could we use it. And literally, every single update they offer with software and how could we use it. And literally every single update they offer with your CRM, we are implementing. I mean, the thing is, is when I first got started

with ServiceTite and I went and toured a couple other ServiceTite businesses and they were on mobile 1.0 when mobile 2.0 came out four months before. And it's so hard when you're working so hard in your business, you can't work on the business. And I've recently hired a project manager, her name's Crystal, and she is so good. And I got to tell you, the only thing she's doing is working on the business all the time on projects. And it's crazy. We're starting to move faster and faster and faster. And I'm like, I keep coming up with these new roles. And we write down the benefits of the role, like the KPIs and the benefits. So we do a SWOT analysis and then we write down what can they affect and how do we pay them for performance? What do we get out of it? And how much is that worth? And we analyze it.

And we all kind of come to a conclusion. Now Now I kind of learned over the last years to really put my two cents in and really kind of put my foot down on certain things. Like they can't affect that. How can this person affect this? Like ultimately some people are like, well, they kind of do in a weird way. And I'm like, yeah, kind of really weird way because that's not working out for me. But it's kind of cool when you learn to look at everything from payroll. And when the majority of it's built on performance pay, you see everybody running towards the finish line together. There's a good book called Five

Dysfunctions of a Team. And what you realize is a lot of people are really just focusing on their own team. So whether that's technicians, CSRs, dispatchers, and us as the door ordering department, we've got our field supervisor program. We've got all these different aspects. They got the trainers, the recruiters, but then the five dissonances of a team, they explained that the department heads should all realize the main team is A1 and those people need to be the strongest team and pull everybody else to understand how the teams work with each other. I know this is kind of a side note, but I think it's super important because

I think the non-communication amongst departments is what kills companies. Absolutely. I think that, and you've found out from experience, in order to grow your company, you need people, but you can't be responsible for 100 people plus running the business, plus, plus, plus, that you have to hire people so that you have a core team who reports to you and who is managing those 100 people and those multi-locations. And it's really important that they all do communicate and they know what the goal is. Yeah, one of the things I'm trying to really get the whole company to understand,

and I hate to make it only about a dollar figure, but in this case, it's 20%, so it's a percentage. And on top of that, it's growth. So growth plus a percentage of profit for me is super important. My revenue number's always been, in the last year, it's growth. So growth plus a percentage of profit for me is super important. My revenue number has always been in the last year is a billion, but it's not going to happen for a couple of years.

But it's important that every single person can know, you know, I guess for the executive team, I don't need my, I wouldn't bother me. But at what point do you decide what part of the companies know your financial goals? Is there like, do you think there's a happy compromise or medium to that? Well, I think that, I mean, again, if you have incentive-based pay, they need to know what those goals are.

They don't need to know everything about the company and what's happening with your financials. You definitely want your trusted advisors. Obviously, your accounting team needs to know what's going on. But I don't think that you have to share everything with everybody. But the certain departments do need to know what their goals are. And if you're talking about a dollar goal for a pay incentive, we need to hit X amount of dollars in sales. People need to know where that's at. If you're trying to reduce expenses by a percentage, maybe they need to know what that amount is.

We're spending $10,000 on this specific supply and we really need to get that down to eight. How are we going to work together to do that? So I think they need to know some numbers, but they don't need to know everything about your company. And when we kind of go back to liability, I would say that with your company and with your company structure,

you really need to work with both your CPA and say an attorney to make sure that your company is set up appropriately in case you do have something happen that an employee puts a claim against you. That all of your assets aren't in one bucket and it's a free for all and they know what that number is. So there is some safety in setting up different entities as well. Yeah. I need to make a note of that because I love that different entities. So when someone's going around looking for a bookkeeper, someone like yourself, advanced bookkeeper, someone to help them get their finances under control, what are some of the good questions they should be asking to make sure it's a good fit? Well, the first thing is, is if you've received a referral from your CPA for a bookkeeper, you're probably going to be okay.

You still want to have a conversation to make sure that they are going to be a good fit for you because you do want to be able to have conversations about uncomfortable topics or things you don't know and be able to communicate what's going on in your business. But the questions would be, you definitely want to know what their fees are and if there is a length of service commitment. So some bookkeepers will charge a flat rate per month, but you're signing up for a year. So you just want to know what you're getting into. That's all negotiable. So keep that in mind. You want to know if they have experience in your industry. And you want to know how you will communicate with the bookkeeper.

What are their hours of operation? So maybe you're going to send a text at 7 at night, but your bookkeeper is only working from 8 to 5. You just want to know what the expectations are there. You also want to ask them how often you can expect financials. Now, ideally, you're going to want financials monthly, but you just want to see what the bookkeeper is going to say and have some interaction with them. You also want to know and ask, will they provide strategies and make suggestions based on your

data? Because again, this goes back to transactional versus an interactive bookkeeper. You probably don't want someone who's just going to do the transactions and not say a thing. If there's something that's blaring, you want to know so that you can deal with it. And then you want to ask them what are their expectations about your communication? Because there is an interactive relationship between your bookkeeper and you when they have questions. So often maybe you spent $30,000 at Toyota. Well, your bookkeeper without all the information doesn't know if that was a down payment on a new truck or if you paid in full. So they're going to need more information to complete your financials. So what is their expectation of your timeframe of communication? And I think a really important

question, especially in your industry, is what accounting software do they use or that they have experience with? And do they have experience with integrations? So what I mean by that is, if they're using ServiceMax or ServiceTitan, do they have experience with the invoices coming over to QuickBooks Online? And maybe they have experience with ServiceMax, but not ServiceTitan. It's going to be similar.

But you want someone, if your software is integrated, that they have some experience with that because sometimes things go wrong and you want someone who's going to be able to help work through that issue. Awesome. I want to ask a few questions here. What I'd like to do is get that list and make it available on the podcast at homeserviceexpert.com. And then they can go to this

podcast and see that list. The next question is, if someone wants to reach out to you, they need help with their books, they need just some questions. First of all, what's the best way to reach out to you directly? And then what's the best way to reach out to Edgewood? The best way to reach out to me directly is at my email. So it's shawnna, S-H-A-W-N-N-A

at edgysolutions.com or they can connect with me on LinkedIn, Shauna Weber, and send me a message. And if they wanted to reach out to my team, they could go to edgewoodbusinesssolutions.com and fill out the contact us form and access us that way. Okay.

And then do you have three books that you're absolutely in love with? Three books. So I have a book that I'm reading right now that I really like. It's called Know Your Numbers by Zoe Whitman. And it's actually based in UK, but it provides the basics for financials.

I'm really into reading this book right now because I know all the things about financials. I'm really into reading this book right now because I know all the things about financials, but it's communicating with our clients on the basics. Another one that I love is Reset Your Mindset by Natalie Ekdahl. And that comes into that really working on your mindset on a consistent basis. And a third book I'm looking at right now is still kind of financial based, but it's the Profit Planner by Daniel Hayden. So it's kind of a financial diary. Cool.

Well, I don't think I might have known your numbers, but I don't think I have the other two. And I'm going to let you take us home here, kind of give us some final words of wisdom to get off your butt right now, ladies and gentlemen, and go out there and get organized and learn your financials. So I'm going to say, take action.

Don't be embarrassed. Bookkeepers and CPAs, they are here to help you. The best thing you can do is just start. Hey, that's words of wisdom right there is the first thing to get going is to start. You know, there's certain people that are listening right now that are not starting. They've heard this and they listen to the podcast and they're afraid to get help. And I promise you the best way to make your business grow faster and become super profitable,

they're going to point out things like your advertising should not be 28%. They're going to point out things that your overhead shouldn't cost this much. Your payroll might not be working. It might not be doing the things you intended for it to do. So I think you guys have heard it from here plenty of times. Reach out to Shauna. Shauna Weber, I appreciate you having you on today on the podcast. Thank you, Tommy, for having me. Hey, guys, I just wanted to thank you real quick for listening to the podcast. From the bottom of my heart, it means a lot to me.

And I hope you're getting as much as I am out of this podcast. Our goal is to enrich your lives and enrich your businesses and your internal customers, which is your staff. And if you get a chance, please, please, please subscribe. You're going to find out all the new podcasts. You're going to be able to ask me questions to ask the next guest coming on. And do me a quick favor. Leave a quick review. It really helps us out when you like the podcast and you leave a review.

Make it four or five sentences. Tell us how we're doing. And I just wanted to mention real quick, we started a membership. It's homeservicemillionaire.com forward slash club. You get a ton of inside look at what we're going to do to become a billion dollar company. And we're just, we're telling everybody our secrets basically. And people say, why do you give your secrets away all the time? And I'm like, you know, the hardest part about giving away my secrets is actually trying to get people to do them. So we also create a lot of accountability within this program.

So check it out. It's homeservicemillionaire.com forward slash club. It's cheap. It's a monthly payment. I'm not making any money on it to be completely frank with you guys, but I think it will enrich your lives even further. So thank you once again for listening to the podcast. I really appreciate it.