Wealth Podcast Post

Knowing Your Numbers with Nate Jenson

George Grombacher February 2, 2023

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Knowing Your Numbers with Nate Jenson

LifeBlood: We talked about knowing your numbers, the necessity of understanding your break even number, balancing the emotional and logical parts of entrepreneurship, and accepting ownership of everything, with Nate Jenson, Certified Management Accountant, Certified in Strategy and Competitive Analysis, and Masters in Forensic Accounting.

Listen to learn why offloading is very different from delegating!

You can learn more about Nate about at ZeroToCFO.com and LinkedIn.

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Our Guests

George Grombacher

Nate Jenson

Episode Transcript

george grombacher 0:15
went for this George G. And the time is right. welcome today’s guest strong and powerful. Nate Jensen. Nate, are you ready to do this?

Unknown Speaker 0:21
I’m ready. It’s early, but I’m ready.

george grombacher 0:25
Let’s go. Nate is a Certified Management Accountant certified in strategy and competitive analysis. He has his master’s in forensic accounting. He’s built and sold three bookkeeping and CFO companies and helped over 50 plus companies gain insight into profitability. Nate excited to have you on thank you for getting up early. Tell us a little bit in person. Tell us about your personal life smart about your work, why you do what you do.

Unknown Speaker 0:51
All right, thank you. I’m a well, let’s get right into it. I’m 45 years old, I’m married. I’ve got four kids. Three of those kids are adults now as of as a couple months ago. In fact, my my third just graduated high school halfway through the semester, proud of him. So I’ve got one at home. Well, I guess I’ve got two at home, but one that’s a kid at home still. I asked, Why do I do what I do? That’s kind of a long story. George, I don’t want to spend too much time, they’ll let you ask some questions and sort of direct that. But let me just give you a very, very broad overview. I, I knew I wanted to be an entrepreneur from about the time I was 21 years old, I knew I wanted to own my own business, I just felt there was a lot more freedom there a lot more leverage there. And I was right, but it’s not that way in the beginning, right, it obviously takes some time to build a business to the point where it provides those things for you. I, I spent time doing a few small businesses that did not go so well. I’ve certainly had my my share of pain and suffering when I started a business lost a lot of money. And I had to sort of pick myself up from that. But I have had some more success in recent years, and selling some businesses and making it making those businesses profitable while I was there. And that’s definitely much funner place to be. But the reason I do what I do, I struggled a lot in my early adult years, just tried to make money trying to figure out how to be a grown up how to take care of my family. And I made some serious mistakes in those first couple businesses. That, to be honest, affected my first business, if I had someone like me now helping me and advising me, then there was just a few small decisions that I could have made differently, that would have made all the difference in that first business. So ironic. It’s ironic that I am an accounting now. And I can trace the failure of my first business to some accounting issues that I have. And so I yeah, I like driving profitability and helping people understand their profitability. And there’s, there’s value in that, right, there’s value in what I bring to the marketplace. So that’s, that’s why I do it.

george grombacher 3:19
I appreciate that. And I always appreciate when people are honest with their, in their self reflection, but then able to share that. So you know what I was, I had the best of intentions, but there were some simple little things that well, maybe were they simple little things, are there are these things obvious? Are they not intuitive? Why do we why? Why did you not do them?

Unknown Speaker 3:44
Well, some are some are intuitive and some are not. Let me give you let me give you two examples, two accounting related examples from that first business. first business was a window cleaning company, very simple startup, right? Not not complicated. All you got to understand how to clean a window. And you the business model is basically you go to commercial areas, so strip malls and things like that and say, Hey, would you like a bid on your window cleaning? And they’d say, Sure, we’d say okay, it’s, you know, this much. It’s, it’s small, it could be 13 bucks a time or it might be you know, we had jobs in the hundreds of dollars, right? But not that complicated. The first problem I ran into, or one of the problems I ran into was, I actually hired a bookkeeping company. I wanted to kind of what I had read that again, this is me very early 20s. What I’ve read is like, Hey, you should offload the stuff that you’re not good at so you can focus on what you’re good at. And so I hired a bookkeeping company, and they came in at school screwed up my accounts receivable. And so I’m gonna give you some numbers these again, this was a very, very early time in my life, right I was I was making I’m in the 30 Grand 30 to 40 grand a year range with this business, okay, it was not huge. But the time I began, I was I was married young had probably I had at least two kids, maybe three kids by this time even. And every every dollar counted, right had kids in diapers and things like that it was it was, I was completely strapped. And my AR was not that high, it was maybe five to 10 grand. But if it was 10 grand, that was like a third of my annual income, right? And so when this bookkeeping company came in, and started doing things that way, and the AR got completely messed up, I would call people to say, hey, you owe us, you know, $150 $300, and then be like, No, we pay that already. You guys stop calling us. And Emotionally, it just became too much of a barrier for me to call those companies and say, Hey, you owe me money. When they would say no, we don’t. And then I look stupid and look like no not doing and actually didn’t know what I was doing. And it just became, for me at that tender age, it became too much emotionally for me to push through that. So that’s the first example. The second one, this is one that’s maybe less intuitive, besides just keep your AR straight and get paid, right? There’s, there’s a simple formula to calculate your breakeven. And when I meet with people, in fact, I have a, I have friends, occasionally, they’ll say, Hey, man, I want to start a business or I’m thinking about starting a business, can we just talk and tell me what you know, the place I always start is what’s your breakeven number. And because it’s amazing how many, how many people go into business, and don’t even know that, hey, I need to sell this much every month just to cover my operating expenses. And if I had had someone again, like me at that time to come in and say, Nate, you need to clean this many windows sell this much have this much revenue, whatever it is to just to break even, or, Hey, if you want to go from three grand a month that you’re taking home, two, five grand a month, here’s what you need to do. Just knowing that number, I think gives an entrepreneur, a target. It’s like, Hey, this is my target. And if I just push this much more I can get there. But to me, it was sort of this black hole, I had no idea what that number was, I never really even I don’t even know at that time how to figure out that number. And so with the emotional side of hey, my AR AR is screwed up. And I’ll admit that at the time, winter was coming on, and I didn’t want to go clean windows, sticking my hand in a bucket of water all winter long again. And I was like my third year. And then I didn’t know how far I’d have to push just to get to where I needed to be. It was too much for me, and I just I just said you don’t have done, I can’t do this anymore. But if someone had been there and said, Hey, you’re like you’re 90% of the way there. If you can do you know this much more business? It’s gonna change your life, right? You’re gonna have again, at the time, my numbers were so small to go from, say three grand a month to four grand a month would not have taken that much. But how much? How much of a difference would that have made in my personal life to raise my income by 33%. So that was that was painful. I didn’t know those things. I walked away. I lost it. Don’t ask me how but I ended up upside down by about 35 grand on that business. By the time I was sitting down. And it’s, it’s funny now because because the number seems a lot smaller now than it did then. But I knew at that time, like I believe at that time, I would never recover. I felt like I’ve lost so much money. I’ve I’ve put my family in such a bad financial situation. There’s no way I can ever get past this. That pain and that that mental anguish is is real. And it’s it’s boy, it’s one of the best teachers I’ve ever had. Obviously, I did turn things around and over time I got past that but to not have had to go through that by just understanding a few simple things. Boy, what price would I pay to have avoided? You know what I had to go through?

george grombacher 9:20
It’s It’s fascinating how it is such a simple tweak of spending a little bit of time to know, here’s what my breakeven is. And then from there you say, You know what, you’re, we have the ability you have the ability to create peace of mind by penciling out create another $1,000 a month. Here’s what it’ll take to do it. And you might still be you. You might be a window washing magnate today night.

Unknown Speaker 9:49
Yes, those exist maybe that there’s there’s one more thing that I learned from that experience that I think is relevant here. I was I don’t know why again, it was my hubris that Young Age thinking, I’m gonna go show the world and I’m smart, and I can do this. And I’m going to prove to whoever all my friends are something that I, that I can do this right? I was unwilling to some extent to ask for help. I wanted to prove that I did, I was an entrepreneur. And what I’ve learned over the years is that the successful entrepreneurs are not the ones that do it all themselves. So they rely on their own knowledge and skills, that it’s those that say, Hey, I’m not good at this thing, or this piece of my business, I’m gonna hire someone, or recruit someone or retain someone who can shore up my weakness in this area. And again, I didn’t have the accounting skills at that time. But if I just said, Hey, I’m gonna go talk to someone who knows about business, and have them tell me what they see. Like, again, I didn’t even think at that time, what a what a breakeven formula, what, I had no concept of even needing to know what I needed to do to break even. But some kind of business advisor might have said, Hey, here’s your numbers, all you got to do is this. And just getting that outside help, would have made all the difference. I didn’t have the knowledge or the skills at that time that I needed. But somebody else did. And I just should have done been open to find out.

george grombacher 11:19
But two degrees into try because you hired a company to do your your books.

Unknown Speaker 11:23
Well, no, see, I hired them. Because I wanted to, I wanted to get to that point in my business where I was, again, I was looking for that freedom, right? I mentioned that. So it wasn’t, I wasn’t looking necessarily for their expertise in like, like from an advisory standpoint. I looked at hiring them just like I hired window cleaner site, I’d hire window cleaners, I know how to clean windows and sent them out. So I didn’t have to do it. So it wasn’t like, hey, somebody can make my business better, or give me some business advice. It was like, hey, just do this when I have to do the work. I was I was pushing perhaps a little too little too much to get to the point where other people were just running everything in my business. And I was like sitting on the beach. And that sort of hamstringing me in in trying to move too fast.

george grombacher 12:16
I think. Got it. Yeah, I think that’s certainly an important, important distinction. So I appreciate Is it is it maturity, it’s wisdom to be able to recognize imbalance the left side right side, the emotional and, and the intellectual.

Unknown Speaker 12:37
It’s well, it’s I mean, it’s experience. Right. And I think wisdom comes with experience. Heart? That’s a great question, George, part of it is, as I mentioned, there was so much pain when I failed my first business. And it was it was months, and maybe even the next couple of years, I would wake up at like three in the morning with a thought on my mind that oh my gosh, I can’t believe how much money I’ve lost. And you know what position that puts me in and maybe puts my wife in, and my kids future opportunities or whatever, right? It was so emotionally draining. But having been through it, and having, and then I went through a second one, right? Where I actually lost a little more than I lost on the first one. But then having on the third one actually sold that business for profit, and I made more money than I lost on my first two. It changes, right, it’s like, you know what, it’s one thing to read it in a book that says, hey, failure is temporary failure is superficial. But to have to go through those experiences and then be able to pick it up and move forward and have some success. That’s, that’s, I think, where that emotional strength comes from, to just again, that’s one thing to read about it. But to actually have have been through that it makes a lot of difference. And then the other thing is, between those first two businesses and the next two, I actually I did get some education right now. I’ve got a master’s degree in accounting. Now, forensic accounting, actually, a CMA CSCA. I’ve actually had other certifications that I’ve I’ve let lapse at this point, just because they weren’t, I didn’t see the value in keeping them. But I took some time to gain the knowledge that I was lacking. And so it’s, it’s not like, oh, I changed this one thing and I’m successful. I, I had to gain that emotional strength. I had to gain that actual intellectual knowledge that would say, Hey, here’s something that I know how to do. And it’s valuable in the marketplace, and now I can go and provide that for people. So it’s, yeah, you know, again, when I was young, and I thought, hey, I’m gonna go as fast as I can from starting a business to retirement right like within a year. and half people can be running my business. I think that’s a great goal maybe to get there. But there’s also the reality, I think that you need to understand that you’re really committing to your business, you’re committing to building this thing that if it was easy, everybody would do it right? You can’t. There’s very few models that work where you can go out and pay in two weeks, I said this business, and then I’m retired, I don’t have to run it anymore. You’ve got to be willing to put in the time put in the work, accept that there’s going to be setbacks. And you know, be honest about that. Because if they blindside you, and you’re not emotionally prepared for it, it’s it’s so easy to just see the whole thing as the problem, the whole business is the problem. And then you walk away from it. But if you’re emotionally prepared for those things, you know, those those potential setbacks, those potential challenges you recognize and forth they are, it’s like, Hey, this is just this one instance, that we’re having an issue here, I’ve got to, I’ve got to figure it out, I can maybe find someone else who has an expertise in this area to figure it out. And then I move forward. So it’s, like I said, 45, I’ve been, I can’t say I’ve been in business for the last 25 years, because I would fail a business, I go get a job for a few years, I started another one, and I get a job for a few years. But I do have a couple of decades of experience with that process of saying, I do want to be an entrepreneur, how do I make it work? What do I have to win I have to get through right now. And I have to learn what I have to know, and how I move forward.

george grombacher 16:42
Because there’s a lot of really important powerful stuff there. And again, thank you for sharing it. In this baby, maybe a word game to a degree I wrote down offload versus delegate, as you mentioned, right? When you were kind of getting started talking about, I wanted to offload stuff, and out of sight out of mind versus delegate is I have a deep understanding of this stuff. And I’m going to find somebody that I know can effectively do it. So I still own it. That doesn’t mean I’m doing it.

Unknown Speaker 17:14
That’s that’s 100% Correct. I, I knew nothing about bookkeeping and accounting, when I started my first business. And I wanted to just not have to think about it. And so the result was someone who came in who they didn’t understand the simple process I had in place. And they started doing it their way without considering what I’d already been doing. But because I really didn’t know very well, what I was doing, I couldn’t identify when they were doing it differently when they were doing it. wrongly. So, you know, one of the hardest lessons I had to learn in that first business was, it really is my business. And it really is, if there’s a problem, it really is mine, right? And so having offloaded it, like you said to them, and then they mess it up? Well, is that their fault? Or is that my fault? Because I didn’t I didn’t manage that transition in the first place. I just said, Hey, yeah, can I do it? I trust you guys. Just do whatever, do what you need. You definitely have to know it yourself, and then delegate it. I think that’s great point, George.

george grombacher 18:19
I bet it’s pretty rare as as you’re working with businesses, rare, if at all, that that approach ever works. I’m just do this. I’m not going to worry about it anymore. It’s all going to work out great.

Unknown Speaker 18:32
Yeah, yeah. We’ll see even even me right. So I, the last company I sold is a bookkeeping controllership CFO company. And I took pride in my work. And I would like to say yes, we came in when someone say, hey, take our bookkeeping, we would come in, we have processes, right? We would manage it, we were very good. But I’ve seen a lot of cases where that’s, you know, that didn’t happen with with. And it’s not just an accounting, but someone would say, Hey, I just don’t want to deal with this thing. Somebody else do it. Usually I see it, I see it less. So when they’re outsourcing and actually more when they’re hiring employee for it was just like, I don’t know how to do this. So I didn’t want to do this. I’ll hire somebody. But I still have a client right now. And when I sold my business, I kept the one. And they just went through round of layoffs. And what they’re finding is when they late, they lay people off. The people who pick up their work, have had to they’d be like, Oh my gosh, I don’t I can’t imagine I can’t understand the mess that I’m walking into. Was nobody managing these people was nobody and that’s not the case with everybody that’s laid off. I want to be clear. But there were some that left and then someone who took over their work was like, they had no idea what they were doing. They had no clue what was going on. And so yeah, you You’ve got to think you’ve got to either if you’re a small business, let’s say you got five to 10 employees, right? Usually the owner at that level is the one that sort of had to become the expert in everything. And as they bring someone on, they’ve got to train, they’ve got to show them how to do it. When you get bigger, when you’re 4050, employees, you have to have those processes in place, because the owner can’t train every person on their job. Maybe they train the managers, and the managers train the people, or maybe there’s a very rigid, you know, training in place that gets that done. But you can’t, yeah, you can’t just say, Well, I’m just going to hire someone, or, or, you know, outsource this and assume that they know what they’re doing. It’s a very dangerous thing. The first business book that I ever read was The E Myth. And he’s very clear about this, right? You’ve got to you got to have systems in place. He gives, He gives an example of like, I forget what the company was like a shipping company or something. And the owner hires and accounts, but I think he’s his first employee, and then just has the accountant hire other people. And then one day, the boss is walking around the office and, and he’s seeing everybody doing things wrong. Like why are you packaging that this way? Why are you doing this this way? Why are you doing this this way? Well, you didn’t train anybody. And that was that was me. And my first business even though I read that book, before I started my first business, I still did it wrong. And whenever you have you got to have those, those processes in place, and really comes back to what you just said, You’ve got to delegate, not just kind of blindly offload it to somebody and hope they know what they’re doing.

george grombacher 21:41
Hope is not a strategy made.

Unknown Speaker 21:43
Oh, it is it doesn’t work. But I know a lot of people that use an ineffective strategy.

george grombacher 21:48
Well, thank you so much for coming on, in and for sharing your personal experiences. That’s so valuable. Where can people learn more about you? And how can they engage with you now.

Unknown Speaker 22:03
So here’s a little bit clearer about what we do. Now I don’t, I guess, except for that one client, I don’t do bookkeeping, I don’t do kind of the day to day accounting stuff. Generally, for my my clients. What I do is I help people understand their numbers we’ve got we’ve we use a software product that helps businesses understand exactly where they are financially, you can pull your p&l out of QuickBooks. But most people, even if they go to that point, they don’t really know what it tells them to do. And so what we focus on is we take your numbers, we put them in charts and graphs and make it very visual that says, here’s what you need to do, based on what your numbers are telling you, it might be time to hire somebody, it might be time to produce your staffing, it might be time to look at, well, without a visual on this podcast, it’s hard, hard to explain, but I help people understand what their numbers tell them in terms of actions, your numbers look like this, this means you need to do this. It’s very expensive. With my last business, we we focused on a lot of consulting, and we charged quite a bit for that piece. And we had a lot of people who needed us, but couldn’t afford the fractional CFO, right, especially smaller businesses that can’t do that. So the model that we’ve set up now that I’ve set up now is is very streamlined, very automated. But anyway, to connect with me on that if you’re interested in having a numbers in front of you like that, the best way to do it is just on my website, it’s zero to cfo.com. And it’s all spelled out Zro to cfo.com. Right on the homepage. Our my flagship product is the automated data analysis, which is what I’ve been talking about. So right at the top says automated data analysis book now you can book a time with me. We’ll talk about what you’re really what your needs are, like, is it a good fit to have this some, some businesses, frankly, won’t benefit from it. And that typically is like if you’re just starting out and it’s you, you’re the employee, you’re everything. It’s tougher to gain a lot of value in analyzing your numbers when all the time is wrapped up in yourself. But as soon as you hire that first employee things you know, the complexity just expands exponentially. So that’s what I think people start to see value with it.

george grombacher 24:39
Love it. If you enjoyed as much as I did, show your appreciation and share today’s show with a friend who also appreciates good ideas. Certainly a friend that is a business owner, and most certainly a friend that is a business owner that has at least one employee. Go to zero to C F o.com ZEROTOCF. o.com and check out the automated data data analysis tool. And if it’s of interest, hit that book now button and schedule some time to talk with Nate and find out if it’s a good fit for you or if it is not a good fit for you. Thanks. Good night. Thank you, George. And until next time, remember, do your part by doing your best

Transcribed by https://otter.ai

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