Strategic Business Planning with Gershon Morgulis

george grombacher 0:02
Let’s see. This is George G. And the time is right welcome today’s guest strong and powerful gear, Sean Margolis. Dr. Sean, are you ready to do this?

Gershon Morgulis 0:09
Looking forward?

george grombacher 0:10
All right, let’s go get Sean is the founder and CEO of Imperial advisory. They’re a fractional CFO and consultancy, bringing clarity to business owners, so they can make better decisions. He’s also a finance professor, your show and excited to have you on tell us a little about your personal life’s more about your work, why you do what you do.

Gershon Morgulis 0:30
All right. Well, George, it’s good to be here. Thanks for having me. So I guess I’ll try it in that order. Personal life, I have a family, Okay, wonderful wife and three kids. And parents, grandparents, siblings live in New York, I hope to get out of New York one day, but at this point, most of my family lives here and my wife wants me here. So. So we’re here for now. And moving on to work. When I go to work every day, these days, I’m running the business. But we’ve got a team of CFOs, I used to be one of them. And now less, more of my time has been in the business. But what we do for work is we go into help business owners, as you said, make better business decisions. And me being a CEO is is a lonely place. And there, there’s a lot of decisions, there’s a lot of things going on that that need to happen and finance and strategy, figuring out how to be profitable, and make sure your employees don’t steal from you cybercriminals don’t steal from you how to make sure that you don’t end up being the next Silicon Valley Bank. And, you know, have an asset liability mismatch. These are all things that are not the reason why people went into business, right? Everyone goes into business, to do whatever it is that they’re passionate about. If you’re in building, you want to be a builder, if you’re a baker, you might be a baker, if you’re a lawyer, you want to be a lawyer. So people there’s a lot more involved in running a business in the same way. A business needs attorneys to help with the legal things. There’s the financial and financial angle to all that. And we get to help people do that and get their life back. You know, a CEO is spending all his time doing something he doesn’t want to do, isn’t trained to do, etc, is not to be a happy CEO. And so we got to give people better life, I guess. I

george grombacher 2:39
love it. So let’s assume that your wife isn’t listening, where? Where else would you want to move?

Gershon Morgulis 2:46
Well, you’re good with the follow ups. So I used to want to move to Florida. But now all the New Yorkers moved to Florida that so right, I’m thinking, I don’t know, maybe like Georgia or something. Okay,

george grombacher 2:57
I like it. It’s like the natural order of things to live in the big city and then migrate slowly down south to Florida, but maybe not.

Gershon Morgulis 3:06
There’s one other one other place. I mean, they say that upstate New York is kind of like the Midwest. So I might not even have to leave New York, I can just move to upstate to the Midwest.

george grombacher 3:18
Okay, well, you got a lot of options. So I like it. I, in my work, in personal finance, people talk a lot about how Oh, geez, I really wish I would have learned this stuff in school. I don’t know how many entrepreneurs actually went and got business degrees, necessarily. But I imagine it’s sort of a similar thing. It’s like, okay, it’s not necessarily intuitive to do all the things that I need to as a baker, or as a builder, to then operate a business.

Gershon Morgulis 3:46
You’re 100% Correct. And I tell this to our, to our marketing people, actually, I’m like, if you don’t understand something that we’re asking you to write about. Make sure you ask because many of our clients, like you said, don’t have business degrees. So our clients don’t have any degree. And the ones who do have degrees, it’s probably a professional degree that relates to their area of interest and expertise. And it does happen that we have clients with business degrees, but typically, that’s not the case.

george grombacher 4:18
And what are some of the fundamental things that that that you find people get tripped up by or people are consistently making mistakes on cash flow is a forecasting?

Gershon Morgulis 4:34
Well, I mean, there’s definitely concerns with cash flow forecasting, but I would say that the biggest issue there is probably that people aren’t doing it at all. The mistakes that people make are lots of people make mistakes with debt. They borrow money and don’t understand what what they’re borrowing they don’t understand the terms. They see a rate but they don’t like 15% had 15% Good or bad? Well, it’s not great, but it’s not terrible. But what if it’s 15%? Even if you pay it back after three weeks? Is it really 15%? So, yeah, it’s 15%. But on an annualized places, if you make a few borrow in that way, multiple times a year, you could be paying 100% or 200% a year. So I would say it’s probably more about, from my perspective about understanding what they’re doing and what they need to be doing. But yeah, I mean, to your point, not forecasting, weather, they’re making people make mistakes, by not forecasting, whether people make mistakes with forecasting, or just don’t forecast at all, not having a good understanding of what’s coming down the pike, from revenue through expenses. And everything else. I mean, that could cause problems for loans, right? You know, if you have a bank loan, you have covenants, you gotta keep, well, if you don’t know what’s going to be happening, that that could cause problems, you could run out of cash, right? Because maybe you don’t understand or don’t pay attention to the fact that when revenue goes up, your expenses go up. But the expenses, you know, may have to be prepaid. So, you know, if you’re, if to buy supplies in order to sell them, let’s say, so, if you have to pay for the supplies before you sell them, then you got to have a whole lump of cash, even if you are profitable, you still need to be able to lay out that cash flow by not understanding and not having a plan and saying, I know that I’m gonna sell X next month, therefore, I need to buy why this month, therefore, I need to borrow the money or deal with the cash ramifications. That’s where people, you know, that’s one type of place where people can get tripped up. And that applies with both Inventory Service businesses, right? You pay your people now, when your clients pay, well, they prepay great if they don’t, you got to make payroll this week, in order to collect the money next week.

george grombacher 6:54
We’re having this conversation on March 14. And we’ll see what actually does finally shake out with with with the banking system. We were hearing stories about how hundreds if not 1000s of these companies that were banking with Silicon Valley, were not going to be able to make payroll because they wouldn’t have access to their money. So I imagine there’s probably a lot of people who are looking at their situation thinking, Okay, I don’t want to find myself in this kind of a scenario. What, what do I do?

Gershon Morgulis 7:26
So, there’s a number of different strategies. Now, obviously, most of us aren’t in control of the entire banking system. So there is a limit to what any one person or company can do. But broadly speaking, if you keep all your money in one bank, there’s, there’s a level of risk there. Right, and many of these companies had all their money there, if you have cash lying around, maybe put it in a bank that will that will provide insurance, right? I mean, what happened was, the reason we haven’t had that many bank runs, and that many banking collapses in whatever it is, the last bunch of decades or the last 100 years, really, it’s been greatly diminished, or the concern has been greatly diminished is because we have insurance, there’s FDIC insurance created, I believe in 1933, after the 1929 crash. So the federal there’s doesn’t make a difference that’s federal there is an insurance fund on deposit. So you put your money in, you know, you’ll get it back. But that only applies up to a certain amount. So part of what happened with Silicon Valley Bank was you have lots of businesses that have a lot of money, they’re much more than the insured max that wasn’t insured, and people were nervous about the bank goes under what happened so you have all your stuff in one place, find a way to get it insured, and there are banks that will do that. So there are banks that will say you know what, you give us a million dollars, we’ll put it in for some of it will keep with us, some of it will put in other banks, it’ll be behind the scenes, you don’t have to deal with it, but you have a million dollars in our bank, it will all be insured we’ll find a way to make sure it’s all insured. The next thing which is not practical for most people, but it’s still conceptually a good idea it’s something to think about think about where you’re putting your money and put it in places you know with and this this is true for banking relationships or really anything else deal with responsible players. Right? If you deal with people who take big risks and you get don’t monitor what vendors are doing then you’re exposed to their failures. Now again, can every Joe on the street and every small business like control with a big bank is doing no but there could be other other cases right if you buy from a supplier who has a right you buy from a supplier if you’re buying from one supplier you’re exposed to that one supplier buy from five suppliers. Your risk is diversify, right? If something happens to one of your suppliers, it’s more like you might pay a little more. I’m not saying that, that there’s no trade offs, right? You pay more money, because you’re not gonna be buying in bulk. But something happens when when your suppliers, you’re okay, you buy from a supplier, and it’s only one supplier. And they’re the type of people who take risky bets. Because, you know, that’s how they’re the cheapest. And that’s why you pick them and they run the risky business. And yeah, you may be exposed.

george grombacher 10:27
It is. So many probably forces at work that odds are I have a relationship with the person I’m banking with. And so I feel like I’m leaving well enough alone, or I don’t want to go through the headache of creating more relationships or make a mistake, how much of that do you think is going on or my off base?

Gershon Morgulis 10:51
I was listening to Bloomberg this morning. And that is something that they mentioned, which is, and again, it goes back to what we were discussing a moment ago, which is trade offs. There, Silicon Valley Bank had relationships with venture capital funds, those were the owners, behind the scenes of many of the businesses that bank with them. So the reason one of the reasons potentially, that businesses bank with them, I mean, one of the reasons businesses took the risk of being concentrated of having uninsured deposits, because syllabi, Silicon Valley Bank wasn’t gonna deal with this, leaving all the deposits there, which I, which I heard but haven’t verified that that was one of their things that you have to leave all your deposits with us. One of the things businesses got in exchange for that was favorable treatment. Right? They knew the banker was a smaller bank, they knew the banker, the banker knew their owner, right? The investor in the business, knew the banker. So if there was a problem, the business would get flexibility. Because the investor in the business would call up the banker and say, hey, you know, the company’s gonna be late on their payment, or they’re gonna blow through whatever covenant? Don’t worry, take care of them, we’ll, we’ll make it good. And so yeah, there was that maybe that’s why people took on these additional risks, but in the end, it potentially had the potential to blow up in everyone’s face. So whatever, these things, there are trade offs, like we spoke about the supplier a few minutes ago, right, if you buy from the supplier, who runs a risky, you know, runs a shoddy operation, and is the cheapest, because he doesn’t, you know, he buys used tires for his trucks. And that’s how he’s able to be the cheapest, then maybe that’s the one supplier, your only supplier, but you go to because it’s the cheapest is gonna be the one who’s, you know, going to have a blowout on the highway and the truck is gonna crash and all this stuff is gonna burn and you’re gonna be left high and dry. So Well, that happened most of the time. No, but if that’s who you’re dealing with, you know, that’s a trade off, that’s a risk you’re taking.

george grombacher 12:54
On imagine the list of things you do for for companies, the list of services, whatever it might be, is probably very, very long. And what do you really do for a client? Is it I’m a confident I can help them recognize blind spots, see around corners, little bit, everything.

Gershon Morgulis 13:17
So I’ll start broad, and then I’ll get dropped more specific. We’re a team. We’re a team. Right now we’ve got six CFOs. I’m a little younger than the rest of our other CFOs have got over three years of experience, right. So they have the ability to see around corners, they’ve been there, they’ve been there through multiple cycles. And I would say that what we really provide is is a seasoned business business executive, who has been there who has been around those corners, like you said, and we can, we can help business owners, get it right the first time or get it right the second time. It’s the third, fourth or 10th time. So we’re coming in with with that experience in perspective. And I think that that’s really our ultimate deliverable. Now, what do we do on a day to day basis? I mean, we work on cash flow forecasting. We work on mergers and acquisitions, right? We have clients we’re looking to grow, we might help a client figure out is the smart way to grow, to buy another company or is the smart way to grow to invest in marketing, or the smart way to grow to pay our people over time and get more labor without more benefits. I don’t know. You know, there’s, we touch lots of different things. It’s typically growth oriented, though not always when we went into a company, the year go around, that was basically insolvent. Right. They owe tons of money, and they really have a way to pay it back. And we we help them a lot like their you know, party That was building a forecast and figuring out if the business was viable. And then it was bringing in an attorney who helped them deal with some of their unscrupulous creditors. And, you know, there’s, there’s a variety of things that we have, we’ve gone into clients do system implementations, but is that I would say our bread and butter is being the adviser being the, the financial and strategic person on the right hand of the CEO. And I should add that sometimes we’ll end up doing that for a CFO as well. So there are companies we go into that have full time CFOs, and sometimes even large departments beneath the full time CFO will still come in, and they’re, it’s more tactical. So it’s, it’s sometimes strategic there. But it’s often often it’s tactical, they’re helping them with bandwidth, you know, related things.

george grombacher 15:51
That makes sense. So what is a? Is there a typical engagement? How does it look when somebody reaches out or you reach out and initial conversation discovery.

Gershon Morgulis 16:04
So that’s interesting, we have a couple of different ways we do it. We’re actually planning on producing next week, a new, very small mini assessment for businesses that come in very small affordable for anyone kind of to get to know them and dig a little deeper. And then from that, we expect the larger engagements to spread out. But I would say like on a longer term basis, the idea is that for the right size business, we’ll probably they’re the equivalent of one day a week, right? It’s remote, typically. So it’s not limited to one specific day of the week. But, you know, we’ll be at the management meeting will be overseeing the bookkeeper, we’ll be discussing strategy with the CEO, you know, somewhere probably between half a day and one day a week is typically, you know, what a business, you know, typical business will, let’s say, have a bookkeeper or maybe a controller, they’ve got to see, and they’ve got, you know, going concern profitable business, and they need help, they’re looking to, to grow to change to do something. And that’s why they decided it’s time to add as CFO to their team, but they don’t need to pay half a million dollars for a high level CFO. So you know, they can either hire a low level not that experienced person for a lot less, or they can hire full time experienced person for a lot more, where they can hire us where they’ll get a high level experienced person for just part of the time.

george grombacher 17:30
Or care, Shawn, thank you so much for coming on. Where can people learn more about you and how can they engage with you and Imperial advisory?

Gershon Morgulis 17:39
Great question. So they can engage with us. We are on Instagram. We are on LinkedIn, Imperial advisory on LinkedIn. I Gershon Margolis, I’m on LinkedIn, I’m very active on there. We have accounts on others, we’re looking to build up our YouTube and other things, but our main places probably I would say is LinkedIn and then after that Instagram, and they can get in touch with us. They’re shown at Imperial grp.com or www dot Imperial grp.com You can also try CFO advisory.co And that should forward to sounds a little better. CFO advisory.co. Will forward to Imperial advisors, you can get to our website that way as well.

george grombacher 18:34
Excellent. With the adjustments I did share show garish shown. I was doing so well.

Gershon Morgulis 18:42
I was doing great. George. People. My other name. My other name is George so George. Origin George though.

george grombacher 18:50
Yeah, so Georgia appreciation and shared today show the friend who also appreciates good ideas. Go to Imperial grp.com What was the other website?

Gershon Morgulis 18:59
CFO advisory.co.

george grombacher 19:02
CFO advisory.co. Find Ngaire shown on LinkedIn and the firm on Instagram and I’ll list all those in the notes of the show. Thanks for being here, Sean.

Gershon Morgulis 19:15
Thank you, George. Pleasure to be here. Thanks for having me.

george grombacher 19:18
Till next time, remember, do your part by doing your best

Transcribed by https://otter.ai