Unlocking Financial Success: The eCommerce Bookkeeping Guide | Nathan Hirsch

Matt Edmundson

00:00:00.160 - 00:03:09.080

Foreign. Welcome to the show. It's great to be with you. Like I said, Nathan and I were going to be talking about all things finance.

But before we get into that, let me mention to you about the website ecommercepodcast.net if you haven't visited us already, do come check us out. There is a newsletter, you can sign up for that every week.

We email you the notes, the transcript notes, the sort of the links to your inbox just come straight through. Yes, it does. So you don't even have to go pick it up from the website, we'll just email it to you.

But you have to be subscribed to the email for that to happen. So why not come join the rest of us on there now today's episode is brought to you by the E Commerce Cohort.

The E Commerce Cohort is our monthly mastermind group that you can come join. Be great to see you in there.

Every month we have great guests coming in and delivering some amazing workshops around E commerce and how we can utilize that in our own e commerce businesses. Super practical, super helpful and it's just great actually we go through them together.

As a business, you can do it as an individual, you can do it as a business. Come join us. It's pretty cheap to join. Find out more@ecommerce cohort.com and I will see you in there.

Now, before we get into the conversation with Nathan, let me give a shout out to Ben Leonard. Actually, because Ben was the chap that introduced us. We also have another mutual connection which we'll get into in a little bit.

But there's a chap called Ben Leonard who has been on the show a couple of times now, Ben Leonard, if you haven't got it already, do check out his book, quick plug for his book called Quit stalling and build you'd Brand by Ben Leonard. It is a great book. Just sort of telling you the journey that he went through in setting up and building an e commerce business to sell it.

And, and he gives you all the tips and tricks that in there so you can make it work for you as well. So if you haven't done so already, do check out his book. Great book, Very, very good read.

Lots of practical advice and if you look at the picture on his back, I don't know if you've seen this Nathan, oh, smacking the microphone, the picture on the back, he looks about 12 but he's genuinely not. But do check that out. You don't need an MBA to crush it in E Commerce. It says on the COVID So do check out that.

Now, Nathan, let's talk about Nathan, the entrepreneur extraordinaire and the brains behind the $12 million success story. Freeup.net started with just $5,000.

Now today he's rocking the business world with hits like Econ, Balance and Outsourced School alongside his partner Connor Gillivan.

Now he's been on a lot of podcasts, he's done all the social media stuff, but for some reason he has agreed to come onto our show and share his knowledge and wisdom. And I'm looking forward to the conversation. Nathan, great to actually finally meet you. How are we doing, Matt?

Nathan Hirsch

00:03:09.080 - 00:03:19.320

I'm doing great. I'm in tired dad mode.

I don't know if you've been there before or just like constant tiredness that doesn't go away, but it's Monday morning so I'm feeling pretty good.

Matt Edmundson

00:03:20.680 - 00:03:50.970

It is. Well actually I was just thinking that is it Monday morning or is it Tuesday? No, it's actually, you're right, it's Monday evening for me.

But the time differences and I can definitely empathize. Tired dad having had. Well, I've still got three kids but I think my kids maybe are a slightly different age.

My, my eldest, my, my two boys are at uni. My daughter's, you know, at college. She's just about to do university maybe possibly. Do you.

I don't know what she can do, but yeah, so very, very different life stage. So I, I empathize fully having been there. How are you finding it?

Nathan Hirsch

00:03:52.090 - 00:04:03.910

It's great. My, my son's five months old so I'm still new to, to all of it and we're getting a lot from my and my parents.

Thank you but it's been great so I have nothing to complain about at all.

Matt Edmundson

00:04:04.230 - 00:04:05.910

Is this your first, first child?

Nathan Hirsch

00:04:06.390 - 00:04:13.910

Yeah, it is. My wife and I were foster parents. We've been fostering teens for a few years so we've had kids in the house but for first bio kid.

Matt Edmundson

00:04:14.310 - 00:04:44.500

Wow. Wow, awesome. Fostering kids, man. That's really good.

Friend of mine, a guy called Phil Watson here in Liverpool, he's, I don't know what his official job title is but he, he works for the council here championing fostering and he does all kinds of crazy things to sort of champion fostering and I have a lot of respect for him, a lot of respect for what he does and the kids he brings in are just incredible and so well done for doing that. And teenagers, to a five month old, it's way different.

Nathan Hirsch

00:04:44.500 - 00:04:45.820

It's A whole different experience.

Matt Edmundson

00:04:46.780 - 00:04:51.020

Yeah, no doubt. Absolutely no doubt. Whereabouts in the world are you?

Nathan Hirsch

00:04:51.990 - 00:05:03.670

I'm in Denver, Colorado. I don't know if you've ever been, but I've lived here for a few years. It's a, it's a place that's tough to beat.

The weather's great even in the winter. Lots to do outside. I got my whole family to move here, so it's a good spot.

Matt Edmundson

00:05:04.150 - 00:05:13.430

Never actually been to Denver, Colorado, but I've been told, and you correct me if I'm wrong. Is it, is it a good place to go ski at Denver, Colorado?

Nathan Hirsch

00:05:13.750 - 00:05:22.870

Yeah, not in Denver, but in Colorado in general. You're always an hour away from, from something. So. Yeah, skiing is great here. I'm a big snowboarder, so it's fun to get out.

Matt Edmundson

00:05:23.330 - 00:05:26.010

Okay, well, you were until you had a five month old baby, right?

Nathan Hirsch

00:05:26.010 - 00:05:27.810

I haven't done much this year for sure.

Matt Edmundson

00:05:30.210 - 00:06:00.500

Can I just say just a little word of caution? There's been two times in my life where I've put on quite a significant amount of weight.

The first was when I got married and the second was when we started having children. So just, just because life just takes on a very, very different season. So just bear that in mind. So tell me about Econ Balance.

Tell me about the story behind that.

Nathan Hirsch

00:06:01.940 - 00:07:45.070

Yeah, you kind of mentioned Free up, our company before it and even going back before that.

I mean I was a 20 year old entrepreneur running this pretty large Amazon business I started in 2008, 2009, and I kind of ignored bookkeeping and struggled with it. I tried doing it myself, I tried hiring college kids to do it.

I tried dumping on my CPA at the end of the year and never really had a good understanding for what my numbers look like every month. And it was hard to make decisions and fast forward ahead. When we started Free up, my partner and I said that was crazy. Let's not do that again.

Let's hire a bookkeeper from day one. And that ended up being one of the best business decisions we ever made.

Not only did we have immaculate books every single month that we could make decisions on, but when we went to sell the business four years later, we had clean books going back to day one. And that helped us pass due diligence and eventually sell the company. So that kind of gave us the idea of some kind of finance business.

We didn't know what exactly, but we started consulting with different entrepreneurs, different e commerce sellers. After we sold Free up, we quickly learned that we hated being consultants. So we didn't want to do that.

But the common theme was that everyone, everyone just had a mess when it came to bookkeeping. No one actually knew what their numbers were, which made it tough for us to and sold.

So we had the idea to launch our own e commerce bookkeeping business. We actually launched a second non e commerce brand called Accounts Balance for agencies and software companies.

But all around the fact that entrepreneurs need to know their numbers. Most of them hate bookkeeping. They don't speak bookkeeping.

And we try to approach it from an entrepreneur standpoint to make it as easy as possible to get numbers you can understand each month and make decisions on them.

Matt Edmundson

00:07:45.230 - 00:09:37.360

Yeah, very good, very good. I actually similar, not similar stories, but similar background in a lot of ways.

When I came out of uni, one of the things that I, because my university degree was accounting and law and I came out going, I never ever want to be an accountant.

But what I did do is I set up a side hustle doing bookkeeping for other companies because I figured no one wanted to do bookkeeping because it's just horrendously boring, dull, and so on and so forth. And it turned out I was right, actually.

I mean, I don't do the bookkeeping thing anymore, but I've always sort of learned that finance and understanding the numbers is super, super important for, for e commerce companies. And it's intriguing that you've gone sort of almost the opposite way. To me. You sort of go, well, now let's go get into bookkeeping. Let's do that.

So I mean, just to sort of let listeners know and if you're watching this on YouTube, just let you know there is a chance we will be joined by Jared Mitchell on this show who has been a guest previously on the podcast. Jared is a good friend of mine and also, you know Jared, right? You have worked with him.

And so I did that thing when I, when I went to your website, I looked on your website and I saw Jared's picture on there. I thought, right, I'm going to text Jared and say, Jared, give me some really awkward questions to ask Nathan.

And he was like, I've got the best questions for you, man. So he started texting me a whole bunch of stuff. And then I said to him, well, why don't you just come join us.

We're doing the recording in like 20 minutes. And so hopefully Jared's Internet will be working and he'll be joining us soon.

Just to let you know, if a third voice starts appearing in the background, that is why first time we've ever done it on e commerce podcast, but, you know, we'll see how it goes. Nathan's game, Jared's game. I'm game. So see how it all works. How did you meet Jared, by the way?

Nathan Hirsch

00:09:38.240 - 00:10:58.800

Yeah, so whenever you start a company, not just econ, balances, going back to free up or outsource school, I mean, you never really know how it's going to go. And we kind of have the mentality of being upfront and honest with clients.

We, we offer clients either discounts or free months of bookkeeping or whatever it is, and in exchange for feedback and allowing us to break everything, and we try to be upfront and honest that there's going to be processes that, that aren't going to work, that we're going to have to build on. And part of the deal is you're going to get a good price and some discount or free bookkeeping. And in exchange, we want feedback.

We want to know everything you like, everything you hate, what's working, what doesn't work, and yeah, use that to build our team. So Jared was looking for a bookkeeper at the time. He was nice enough to be one of our first beta clients. Definitely went through some growing pains.

Nothing too crazy, but just us figuring out who's our team, what are our processes, what are our communication channels. And I'm not a bookkeeper. My business partner's not a bookkeeper.

To run a bookkeeping business, we had to hire a lot of bookkeepers, hire controller and everything that goes with that. So, yeah, a whole, a whole adventure. That was a lot of fun, a lot of hard work. And Jared was nice enough to.

To give us feedback and bear with us through those growing pains.

And now hopefully he says we're kind of have this under control and have a good monthly process, but there was definitely some element of us figuring stuff out in the early days.

Matt Edmundson

00:10:59.120 - 00:11:16.000

Fantastic. Well, here he is. Let's. Let's see if I can pull him in here. Let's just add him to the guest list. No, he's. Let me assign him that. There we go.

And let's go on here. Here he is, man of the hour. Mr. Mitchell. How are you doing?

Speaker C

00:11:17.360 - 00:11:19.760

Hey, what's up, man? Good, how are you?

Matt Edmundson

00:11:20.000 - 00:11:29.920

Yeah, really good. Yeah, really, really good. There's three of us on screen now, which is, like I say, first time ever for the E Commerce podcast. Super excited.

So thanks for joining us, Jared.

Speaker C

00:11:30.800 - 00:11:32.960

Yeah, well, thanks for having me, man. I'm honored.

Matt Edmundson

00:11:33.280 - 00:11:46.660

Well, I know it's great.

When I saw, I was saying to Nathan, when I saw that you were on, your beautiful face was on his website, I thought we've got to do something together like and just grill him, so why not? And Nathan's up for it.

Nathan Hirsch

00:11:47.220 - 00:11:57.380

Yeah. Great to meet you. I actually don't see you on screen, so I've never actually done a video call with you.

I don't really know what you look like outside of your picture, but great to hear from you.

Speaker C

00:11:57.860 - 00:11:59.700

Prepare to be disappointed, my friend.

Matt Edmundson

00:12:04.260 - 00:12:08.640

So you guys have never actually seen each other? You've worked together all this time, but you've never actually seen each other?

Nathan Hirsch

00:12:09.280 - 00:12:13.040

Yeah, we've done a bunch of calls and stuff, but I don't think we ever done a zoom or anything.

Speaker C

00:12:14.480 - 00:12:21.120

Yeah, I've only cyber stalked social media stocked Nathan. So that's about it, right?

Nathan Hirsch

00:12:21.440 - 00:12:22.320

Sounds about right.

Matt Edmundson

00:12:23.120 - 00:12:28.160

Wow. Wow. So, Mr. Mitchell, how's life in California?

Speaker C

00:12:29.120 - 00:12:36.840

It is rainy and the reason I say it like that is because it never rains here. And so it's kind of something I should talk about.

Matt Edmundson

00:12:39.480 - 00:12:42.120

Feel the need to offload. It's raining. I don't know what to do.

Speaker C

00:12:42.600 - 00:12:49.560

Yeah, yeah, no one knows what to do. It's, you know, it's a big deal. So. So yeah, man, I'm doing really, really well. How about you guys?

Nathan Hirsch

00:12:51.320 - 00:13:03.510

Life's good. I was telling Matt I'm in tired dad mode. My.

My son's 5 months old and just trying to learn how to be a dad and wake up six times throughout the night and still work the next day. But tough to complain.

Matt Edmundson

00:13:05.750 - 00:13:54.630

Stuffed. It's very tough to complain. And let me tell you, it gets better and better, Nathan. It does, I think going through the different ages.

Although this is not a show about parenting, but it does get better and better, without a doubt. So Jared, Nathan was saying that you were one of his early guinea pigs and you very gracious with. With him. I'm kind of curious.

Why don't I turn the floor over to you a little bit? Bearing in mind people who are listening to the podcast are going to be going, I'm in E Commerce.

Some of them will have bookkeeping, an accountant sort out. Quite a lot of them won't. And it'll just be one of those annual things.

So let's get into, I guess, why this matters, why it's going to help people and maybe ask some questions around that. I don't know if you've got anything top of mind, Mr. Mitchell, that you can throw in.

Speaker C

00:13:56.340 - 00:13:58.980

Questions or answers to what you just said.

Matt Edmundson

00:13:59.700 - 00:14:06.980

Well, that's actually a good point, actually. Why did you go to someone like Nathan for bookkeeping? What was it you were missing, do you think?

Speaker C

00:14:07.780 - 00:15:10.960

Yeah, the quick, full background is I've been in E commerce for about 20 years, and when I started, the only thing available for bookkeeping was, like, the discs or CDs that you put in computers and download QuickBooks to your computer. And I am not an accounting finance mine, but I know enough about it to, like, understand it and hire the right people.

So with those deep disclaimers, I think I came across Nathan through you, Matt. I could be mistaken. And this was in a time when we had been on Netsuite and had a very bumpy ride.

And actually, when I dug into it, my accountant wasn't even using NetSuite for accounting. I was paying for it. They weren't. NetSuite provides accounting and like, IMs, ERP stuff if you want to pay for it.

And once I found that out, I started looking around for new imf, ERP systems and also for new, you know, I guess, accountants or CPAs to help us run our books.

Matt Edmundson

00:15:11.040 - 00:15:15.600

Yeah. And so you came across. I don't know if it was for me. Maybe it was. I don't know. When was this?

Speaker C

00:15:18.400 - 00:16:01.380

Gosh, I want to say it was when you had me on as a guest on your show, right? Yeah. You just were like, hey, check this guy out. And Nathan, you were one of the maybe like three or four firms at the time that I checked out.

And I wasn't familiar with what you guys do, how you're structured, your competitors, your space.

And something I did after is I actually reached out after I hired Nate, I reached out to probably 10 to 15 of his competitors, not only to learn more, but just to make sure I was in the right hands and I had the right systems and all of that.

Matt Edmundson

00:16:02.100 - 00:16:10.420

Oh, wow. Well, this is a great testimony for you, Mr. Nathan Hirsch. You stood up to the 15 people that he was checking you out against.

Nathan Hirsch

00:16:11.460 - 00:16:35.120

Yeah, I appreciate it. Like I was telling you before Jared came on, I mean, we're grateful to anyone that gives any of our companies a chance when they're young.

I mean, business is hard. Trusting some. Someone who's not a bookkeeper. I'm not a bookkeeper. Is even harder.

And just for someone to kind of give you that trust when you're in year one or even the first six months of a business, you want to do your best to make good on that trust and give a good experience and treat them well going forward.

Matt Edmundson

00:16:36.000 - 00:16:57.820

Totally. So let's get into this. So you've got Companies that come join you. Right.

Does it make sense for somebody who is just starting out in E commerce to sort of think about bookkeeping from day one to maybe talk to somebody like you from day one? Day one. Or is it something that I can think of six months down the line when I've got proof of concept?

Nathan Hirsch

00:16:59.020 - 00:17:37.410

My mentality for any business we start is we don't start a business unless we're hiring a bookkeeper from day one. Even if the business is going to fail down the line. I mean, unless you're a bigger company like Jared, bookkeeping is relatively cheap.

You're not going to go out of business because of your bookkeeping expense. You will go out of business if you don't understand your numbers and you're making bad decisions based on what the numbers are telling you.

So I, I think veteran entrepreneurs know that, hey, if I'm starting a business, even if it's a startup, I'm going to hire a bookkeeper.

I think rookie entrepreneurs, they think, oh, I'll do it myself for the first six months or I'll ignore it for the first year and I can always go back and do it later. And I would strongly argue against that.

Matt Edmundson

00:17:37.810 - 00:17:53.650

Yeah, fair play. I totally agree. I guess. What if you were starting out in E commerce? What would, what would.

I mean, I appreciate I need to know the numbers, but what numbers is it specifically that I really should be looking at?

Nathan Hirsch

00:17:54.850 - 00:18:46.650

Yeah, it's a tough question. I mean, it's different for, for every single business.

I mean, obviously understanding your sales and what fees for each marketplace you're selling on, what that actually looks like. I think we live in an era of vanity metrics. Right.

There's a lot of seven, eight figure sellers out there, but that doesn't, it doesn't tell the full picture.

So understanding your fees, understanding your cogs, what you're actually making per platform, a lot of people will be wasting their time on platforms that actually aren't making them money or where they could just be doubling down on what's working. But then you kind of dig into, okay, you've got private label sellers, you got wholesalers, you got people who are just Amazon.

You got people who are spreading out across different Amazon platforms and marketplaces. And that's where it can get a little bit more company specific.

The numbers that Jared cares about might not be the exact numbers that a smaller, more isolated seller cares about.

Matt Edmundson

00:18:47.050 - 00:19:19.719

Yeah, yeah, well, it's a very good point, but I think it's, I think one of the things that I've observed with E commerce businesses is actually, there are. There are a lot of these vanity. I love this phrase, vanity metrics that you mentioned.

You know, sort of the metrics that we like to chase but actually don't really make a whole big deal of difference to our company and not really should spend a lot of time on. What are you. What's your experience in some of the vanity metrics that people get caught up in?

Nathan Hirsch

00:19:21.000 - 00:20:11.540

Yeah, I mean, it's mostly around sales, right? Like your total sales on Amazon or your total sales on a certain marketplace.

And then when you actually look at the margins, what are your margins as a seller? And Amazon makes it incredibly hard to have margins.

But I mean, if you can get that 20, 30% margin opposed to that seller, that's in that 1 to 5% margin, I mean, that makes all the difference in the world. And then where are you spending that money on and looking at it every single month? Are there expenses that I can cut? Can I really hire more people?

How do I lower the cost of products? I mean, these are the questions you got to be asking yourself as Amazon cracks down on margins.

I know when I was an Amazon seller, I had products that I was making 35, 40% net margins on, which is just unheard of nowadays. But, yeah, that's what you really have to care about. I'm curious Jared's thoughts.

Speaker C

00:20:13.300 - 00:22:03.380

Yeah, I think for us, and this is a really important question for us, because if you're listening to this and you're like me and you're an entrepreneur that has more of a marketing mind, this conversation that we're having right now is something that's probably like, not a priority for you or on the back burner. And the reason why I'm saying that is because that's how it was for me for like, 15 years.

Number one, because the systems didn't really exist 10 to 15 years ago like they do now to support all these metrics and these important ratios and to have them at hand. But number two, because it's not your default. Right.

But for us, what I've had to discover the hard way is which systems, I think, have the best bang for their buck and which ratios work best for us. For us, we pay really focused attention around cpa.

And not only that, but from which channels we're getting the best bang for our buck through marketing. And then we tie it back into inventory, and we have a very close understanding of how much that inventory costs us.

To let everyone know, we have around 15,000 active SKUs. The reason I mentioned that is because this is not like, I guess when I did consulting in the past for Neil Patel, we did like thousands of websites.

Most of them, the SKU count was like in the hundreds, you know, so if we're not really, really careful about these metrics and about keeping an eye on our inventory and our margins, we. We will start spinning our wheels in an area of advertising really fast. And that does nothing but waste everybody's time.

Matt Edmundson

00:22:04.180 - 00:22:08.460

Very. Just explain what you mean, Jared, when you say things like CPA for those.

Speaker C

00:22:08.460 - 00:22:29.430

That might not know cost per acquisition, like how much it costs for you ultimately to get a customer, but not only that, breaking it down to how much the fulfillment costs you coming in through your door, if you do your own fulfillment out the door or even if you use a fulfillment center and how long it takes as well, because there's a cost to that.

Matt Edmundson

00:22:31.030 - 00:22:33.910

Very good. So you want to come in on that, Nathan?

Nathan Hirsch

00:22:34.870 - 00:23:41.320

Yeah. I think something that I've just seen Jared do a good job of over the past few years is adjusting systems.

If he doesn't feel like it's spitting the right information out.

I know you just change inventory systems because we weren't getting the correct cogs which, which cost of goods, which is obviously incredibly important if you want to know your margins. And the thing about inventory systems is there's a bunch out there. Everyone loves and hates every single one.

And the ones that are out there, they just don't fit every single business model. So I've seen clients switch two or three times before they find one that really works for them to get accurate numbers.

But I mean, Jared, I don't know how much we want to go like into Jared's business personally, but switched over to a different inventory software to get better numbers, which is only going to make the books more accurate. Probably heard the phrase, like garbage in, garbage out. The bookkeepers are only as good as the numbers that they're getting.

And even though I know it was a pretty big move for Jared's business and his internal team and lots of hours and time were spent not only doing the research, but actually switching over to that company at the end of the day, if you're getting more accurate numbers, it makes it all worth it.

Matt Edmundson

00:23:42.440 - 00:24:15.950

That's really interesting, isn't it? Because I'm just thinking of my own e commerce businesses and we've got a lady who, who manages the operations, director of operations.

She's called Michelle. She's a beautiful lady.

If I even thought about suggesting to her that she changed our accounting software from, say Sage to Xero, she would slap me upside the head because there's just no way she's got it into her head in the sense that this is what we use. I know this system, it gives me the right data that I need. But actually for you, Jared, then moving systems, how big of a decision was that?

Speaker C

00:24:17.330 - 00:26:43.440

Oh, it was massive, I want to say because we had moved platforms from Magento to Shopify the year before and that was a long time coming. I really wanted to wait till Shopify could prove to me that they could handle a vendor that had over 10,000 SKUs.

And so I waited a long time and then it just became a no brainer because there were so many vendors that had successfully, I don't like being a test dummy. So successfully like put their store on Shopify and had no issues. And so I moved to Shopify and it's been night and day better for us than Magento.

And I would venture to say it would be better for anyone than Magento, quite honestly. So after we did that. Yeah, yeah, that's my opinion.

And after we did that, that opened the door for us to work with almost any ims, inventory management system or ERP that we wanted to. So like I did with the accounting thing that I mentioned about Nate, I did the same thing with IMs, ERP systems.

And just to give everybody a history of the ones that we have tried, we started out with a company called dydacomp, Mail Order Manager. I want to say that was about 15, 17 years ago. Used them with some success.

We used a company called Stitch Labs for a while and we used them with some success. And then we heard everybody raving about NetSuite. So we moved over to NetSuite and we used them with some success.

But we felt like we were paying way too much for our accountants, we were paying way too much for the system and we weren't able to make it work for us. And their support wouldn't really help us. We just felt like we were too small of a company for them. And I think we were.

So after researching like 15 of these systems, which took probably a month or two of, you know how you do it, you get on the phone, you make the calls, you talk the talk, you're talking to sales, you ask the questions. I get a big list of questions. Then I keep adding to the questions.

I go back and forth and now I'm like, you know, I've like, I learned the lingo and like I've learned about the space. And we settled on a company called Finale Inventory. And I cannot sing their praises highly enough. Like, I'm not on their payroll.

Matt Edmundson

00:26:43.520 - 00:26:45.680

Like, there's an affiliate link up.

Speaker C

00:26:45.680 - 00:27:03.840

Maybe I should's amazing. I gotta tell you, we're paying around five to ten grand a month for NetSuite.

We're paying about 500amonth for Finale, and it's a way better system for us, in my opinion.

Matt Edmundson

00:27:04.390 - 00:27:08.950

Oh, wow, that's a hell of a saving, isn't it? Jeez, that's a lot of money saved every month.

Speaker C

00:27:09.590 - 00:27:17.190

It paid for my entire rent. We just expanded our facility and it literally, I was like, well, instead of paying that, like, let's expand.

Matt Edmundson

00:27:18.150 - 00:27:30.550

So, Nathan, do you get when people like Jared come along and say, I'm changing systems, dude, do you get nervous? Or are you like, no, let's do it. Let's. Let's go for this. Because I think you probably should.

Nathan Hirsch

00:27:32.720 - 00:28:55.860

Not so much nervous. And I definitely don't put my opinion in, like, whether you should or shouldn't do it. That's more of a business decision from my side.

In the best possible scenario, you do a clean cutoff, right? Even if you're switching from QuickBooks to zero, you do it January 1st, and it just makes everything easier for everyone.

In a more realistic situation, that rarely happens. There's always, like, nothing ever works in the exact timing that you want it to.

And I mean, especially when you get to bigger and bigger businesses, you don't want a situation where past books are done incorrectly. Like, if you're. If you're in year two, your business and year one is, okay, somewhat accurate numbers, but you're pretty small.

You could probably get away with your cpa, filing your taxes and just being right going forward. And five years later, no one's going to care about that initial first year. And Jared's situation doesn't necessarily make a lot of sense.

So from there, it's setting realistic expectations.

And hopefully Jared feels this way of how long it'll actually take for us to go backwards and fix it and how much that'll cost and how much time it'll take. But yeah, I mean, Jared knew what he was doing. He knew what he wanted to do it. There was no talking him out of it or anything like that.

We wouldn't do that anyway. But yeah, it's more of like, what makes the most sense in terms of time. And how far back do you want to go?

What you want to avoid is every time we switch something, we got to go back five years and change everything. That becomes unrealistic. Pretty Quickly.

Matt Edmundson

00:28:56.180 - 00:29:36.410

Yeah, top tips there.

So Nathan, I guess this leads me on to actually a question which you text me, Jared, when I said, gee, I'm talking to Nathan, give me some questions to ask him. Before we agreed that you were going to come on the show and I thought this was a great question.

So talking about changing software or moving to suppliers or vendors, what are Nathan, some of the most important questions a company needs to ask. You know, what needs to be on the question list?

Jared's sort of checklist of questions when he's on the phone to make sure that a company like say Ecom Balance, when you're talking like financing, bookkeeping, accounting. What are some of the questions that maybe I would need to ask to make sure we're a good fit?

Nathan Hirsch

00:29:37.530 - 00:31:36.150

Yeah. So starting off with software, I mean if we're we only use QuickBooks in Xero.

If you're using a bookkeeper that has a lot of experience with QuickBooks or Vice Versa 0 and you're on the other one, that could be a pretty big red flag. And like Jared said, and a common theme through all this is you don't necessarily want to be someone's guinea pig.

If they've been using QuickBooks for 30 years, you don't want to have them be your first zero client. And from there just e commerce in general.

You'll see a lot of local bookkeepers that have no idea what E commerce is or how to do the bookkeeping for it. And they'll probably say that they could do it and do you really want to be someone's first e commerce client clients.

So asking questions around that and what connecting tool you use, we like a 2x and link my books.

In terms of connecting from the marketplaces to QuickBooks or 2.0A pretty good way to tell whether someone knows E commerce is if they're using a connecting tool, if they're a partner of that connecting tool. Like we're gold partners with both.

So a lot of people that don't understand E Commerce, they're either going to try to connect Amazon directly to QuickBooks, which won't work very well, or they're just going to take the money deposited into your bank account and put that as a top line of income statement which your CPA is not going to like. That's incorrect.

So some quick ways to just see if they understand e commerce bookkeeping and the next thing, and hopefully Jared thinks we do a good job here, is just integration, getting view only access to everything documents we need up front so that each month we're only requesting things that we actually need. You might run into banks that don't allow view Only access and, and stuff like that where we need statements every single month.

But our goal is to get that access every single month. So we can log into Amazon, we can log into your bank, we can log into your credit card and pull as much information as possible.

And a lot of bookkeeping firms that they might be good at the bookkeeping, but they're bad at the stuff around the bookkeeping that leads to a not so good experience. Systems processes integration, customer service, stuff like that.

Matt Edmundson

00:31:36.630 - 00:31:45.130

Fantastic. So if I was starting out right, if I was starting a business today, I'd be kind of curious to should I use Xero or QuickBooks? What should.

What's your preference?

Nathan Hirsch

00:31:46.730 - 00:32:49.000

I think there's pros and cons to each one. That's why we allow clients to use both. The real answer is whichever one your bookkeeper has more experience with.

Our Controller, who has 30 years of bookkeeping experience, has 30 years of QuickBooks experience.

So for us, if a client comes to us and they don't have any books, we're going to say, hey, we think you should be on QuickBooks Online for this reason.

Now if they hate QuickBooks Online for some reason and they're adamant they want to be on Xero, sure, we can still work with that and we can still take on a zero client. But if it's up to us, the default is going to be the software that we're more familiar with.

And what you really want to avoid is like the final loops and the benches of the world who have a software that no one else uses because not only are you stuck there and it's going to be an absolute pain to, to move off of, but no one else uses that Software. Even the CPAs, your tax person doesn't necessarily use that software. So at least stick with something that's going to be easy for you to switch.

Hopefully Jared has a good experience with us, but if he doesn't, there's a lot of e commerce bookkeeping bookkeepers out there that use QuickBooks Online.

Matt Edmundson

00:32:49.640 - 00:32:51.560

Are you QuickBooks or Xero, Jared?

Speaker C

00:32:53.000 - 00:32:54.200

QuickBooks Online.

Matt Edmundson

00:32:56.040 - 00:32:58.280

And have you been on that for a while? Do you like it?

Speaker C

00:32:59.560 - 00:33:28.580

I like it. It's clunky. Reminds you of checking out on Amazon when you need to buy something.

There's just stuff everywhere they have, so you got to know what you're doing, they have decent support. I echo exactly what Nate said. Like if you're wondering what to use, hopefully you have a CPA that's helping you with taxes.

And then hopefully you have a solid bookkeeping team like Ecom Balance. Ask them and make sure that they're extremely comfortable with both and that'll answer your question.

Matt Edmundson

00:33:30.020 - 00:33:38.640

So just for the sake of those who are maybe listening this side of the Atlantic rather than your side of the Atlantic, you've used this acronym CPA twice to mean two very different things.

Speaker C

00:33:40.880 - 00:33:43.000

Oh, really? What did I do? What did I say before?

Nathan Hirsch

00:33:43.000 - 00:33:45.520

So what is for acquisition and.

Matt Edmundson

00:33:50.480 - 00:34:02.400

So you're using it. I'm just aware that in England we don't call bookkeepers CPAs. And so I'm just getting you. Just to.

Just to clarify, when you say CPA in two different contexts, you are talking about two very different things.

Speaker C

00:34:03.130 - 00:34:07.530

Is that the right acronym name, Nate, for what I call my tax guy? Isn't it cpa? Am I.

Nathan Hirsch

00:34:07.530 - 00:34:14.010

It is. If I could. No, no. If I could jump in. So this is kind of a quick way to think about it. Yeah. Cpa.

Speaker C

00:34:14.410 - 00:34:14.890

Yeah.

Nathan Hirsch

00:34:14.970 - 00:35:01.490

You've got accounting. Accounting is like the big bubble that everything falls under. And accounting could be really three parts.

You got your bookkeeper who's doing your monthly books every single month. It gives statement, balance sheet, cash flow, categorizing. You got your tax person. In the US it's called the cpa.

Outside the US it's called something different.

They're there to give you tax advice, tax strategy, actually file your taxes, communicate with your bookkeeper, and then when you get a little bigger, you can go more that CFO or consultant, whatever you want to call it, part time, fractional. They're there to help you make business decisions. Say, hey, this is what the numbers are telling you.

You should spend more on ppc, you should hire more people, you can forecast cash flow, whatever it is. So those are kind of the three elements. And you at least need a tax person and a bookkeeper. And then the CFO is optional as you get bigger.

Matt Edmundson

00:35:01.890 - 00:35:32.380

Very good. So I'm just going to translate this, ladies and gentlemen. For the.

For the English amongst us, we would have a bookkeeper, an accountant, and maybe a CFO at some point when you get. Well, that's a good point, actually. Would you, if you're starting out in a business, would you have someone who is competent, involved, who is not.

Not necessarily employing him as a cfo, but certainly bringing in someone quite early into the business with that kind of acumen and thinking?

Nathan Hirsch

00:35:34.300 - 00:36:12.910

Yeah, I mean, it just depends how complex your business is. Like I ran free up, which is a. We got it pretty big to 12 million. But it was a pretty simple business, right?

It's cash flow, positive charge your clients, take our fee, pay the freelancers on delay. We didn't have an office, we didn't have lots of overhead. So wasn't the most complex business in the world.

And I consider ourselves decently good at finance, so we never did hire a cfo. If you're running a pretty large e commerce business and other situations, it might make sense. And I know Jared has people on his team that.

And maybe I'm wrong, but I believe you have people on your team that specialize in that. Just because you said it yourself, your background is more on the marketing. So it depends on what your background is too.

Matt Edmundson

00:36:14.510 - 00:36:23.700

Very good. Very good, Jared, you said. What other pieces of software does he recommend clients alongside of his? Make sure to ask him about Fathom.

Nathan Hirsch

00:36:25.860 - 00:37:18.420

Yeah, Fathom.

There's a few tools that we use Rewind, which I'm actually testing some other stuff, but that's good for just backing up your books in case anything goes wrong or you hire a bookkeeper and they mess it up. Always good to just have a backup copy Fathom we really like. For reports, it turns again.

QuickBooks can be very clunky and the reports are no different. They're a little hard to read, in my opinion.

So Fathom takes the same information and just puts them in a clean, easier to read format that our clients really like. And we get a lot of compliments from our tax person, our CPAs that are our client CPAs when they get those reports.

And then we use a tool called Zenit, which takes a little bit of the personal errors out of the equation where it'll help double check books before we send it out to the client just in case anything's missed so we can look into it. So those are a few tools along with a 2x and link my books that complement the QuickBooks online and the Xero.

Matt Edmundson

00:37:18.980 - 00:37:25.380

Very good. Anything from you in terms of software that you use, Jared, that can throw into the mix here that people might be interested in?

Speaker C

00:37:25.940 - 00:39:11.300

Yeah, I think two things I wanted to echo what Nate said, but I wanted people that are listening to know because you might not have accurate inventory and you might have SKUs going on that's like you don't know like what your input where it's at, like.

And so there's a tool that Nate mentioned called a 2x that connects to your platform that'll actually help you get a decent cogs number for the month until you catch up and get accurate Inventory. I wasn't aware that it was as slick as it is.

The reason we know it's as slick as it is is because what Nate and I actually did, now that my inventory is live, is we went back and fixed some of the months, fixed some of the months that we had sort of not had live inventory for. And the adjustments we made are not that far off. So that was pretty cool, pretty encouraging for me to see.

The second one that like, I can't speak enough positive things about would be Fathom. And the reason I love it is because, you know, we've, we've been talking a little bit about CFO in the past.

I've had to hire like, you know, part time CFO type minds to help us answer certain questions about our financials or inventory. This tool fathom, their support's insanely good. And basically they kind of replace that whole need for me.

Like I can ask their support, hey, I want to figure out, you know, this about my inventory.

And they will sit there and walk me through it and set up a custom report for me or show me where that information already exists and answer my question.

Matt Edmundson

00:39:12.660 - 00:39:53.060

So it seems actually listening to you talk, Jared, support is a big deal.

So whichever software platform you're using, because obviously there's going to be different bits of software around the world for different things, right?

But it seems like one of the key things for both service, like, you know, choosing a bookkeeper and choosing a platform is, is actually the customer service. Can you get on the phone or if you're a millennial or Gen Z, can you email them or have instant chat? Right?

And can you talk to a person that's actually going to be helpful? It seems like remarkably simple, but it seems like this is a common thread which is weaving its way through.

Speaker C

00:39:55.310 - 00:40:58.210

Extremely important. And that's one thing that I'd say kindly about Nate, in addition to many other things. But I'd start with the fact that this is the funniest thing.

There's at some point in our relationship where he like emailed or called and he's like, dude, you email me a hundred times more than any of my other clients combined. I'm like, oh no, I had no idea. I had zero clue. And you know, it was like Nate said, we had like a lot.

We were like early stages and had a lot to figure out. But what I really appreciated about them is they fielded the emails and they answered my questions.

And I have a lot less these days because things are figured out and cleaner. But every step of the way with your cpa, with your bookkeeping team, with your inventory management system.

Like, if you can't get an answer to something, you're kind of dead in the water, especially if there's like a big issue, right? So to me, it's everything.

Nathan Hirsch

00:41:00.690 - 00:42:37.000

I have a few thoughts on that. To backtrack for a second. Just like Jared said, he tests out every single software and asks them a lot of questions.

We went through that in the first year of Ecom Balance.

The reason we found Fathom and we found Zenit and Rewind and all these places is we were just going through all their competitors and talking with them and testing them. And again, I'm not a bookkeeper.

So we rely a lot on our bookkeepers to test it out and tell us what they like and what they don't like about each software. So that's kind of how we got to the. The tech stack when it comes to customer service.

And this goes for all my businesses, whether it's free app, outsource school, my new business, True SEO, all about customer service. We want everyone to respond within a business day.

One of my biggest pet peeves is when people ask questions and they don't get answers, direct answers to those questions. So bookkeepers, they're unique human beings, right? Like, they hide behind the numbers. They're categorizing stuff all day.

And we've had to do extensive just email training on with someone. Hey, a client sends you five questions in one paragraph. Don't respond to three of them. Break it down and make sure every single one is answered.

Make sure that email chains don't go back and forth more than three times. If you're doing that, then you're doing something wrong. What is the situation where you say, okay, this isn't working via email.

Let's hop on a call and hash it out. And you want to do that before you get to email 15 on the email chain.

So we've gone through a lot of email train, a lot of email training with bookkeepers who are great when it comes to what they normally do, the bookkeeping side. But trying to add that customer service element that we want to be the best of the best compared to other bookkeeping firms out there.

Matt Edmundson

00:42:37.230 - 00:43:27.200

There, that's really cool. That's generally good business advice when it comes to email, I feel. And offering customer service to your own customers via your ecom business.

What's the.

I guess one of the questions, Nathan, that maybe you can touch on is when I think of bookkeeping, I think of what the guys at 40x call lag measures, right? So they, you're looking at data which is historically out of, I mean it's historical, it's out of date as soon as you look at it in a lot of ways.

Whereas if I look at a live dashboard, for example, you know that that's given me like to the minute information. Do I need both? How, I guess how do they work together? Because in my head both are important.

But I can see why a lot of people might go, I've got a dashboard here, that's fine.

Nathan Hirsch

00:43:28.970 - 00:43:59.850

Yeah, both.

I mean all of my companies, we're looking at stuff on a weekly basis, we're tracking stuff on a weekly basis but we don't consider any numbers final until we get the final report. And there's always stuff missing. There's stuff like seller board, which I know the founder, it's a good tool but things change.

It doesn't replace monthly bookkeeping. So for me it's monthly bookkeeping you absolutely have to have.

And then the dashboard or the weekly reports you might get or whatever it is, that's the add on, it's not the other way around where you've got the weekly stuff. So you don't need the monthly.

Matt Edmundson

00:44:00.570 - 00:44:01.610

Do you agree, Jared?

Speaker C

00:44:02.970 - 00:44:55.160

Definitely. And you know, with regards to timing, a hot question is like, well, how soon can you get me my books? Right?

And I think there's like I had false expectations and I think the expectations I'd lay out for anyone within the sound of my voice right now is that if you're not up and running with like these systems that we're talking about, you're probably going to have to rely on getting your financials for the prior month either from the 15th or the 30th of the next month. It's going to be delayed most likely.

So I would get to that point first and make sure everything's clean and like a well oiled machine before you start talking about, okay, how do we close in on that end of month number and so I can get those ratios as soon as I can and actually act upon them.

Matt Edmundson

00:44:55.640 - 00:44:58.440

Fantastic. Any thoughts on that, Nathan?

Nathan Hirsch

00:44:59.000 - 00:45:40.480

Yeah, I mean one thing we didn't really talk about was just the setup. Like before you hire a bookkeeper, Obviously you need QuickBooks or zero, but also just what banks you use, what credit cards you use.

Jared's not one of these clients, but we've got clients who are using really outdated banks or banks that don't allow view only access. They're a pain to work with. We have to keep reconnecting it to QuickBooks every single month. And you don't.

You don't think about these things, but simpler is a lot of times better. Like sometimes you don't need 10 bank accounts when you're a startup. You can go buy with one or two.

Anything that you can do on the front end to make your actual setup of your business finances easy is only going to make it faster and easier for your bookkeepers, and the end result is going to be faster books every single month.

Matt Edmundson

00:45:40.960 - 00:46:08.040

Fantastic. Fantastic.

Gentlemen, listen, I'm aware of time and I'm aware that we could just carry on the conversation and just keep going, and I've actually quite enjoyed it.

What we've managed to do somehow is take what is perceived as not a very interesting topic like bookkeeping and have quite a fun conversation about it. So I tip my hat to you gentlemen. It's been fun. Jarrod, anything in closing from you, Bert, on this whole thing, man?

Speaker C

00:46:08.040 - 00:46:40.670

No, just thanks for your time, I guess. If anyone, I'm one of those people that, like, now that I know what I know, I want to help others.

So I don't really do consulting anymore, but someone's welcome to email me and ask me a question and which one do I use or lay out their scenario. I'm happy to help. I feel like that's just what we should do as entrepreneurs every single time.

I'm going to recommend Nate for bookkeeping and he doesn't pay me to say that. He actually didn't even know I was going to be on this show. And, you know, I'll make some other recommendations. Happy to help.

Matt Edmundson

00:46:42.510 - 00:46:47.070

Fantastic. Nathan, anything else from you? That's perfect timing for him just to go.

Nathan Hirsch

00:46:50.350 - 00:47:06.900

No, I really appreciate it. Like you said, I didn't know Jared was going to come.

It's always good to chat with him and I appreciate the kind words and the trust and everything that goes with that. And yeah, thanks for having me on. It's fun.

I was telling Matt before this anything to make a podcast different from the other 800 podcasts I've been on is.

Speaker C

00:47:06.900 - 00:47:07.900

Always a welcome change.

Matt Edmundson

00:47:08.940 - 00:47:11.020

Well, hopefully we've done that, Nathan.

Nathan Hirsch

00:47:11.900 - 00:47:12.620

Definitely.

Matt Edmundson

00:47:13.980 - 00:47:25.260

Well, gentlemen, both of you are exceptionally beautiful people. Thank you for coming on the show. Really enjoyed the conversation. Jad, we should do this again sometime, bud, where we just go and chat to people.

Speaker C

00:47:26.220 - 00:47:30.880

Hey, man, if you need a co host, I'm right there, dude, you know, Excellent, excellent.

Nathan Hirsch

00:47:31.600 - 00:47:32.400

I got you.

Matt Edmundson

00:47:32.800 - 00:48:09.770

We should definitely do that again. Let me. While I remember just giving a quick shout out to Ben Leonard, we mentioned it earlier, but the quit stalling.

Build your brand book definitely go check that out. Ben's a great guy. I think he's coming on the show again soon, but yeah, I think that's it.

We will of course link to both Jared and Nathan in the show notes which you can get on the [email protected] if you're subscribed to the newsletter, they will be coming to your inbox box automatically. Of course they will all be in there, but yeah, gentlemen, you, you're both awesome. Thank you for coming on. Really, really appreciate it.

Great conversation.

Nathan Hirsch

00:48:10.810 - 00:48:11.290

Thanks.

Speaker C

00:48:12.010 - 00:48:13.530

Well, thanks so much for having us.

Matt Edmundson

00:48:13.610 - 00:49:13.490

Nice. It's beautiful. It's beautiful. Just stay there for a few minutes. Don't go anywhere while I close out the show. Thank you so much for joining us.

It's been great, hasn't it? Now make sure you check out the E Commerce cohort. Be great. Great to see you in the monthly Mastermind.

If you're not in there already, come check it out@ecommerce cohort.com Big shout out to the team that makes this show possible, which includes the beautiful and talented Sadaf Banon and Tanya Hutzlak. Big shout out to Josh Edmondson for the theme music. And if no one's told you yet today, let me be the first. You are awesome.

Yes, you are created awesome. It's just a burden you've got to bear. Jared's got to bear it. Nathan's got to bear it. His five month old kid's got to bear it. I've got to bear it.

We've all got to bear it. So that's it. E Commerce podcast is produced by Pod Junction, the new name for Orion Media. Find out more about Pod Junction.

Find out more about [email protected] but gentlemen, that's it from me. That's it from all of us. Thank you so much for joining us. It's been fun. Bye for now.

Nathan Hirsch

00:49:19.380 - 00:49:35.090

Sam.