Suzanne, welcome to the Resilient Entrepreneurs podcast. We're so excited to have you here today and to have a really exciting conversation around money, my favorite topic when we're talking about all things entrepreneurship, money is one of those topics that we just need to speak about more and more and more and normalize and make just part of our everyday language. So really looking forward to that. Thank you for being here.
Well, thank you for having me. I'm excited to talk about money too.
Good. Perfect. So I always like to start these podcasts understanding a little bit about you and your backstory. So tell us, were you that entrepreneurial kid with a lemonade stand? Where did that first experience of entrepreneurship come up for you?
No, I was actually probably more of a nosy kid. That's probably the best way to put it. My dad was a CPA and he started his own firm and he ran it for almost 40 years. And he hired me when I was 14 to actually be a bookkeeper in his firm. It was kind of like a tax write-off and free daycare kind of combination for him. And he taught me how to do accounting for his clients. My dad's Chinese, my mom is black. And so a lot of his clients were like Chinese restaurants. And it was just amazing going in and going, where do you buy your food from? And what are you spending your money on? And things like that. And it was interesting because when I went to college and I was trying to figure out what I was going to do, the natural progression was really accounting because I already knew how to do it and the classes were interesting and that compound growth, right? You know, they say that, Malcolm Gladwell says it takes about 10,000 hours to become an expert at something. And while most people are graduating from college imagining already being an expert. So it was just a natural progression from that standpoint. So not only is hiring your kids a great tax write-off, but it's a great apprenticeship and experience for them too.
that apprenticeship. That's fantastic.
And I can tell Suzanne that you kind of love it. I think you, it seems to me that you love accounting and numbers. Tell us a bit about that passion.
You know, I think it's more so the impact, the fact that you can make impact with numbers. And you know, the one thing that I love about accounting is it doesn't lie. If you make a transfer, it went someplace, right? The books don't balance unless you're completely honest in the books, right? And so it really tells a story and being able to work with people as a fractional CFO and being able to help them make financial decisions that change their lives has been probably one of the most rewarding things that I have ever done.
I actually, I wrote a book, Profit First for Minority Business Enterprise. This is part of the Profit First family, it was written in collaboration with Mike Michalowicz, and I talk about several of my clients in that book. And one of my clients, she was a wig maker and she was making wigs as a hobby. You know, she, and really for herself because wigs are very expensive. They're a thousand dollars for a good one sometimes. And she made herself a wig and she made it from YouTube. And literally she was wearing her wig one day at work and one of her shoe store clients came in and said, my gosh, I must have that wig. I'll pay you a thousand dollars for that wig. And my client was like, why do you want this wig? I've been wearing it all day, it’s my YouTube wig and this client's like, no, you don't understand I must have your wig. And the client at the time was going through chemotherapy so she was losing her hair and this wig gave her the ability to have dignity. So my client Jane literally sold her the wig, for $1,000 right off her head. And that was the start of her company, the Virgin Hair Fantasy.
And that company has allowed them to own real estate and it's allowed them to become the first millionaires in their family. It's allowed them to really pivot their family legacy. Definitely entrepreneurship can be an opening for many incredible opportunities.
Yeah, absolutely, you're speaking our language because that's exactly what we get excited about too, is what doors open up for entrepreneurs when they start to create something for themselves. So tell us more about how an entrepreneur starts with the financial part, because I think a lot of entrepreneurs have great creative ideas and want to, you know, go out the door and get cracking with them. But let's pull them back a little bit, pull in the reins a little bit and just step by step tell us a little bit about what's really important for an entrepreneur to keep in mind when it comes to finances, especially when they're starting out.
I think the mistake that most entrepreneurs make is that they fall in love with what they do, which is amazing. They're usually the best of the best, right? Otherwise, who would dare start a business if you weren't the best at something, right? And they love what they do so much that they would do it for free. And that's exactly what happens. Three years from now, they look back and they're like, my gosh, I have nothing at all to show for all the hours that I put in, all the money that I've spent. I'm not contributing to my 401k and I have nothing to show for it. I think that's a common story. And I think that's why 80% of small businesses end up closing their doors, right? Within 10 years is because most of us, we do what we love and we love what we do so much that we would do it for free. And one of the biggest mistakes that happens is we don't create the intentional outcomes that we want.
And we don't create those intentional outcomes from the beginning because reality is, profit is intentional. If you don't create processes, if you don't have goals that support those processes, you will not achieve your goal if you don't have a goal. Right. And as a CPA, I have seen many people at the end of the year, they're like, how much taxes do I owe? Did I even make any money? Right. And literally it's kind of like the surprise three months later after the books close of did you make any money, right? And as an entrepreneur, imagine if you knew every single month, did you break even? Did you produce profit? What can I course correct, right? Along the way, imagine the change you can create in your business even more timely, right? And so really it's about creating intentional outcomes.
And I do this through a method called Profit First. And Profit First was a method that was created by author Mike Michalowicz and it literally does just that. It creates intentional outcomes. And I love it because it works with our natural human tendencies. And that's important for success because in schools we teach this lovely accounting equation, revenue minus expenses equals profit. But unfortunately, that doesn't hit home for a lot of us entrepreneurs, right? We focus on revenue, we drop our prices to make the sale, we pay our bills.
But profit isn't anything really to brag about. So this accounting equation doesn't work. We actually have to have behaviour that creates intentional profitability. And what happens in Profit First is we create intentional profitability by creating an illusion of scarcity. For example, if I would go out to eat at a, I'm gonna call it, in America we have these smorgasbords, right? We call them golden corral, all you can eat buffets. And I have never left a golden corral, all you can eat buffet proud of myself, right? I've had too many plates. went up maybe a third time. I've got dessert when I normally wouldn't order dessert, right? And I've never left proud and I've done this because there are too many options, right? There's too many plates. There's no shame. As soon as I dirty up a plate, someone will pick it up and destroy the evidence. And I'm eating because it's there, I'm literally, it's how I'm made. If you sit food in front of me, I'm going to eat that. And that's the same way it works in business finances. On a day that my entrepreneurs have just been paid, so then they can hire that new support staff, buy that new computer, right? And payroll's two weeks away, there's plenty of time to recoup.
And the problem with that is that, on the other hand, when I think about scarcity, right? When I think about COVID when none of us knew when the next check was going to come in, right? People were making different decisions. They were like, well, maybe I should not hire right now, or what costs can I cut right now in order to make it through this time? And what's happening is the cash flow is different. It's what's happening.
And so what happens in Profit First is we create an illusion of scarcity and we do that through the use of bank accounts. So instead of all your money being available on one bank account to spend, like it is for most of us, what's gonna happen is you're gonna collect money into one bank account, but then you're gonna allocate to different bank accounts according to a pre-designated purpose. So one of the accounts that you're gonna allocate to is gonna be your profit bank account. And the great thing about this, Laura and Vicki, is it's physics, right? If I allocate money and I physically move it from one account into another, into a profit bank account, I'm profitable. I'm profitable on day one, right? I've created physical profit.
And I'm already beating my Bureau of Labour statistic odds because while most businesses are closing because they run out of cash, I've created profit on day one. The next bank account that I'm going to fund is going to be my owner's pay account and this is my salary. So many times when I meet entrepreneurs and I ask them how much they made, they made the same amount that they made last year, they put themselves on a fixed salary, maybe 100K was their big goal. And once they hit 100K, they never gave themselves a raise, right? And what's gonna happen in Profit First is you're gonna allocate a percentage of your revenue into profit. And so now you're rewarding yourself based upon the performance of your business. So as sales go up, so does your owner's pay. It goes up, right? And so there's more incentive to make more revenue because I'm gonna get more pay as an owner.
The next bank account that we're going to fund, it's going to be our tax bank account. You know, as a CPA, I've seen so many entrepreneurs wonder how they're going to pay last year's taxes with this year's money. Literally on April 15, they're asking for an extension. They're asking for an installment plan and, and they're looking for like, how am going to pay this tax? I have no preparation for, I've already spent everything, right? And the great news is on Profit First, taxes are never gonna be your problem again because you're gonna be putting away money into a tax bank account throughout the year. And so you're gonna have money stored up for that event. Now, granted, you're hopefully not gonna use all of it because you're meeting with your CPA throughout the year to make sure that you're doing estimated tax payments, you're projecting your profitability, your tax planning, but you put the money into a tax bank account, right, so that you have it just in case.
And that last bank account, after you've allocated it to your profit account, your owner's pay and tax account, that last bank account that you're gonna fund is going to be your operating expense bank account, which I like to call the OpEx account. And this is the account that you're gonna use to make decisions on, can I afford to hire any support staff? Can I afford to buy that new computer? Can I afford to sign that expensive lease, right? And be able to say, you know, I've got this great brick and mortar that's an even bigger location than what I already have.
And you're gonna make decisions based upon scarcity, like how much money do I have in this operating expense account to spend money on? And so you've kind of re-engineered your outcome is what's really happened here.
Suzanne, feel like you have flipped the traditional model on its head because I'm sure I'm not alone that many entrepreneurs when we start out we first pay all the expenses and you've just described an elaborate plan to pay your expenses last. How does that even work when you're starting out and you're just seeing maybe a thousand dollars come in, a couple of thousand dollars come in? Help us get that bridge from absolute zero to this plan.
Absolutely. I think with startups, it is a little bit different, right? Because a lot of times we're starting out with nothing, right? And with startups, I think one of the things that doesn't happen in startups is the concept of seed money. And what that means is, before I even start a business, how much am I willing to lose, right? How much am I willing to gamble? Because at the end of the day, just like an investment in the stock market, your company is an investment and it may or may not work out right. There are going to be lessons that you're going to learn along the way. And so first of all, deciding how much do I want to invest upfront and creating that seed budget? So how much am I going to spend on inventory if I'm going to get into a retail type of business? If I'm going to hire my first employee, how much am I going to spend?
And when do I project that I am going to break even and when do I project that I am going to turn to a profit? So first of all, putting that money aside as seed money in the beginning and creating a budget for that is extremely important.
And then once you've created a budget and everything that you're bringing in at that point, you know, now you can allocate to your profit account, your owner's pay, your tax account and your operating expense account.
Yeah, that's good, that's just so good. I love this system. It makes so much sense. It's so great and clear. Thank you for that. Seriously, thank you for that. I hope everyone listening has really heard it and maybe replay, you know, you can do like the 15 seconds, go back a few seconds and listen to that whole explanation. Thank you, Suzanne. That was brilliant. Love your system.
Tell us about what mindset shifts you feel entrepreneurs get stuck in and need to make in order to get these systems working for them and becoming profitable.
Yeah, so I think one of the big mistakes that we make is vanity. So like revenue, everybody wants that seven, eight figure company, right? And, and, you know, as a fractional CFO, you know, and as someone that has sold a seven figure company, you know, one of the things that you realize is that revenue is vanity, right? Profit is sanity. And, and you can run a $50 million business and run at a million dollar loss. Just because you have the revenue doesn't mean that you're gonna be profitable.
And so first of all, understanding I'd rather run a smaller business that's more profitable than a bleeding business that's in the multimillion. So first of all, understanding that the bigger you are doesn't necessarily mean the better you are. We don't have to mark our worth, our self-worth against our revenue number, I think is first of all, very important with that. And then the next thing is, again, focusing on what is the outcome that I want, right? What is the social impact that I want to have in the world? Do I want to be there for my children when they get home from school, right? What is the social, what is the impact that I want to have in this world? What does my personal happiness look like? And then how do I create those outcomes for that? You know, one of my goals was that I wanted to be able to retire at 50 was one of my goals. And I sold my company at the age of 46. And so being able to create procedures and processes based upon your goals is extremely important.
Congratulations on having built a company of that worth and selling it all before you're 50. Talk about a goal getting. I knew this would be a masterclass in everything financial, and I'd love to even extend it into a masterclass into entrepreneurship. And with a specific view to minorities, because I know that you've written on this topic, and I'm curious, Suzanne, what do you see as the greatest opportunity for minority groups to really be super successful as entrepreneurs?
I think one of my strengths from being a minority was, you know, really what allowed me to be successful was I had nothing to lose. You know, when I started my business, I had $500 that I invested into my business. I think $200 was actually borrowed from my best friend to buy a printer. And I had nothing to lose other than let's just best our best every single day. Why not do what I love? Why not create impact and value for my clients? And let's see where the world takes you. Because I think it's easy as a minority to sometimes get stuck with the noise in our head. When you watch the news and they tell you that everyone's gonna discriminate against you when you walk into a room, people are gonna treat you terribly, right?
And I think at some point that if you allow it, it can get into your head. You can even go into a room and fail before you even take a step into the room because you've got so much going on in your mind. And the reality is you just have to go for each experience and just give your best and let the cards go where they fall. And you might find that you actually get more than you ever thought you would.
Yeah, I think it's that openness, right? That openness for opportunities and that grit and that resilience. I mean, it takes so much resilience to be an entrepreneur. We hear more nos than yeses on a daily basis. It's just normal. And I think you can pull that up and keep going. Well, how do you define resilience? Do you have a particular definition of it?
Resilience constantly changes, right? It looks different for every situation, you know, just like with entrepreneurship, every level is a new devil, right? That you face, you feel like, well, if I get it to this point, then my life will be different. If I get to this point, my life will be different. And every time it's different, but it's even more harder, right? And so resilience is different for every step where you're at. You know, I think in the beginning, resilience is about asking for a sale and actually asking for what you're worth, right? Versus the price that everybody else is charging, right? I think a lot of times as entrepreneurs, we call our competitors and we go shop or, you know, and we secret shop and we go, what would you sell it to me for if I'm looking for this and this colour, this brand, this fast, you know, what would that price be? And then we match the price, right? And it's probably one of the worst things you can do because now you're getting into that race towards zero, right? Where we're competing based upon price and the winner is zero. And so I think that's probably one of the first steps.
The next step is boundaries , right? It's OK I’ve mastered sales now. I've got people and some of these people are, I wouldn't choose to work with them, right? They're not putting in their best or maybe it's just not their zone of genius and they are doing their best and maybe they would be your best friend and you would hang out. But you know, every night you go home and fix their work, right? And it costs you more than it is to keep them. And so that next step is learning boundaries that you deserve to be happy in your life. And you deserve to be with a team that supports you versus you supporting everyone else around you. And so everything has a different caliber.
And then the next step is learning how to delegate. I can't control everything. Every piece of paper can't go through you. Every decision can't go to you. And how do I find people that I can trust or build people that I can trust that can take those responsibilities from me? And so it's very important there that, you know, for me resilience just looks different for every step.
I love how you articulate that, Suzanne, and what comes to mind is there's always new problems to solve, new challenges to overcome, and it's just so true. I think we can, as we progress, we forget the challenges that we've overcome. And here I find that there's an opportunity for us to look back at what we have achieved and what we have overcome. And the growth that we have had as entrepreneurs and Laura and I like to say that, you know, being a business founder and growing a business is the greatest personal development journey you can ever be on because not only are you growing your business, you're growing yourself. Has that been your experience also?
Exactly. Every step you are growing yourself. I think that one of most important things is, and it can happen in entrepreneurship, we lose who we are, right? And I think it's important to really know your values. Like what makes you happy? What is the impact you want to have in the world? And what do want your life to look like? And really stay true to those values each and every step, I think is really what keeps us sane and makes sure we're moving in the right way that the company should be moving in.
Yeah, your point about lifestyle and being able to create a business that suits your lifestyle rather than creating another J-O-B where you just start working for yourself in a rat race that you just wish you could get out of. There's nothing more demotivating than that. So I think this kind of balance of passion, a servant's heart, and then also being able to serve ourselves. And I believe that's where, when you talk about boundaries, that's a big piece to our inner happiness and inner sanity.
Yeah, definitely. Because if you don't have boundaries, everybody else's boundaries will become yours.
Exactly right. You also mentioned charging what you're worth. I feel like a lot of people struggle with this. I personally have struggled with it over the years, of course. I think how do people figure out how to charge what you're worth? Do you have any thoughts on that? It's a tough one. I think, do minorities struggle with this even more?
Yeah, I think everybody struggles with it and minorities especially because I think one of the things that I've gone through was I just felt so grateful that somebody trusted me with their business. And when it came time to raise prices every year, just held still, Held still even though cost was going up and labour was going up.
But again, I think that it's a human struggle too. I don't think there's anyone that hasn't because my clients are minorities and non-minorities and they all struggle with pricing their worth. I think it's a human thing, right? That humility that makes us beautiful, right? When we operate well, that humility that's there. But I think in entrepreneurship, there's a consequence, unfortunately, when we don't charge our worth, right?
That consequence is we can't afford to hire the best people. can't afford to train them up so they grow in their career, which is what the best people want to do. We can't afford to buy the best supplies and eventually it will hurt your reputation if you're not able to put the best into what you do to produce the best outcomes. And so I think in entrepreneurship, it's important to have a realistic understanding of the cost that's required to bring your goods and services to market. So just a real grounded understanding of that because at the end of the day, you can only cut yourself so much to profit, right?
You can only cut so much to prosperity. And at some point, you know, if you're charging below cost, you're just financing the whole world's endeavours. And so really having an understanding of how much does this cost to bring my goods and services at the quality that I need to bring it in that I'm proud of to market. And that's where we're going to start the discussion at and build on from there. And when I say cost, not just materials, not just labour, right? I'm talking about opportunity costs. Like how much would you make working at a J-O-B? Because reality is if you're not making enough to cover what you would make in a job, this business isn't working for you. And so you have to build that all into your pricing to create that salary for yourself as well as for your people, as well as profit.
Yeah. yeah. I love the way you think and I love the way you explain things so well. That's so incredible. Another thing I want to talk about because this is such a buzz and everybody in here all over social media all the time is the concept of generational wealth. What's your thoughts on that? How do you define it? Can you just explain it for someone who maybe doesn't really, it kind of gets it but doesn't really get what people mean when they say that?
Well, generational wealth starts with somebody. And for minorities, a lot of it is going to start with us. Because there isn't anything that we inherited, no one that gave us our first house or our down payment for our home. It starts with us. And a lot of times, starting with us means starting in a room where nobody looks like us. Where in the United States, we've just gotten rid of affirmative action. So there's no government contracts or anything like that. But it's realizing that I may have to work three times harder just to be seen as average. And I know it's not popular. It's not nice. It's not, it doesn't make you feel good, but the reality is when you are the best, it does rise to the top. And so the start of a generational wealth starts with somebody making that sacrifice.
If you're in college and you're going to school, it's getting straight A's so that you can get your first foot into that company that's gonna be able to set the foundation for where you go for the rest of your life. But it starts with that personal sacrifice to create that generational wealth.
The next level is being responsible, a good steward of your finances. Meaning that in every decision you're building in profitability because that profit is going to allow you to save for your children's college. It's going to allow you to retire by the age of 50. And so it's being a good steward of the gifts that God has given you.
Thank you Suzanne. I feel like even though I'm not a minority you were speaking directly to me. This is such an important message and we do kind of look at you know we have to work twice as hard to achieve mediocre or achieve what others are achieving and I do feel like what's your view on this? Is some of that about comparison? We compare to what others are doing so we feel like we're working twice as hard.
Please don't feel like, I'm not saying that this isn't also a reality and that some people can just walk into a room and swan in, and then I really look deeper and say what is it about them? Is it solely the people they know? Is it the connections? Or is it who they're being? Is it that innate confidence that comes from that generational privilege? Acknowledge that. Yet can we create that air of privilege? Can we create that air of confidence? I don't know. I mean, I just think this is a really wonderful topic to delve into. What do you think?
Yeah, I think that's a great way to put it, Vicki. I think that entrepreneurship, no matter what industry you're in, isn't easy. And at the end of the day, especially in business to business, or even consumer to business, somebody worked hard for that money that they're about to spend on you. And no matter how good looking that guy is, I walk through the room or how well-spoken he is, if I'm gonna drop $1,000 and he's not gonna change my life, I am not gonna spend it. And so at the end of the day, right, at the end of the day people are gonna invest money and people that are gonna give them results. And they should.
And that's why for me, I feel like, you know, sometimes I talk too fast. Sometimes I don't pronounce right. I definitely don't come across with an air of confidence in the room by any means, but when you work with me, I will deliver on the results and that reputation begins to ride you.
You can tell when someone really cares about the people they're working with and for and the work that they do and the impact that you have. That just radiates from you. And I think you can tell that and that's what creates attractiveness for a business to business. And yeah, thank you for your views on that. I do believe it's true that we, you know, as minorities, I'm not counting myself as a minority, as minorities, there is a need to work harder to get to the same place. And when we focus on that, then it becomes harder. Like anything in life, when we focus on what's hard, it becomes harder. When we focus on who we're being and what we can deliver as you've just described Suzanne and the impact we can have and really work on the value that we deliver, then I feel like it flips hard into less hard, perhaps even enjoyable.
Yeah, I absolutely agree with you, Vicki. there's working smarter too, right, with everything. It's at some point, you know, I'm gonna take it from a CPA perspective. You can only do so many tax returns. You have two hands, one keyboard, and you can't type on four keyboards at one time, right? No matter how talented you are. And it's about being smart about who you bring on your team. Are you gonna add value? Are my clients gonna be confident when they're working with you to produce their tax return, right? And so it's surrounding yourself with people that are high performers. And so it's also about creating that culture of excellence.
Yeah. Yeah, exactly. What does a culture of excellence mean to you?
Tell us more about that.
So a culture of excellence, I mean, you're going to make mistakes, bad things are going to happen in even excellent companies, but it's how do we fix those mistakes if they happen? How do we take responsibility for those mistakes? But it's really about creating standards. So it's being careful about who you hire, vetting carefully who you allow in your circle. I think it's really important. It's also providing those people with training so they can continue to grow and they want to stay with you because A players love to be refined. They love to grow. People will stay with you if they feel like they're progressing in their career. Nobody wants to be in the same place 20 years from now that they were today. And so, especially if you're looking for a culture of high performance. And so what does my team need in order to feel like they're growing, that they're contributing?
The other thing is also realizing what is your zone of genius? Like Vicki said, you know, if you're in an environment where it's constantly hard, everybody's going to get burned out when you're constantly in a hard. And that's why it's important to realize you're doing something that you love, that you can see the impact that you're making in this world. For me, finances came really easy. It was a fun topic for me. And so I can look at it all day long and I love it. And so finding that zone of genius, finding that area that you love that really just lights you up is also very important.
That's such good advice, especially for those who are out there still searching for what their thing is, trying to figure out their purpose. And such a good message there for those who are already in business and trying to create the type of culture they want. Because exactly what you were talking about was like the culture, right, of the business. And that's what the leader can really establish is the type of culture they want, a culture of excellence where everyone is driven to create the best versions of themselves. And maybe it's in continuous education, and research and learning and growth and all these bits and pieces so important for entrepreneurs to be cognizant of that you set that standard. You set that bar for everyone to come up to, to always keep that in mind.
Yeah, as leaders we have more power than we realize. We definitely set the tone at the top.
You make a great point Suzanne. I think it's important for us as business founders, even if we just have a, let's say a part-time staff member for starters, we're still a leader. We're a leader, whether we know it or not. We're a leader, whether we like it or not. And so your word about intention is so key here. We must be intentional as leaders and know that we're leaders in so many aspects of our life. How are we choosing to lead and what impact are we creating? Thank you for that thought.
Thank you.
Okay, final question. If you are talking to your younger self, go back 20 years or maybe to the start when you were first starting your business, what piece of advice do you wish someone had given you to just get you started, get you flying?
So the best advice that I would have done, looking back, that's a good question, Laura. That advice would have been, be okay with saying no.
Mmm.
Be okay with saying no. And the reason why I say this is not all business is good business. You know, there's something called Pareto Principle, the 80-20 rule, where 20% of your activities will produce 80% of your results or 20% of your clients will produce 80% of your profits. And also there's a joy factor too, I think, also in business, right? There are just some customers that it's just who they are. You know, they're never going to be happy. They wake up on the wrong side of the bed every single day. Right. And you can even sense it when they come in, you know, they're talking bad about their own provider and you're like… be okay with saying no. Be okay with saying no to the wrong opportunities because the right ones will come along.
Hmm. That's it. That's so solid. That's such solid advice for anyone out there listening that sometimes you need to say no. And I definitely agree with you with that 80-20 principle. It's proven right in my whole life when I look backwards. It's absolutely true. And focus on those important parts that really take your business to the next level. Focus on Profits First. I just love this message. I love this conversation around money, around mindset, around understanding a system to how to create for yourself a successful business. And that's exactly what you gave us today, Suzanne. I appreciate you so much. Thank you for this conversation. It's been a masterclass, as Vicki said.
Thank you, thank you Laura, thank you Vicki. It's been a great conversation for me also.
Good. Lots of fun. We'll definitely be seeing you again, I'm sure. Thanks so much for being on Resilient Entrepreneurs.
