Ecommerce Bookkeeping⎜ EcomBalance ⎜ EP 224
Ryan Cramer: What's up everyone. Welcome to my corner of the internet. I'm your host, Ryan Cramer. And this is Crossover Commerce, presented by PingPong Payments, the leading global payment's provider, helping sellers keep more of their hard earned money. Hey everyone, welcome back to another episode of Crossover Commerce. I'm your host, Ryan Cramer. And this is my corner of the internet, where I bring the best and brightest of the Amazon and e- commerce space. I like the pointing I'm doing now, it's so natural. This is Crossover Commerce episode 224, where I bring the best and brightest, like I said, in the Amazon and e- commerce space. Every episode here, if you're new to the space, welcome, thanks for tuning in just for a little bit of your time today. We know you're a busy entrepreneur and e- commerce Amazon seller, whatever you might be doing, thanks for stumbling into my corner, just to learn from the best and brightest in the Amazon and e- commerce space. That's what the show is about. That's what we do. Every single episode, all 223, up till today. We have amazing guests who have walked the walk and talked the talk. Anything from marketing to advertising, to sourcing logistics, to knowing your numbers, to even growing into direct to consumer or growing internationally localization, you name it, we're covering it. So that being said, every episode here with Crossover Commerce is presented by PingPong Payments. PingPong Payments is a cross border payment solution. Helping sellers keep more of their hard earned money. How do you keep more of your money? Well, it's being smart with your numbers and money. At the beginning, if you're paying with suppliers or manufacturers or VAs, wherever you might be paying those people, if they're in a different country, pay them in localized currency. It's saving on transaction fees, foreign transaction fees, any wire transaction fees that you might be doing with old archaic systems like banks or international payments, or even if you're doing PayPal. A lot of those things are costly at scale. So once you're growing, make sure you're using a solution like PingPong Payments, save on those transactions and getting money to them and to your entities quicker, whether it's receiving or sending sign up for PingPong Payments today, and sign up for free. Just go to usa. pingpongx. com/ podcast, and let them know that Crossover Commerce sent you. That being said again, episode 224. We're booking right along here this week. Lots of great content that we've had already earlier this week yesterday, leading up to today, as well as the rest of the week. If you're new to the show, again, this is a live podcast. If you're watching on LinkedIn, Facebook, YouTube, and Twitter, feel free to comment in the comment section below, just let us know, you're saying," Hi, how are you?" Let us know where you're listening from. Or if you have a question for us or our guest, we appreciate this as well. We'll throw them up on the screen, get those answered for you and help you out along the way. But if you're listening to us later on, just do the same thing on the replay, or you can check out the show notes below for all of our resources that we'll be talking about today. That being said, I have... I would call it a trifecta, if you will. A person who's been in this space such a long time, you've recognized his face. Every time I feel like he keeps coming up, there's amazing business, that's tied to it or a great idea. A solution if you will, that is filling the void in the space. And that is who our guest is today. Nathan Hirsch of EcomBalance. You might have heard him from FreeUp. You might have heard him from Outsource School, which is still obviously an amazing company going on, but Nathan and his partner Connor have done it again. They are launching an amazing service, that's helping fill the gap in the e- comm bookkeeping world. And that being said, we're going to be talking about, you guessed it e- comm bookkeeping today. So without further ado, welcome to the podcast, Nathan Hirsch of EcomBalance. Press the right button. There you go. Nathan, how are you doing today?
Nathan Hirsch: I'm doing great, Ryan. Thanks so much for having me.
Ryan Cramer: Yeah, of course. We haven't had you on the podcast. We've had you on some webinars before. So just to kind of hop in, I'm very familiar with your background, super impressed by it, obviously, and would love to, if people don't know, or for one reason or another don't know who you are, please. How are where we are today. How did you get to this podcast today really, as a professional?
Ryan Cramer: I love the," We didn't know what we wanted to do, so we started a different business to buy us time." I don't think there's too many people out there, that are like," Yeah, we'll just start a different business, it's profitable, I'm assuming, very successful." But then also to take that half step into, Well, we actually want to do..." That's such a fascinating story, man. That's awesome and congrats on obviously, your FreeUp, the acquisition for there, did you feel like that was a... I guess going backwards kind of moving up to EcomBalance? Did you feel like that was the perfect time? Or did you ever feel like," Oh man, maybe we can hold it onto it," and in retroactively going back and you could say," Wow, we really lucked into the timing aspect of it." Or would that have even mattered with the pandemic? You mentioned of," Hey, we got kind of lucky when we sold it when we did."
Nathan Hirsch: Yeah. I'm not sure if we got lucky, I mean, the pandemic kind of shifted everything to remote and remote hiring anyway.
Ryan Cramer: Sure.
Nathan Hirsch: So, maybe at first it was a sticker shock to the new buyers. But then once people realized that the economy was going to be okay, that kind of changed that. I mean, FreeUp, there was a lot of factors. At the time, remember this was pre- pandemic. The economy was at an all time high, so just thinking about," Hey, maybe this is the best that it's going to get. Maybe this is time to look at... get offloading a company." But, also we had grown this to$ 12 million a year to get it to 25 to$ 50 million a year-
Ryan Cramer: It's tough.
Nathan Hirsch: It would've taken a lot of changes and we didn't have experience doing it. It was the biggest company we had ever built. We sold it to two great entrepreneurs, Mark Hargrove, David Martin, who have grown way bigger businesses than we have. And you kind of have to look at it... the way that we looked at it was, if we are going to sell this thing, we can't have hindsight, we have to move forwards, knowing that we made the best decision with the information that we had available, because you can't just regret something like that for the rest of your life. So, we looked at. It was obviously an opportunity to change both of our lives and even our team's lives, because we took$ 500,000 from the sale and gave it to our team in the Philippines. And sometimes it's tough to kind of turn that down, even if... yeah, maybe we could have grown it to 50, but maybe we couldn't and we would've run into a lot of issues. So we'll never know.
Ryan Cramer: Never have sellers remorse, I like that. And that's just a testament to you guys too, of like what great people you are. Obviously, I think that's really cool that you guys were able to reward your team for just the great work. I think that's a lot of what people run into now is the... I've heard it from a lot of sellers and maybe you've heard this too of upon selling, and obviously, this is kind of where EcomBalance really helps out, is a lot of people have employees, they have part- time workers, they have warehouse workers, they might have bookkeepers. They might have CFOs. They might have just other employees under their wing. And when it comes to selling, they're like," Well, I don't want them to not have a job anymore, but I think it's the right thing for my business." Do you guys encounter that quite a bit? I know you did on the FreeUp side, but do you encounter that more on the seller's side, that you guys are helping out?
Nathan Hirsch: Yeah. I mean, we're pretty new with EcomBalance, so I don't think we've had any... we have some clients who are looking to sell their-
Ryan Cramer: Give it some time.
Nathan Hirsch: Business, but it hasn't actually gone through, but it was definitely a factor. One of the things that we negotiated in the offer was that all of our guys would keep their jobs within reason. Obviously, if they did something wrong, that the new owners could take action there. But they've really honored their word. Like all the same internal people, 95% of them that were there when we sold it two years ago, are still with FreeUp today, and they got that large bonus from us. And they're overall happy. Parting ways was obviously an emotional moment and sad. But I think everyone across the board was better off for it.
Ryan Cramer: Pressed the wrong button there. We're trying to get back to my tabs of questions and just thoughts and process, because there's so many routes, but I obviously want to stick it to your bookkeeping. So again, you said you were passionate about bookkeeping, but you're not an accountant. You're not one of those people who are like," Hey, numbers are my passion. I can probably flag it from a mile away." Maybe why bookkeeping? I'm just curious, why is that something that you found passion in? You're like," Every single day, this is going to be where I could help people the best."
Nathan Hirsch: Yeah, so let's take a step back to my Amazon business. This is how I would do bookkeeping. I wouldn't do any bookkeeping the entire year. And then the year would end and tax season would be around the corner and I would take everything and I would dump it to my accountant and he would put it together, charge me a fee, file my taxes, and then I would rinse and repeat. And that was absolute chaos. Outside of just looking at my bank account, I really just didn't know what was going on in my business. I couldn't make any decisions month to month. I didn't know what products were profitable versus other ones that were, and I kind of learned that lesson, but in the Amazon business by year four or five, it became very hard to go back and fix everything and create good processes. So one of the better decisions we made with FreeUp, before we even profitable, we hired a bookkeeper internally to just do our books clean from day one. And this allowed us... the month would end within 10, 15 days of the month ending, we'd get a report. We'd see our revenue broken down by different types of freelancers. We would also see our expenses and then we'd be able to make decisions based on the numbers and actually be able to make fast decisions. And so, we had this going month after month for all four years that we ran FreeUp. And when we went through due diligence, and the buyers are asking us questions, everything we told them on the phone matched exactly what was in our books. And we had the books going all the way back to day one of the company. So, they could see exactly what happened and that helped us sell it, but it also helped us make really good decisions along the way. And that's what we see with sellers a lot of times, is they're either doing their books once a quarter or they're doing what I did and just doing it at the end of the year. And you really can't run your business that way. You have to be able to... even if you're not a bookkeeper, and even if you are a bookkeeper, you shouldn't be doing your own books, but you need to be able to get those reports, have a meeting with your business partner or your leadership team and make decisions month after month. And if you don't really understand the numbers of your business, you're just guessing day in and day out. And that's no way to run a business.
Ryan Cramer: So what are those mistakes that you're seeing? Obviously, it's something that you can attest to firsthand. What do we do that made us successful that's planned? But what are you seeing that most people are falling into those same pitfalls? I would assume that they're pretty consistent right across the board as an entrepreneur.
Nathan Hirsch: Yeah. I mean, just in e- commerce, so we talked about not doing your books monthly, that's a big mistake. A lot of people aren't factoring in the marketplace fees properly. They're putting in net as a revenue instead of the gross and actually being able to see," Hey, Amazon's costing me this much." Or" Hey, Etsy's costing me this much," Whatever it is. A lot of people don't understand their different products, their different brands and how profitable they are. They might have five products, but most of their money is made on one of them. And they're spending a lot of time on other ones that are not profitable at all. And even just breaking down expenses and doing payroll properly like when we're cleaning out books, that there's so many nuances that the average bookkeeper doesn't understand when it comes to e- commerce, that you really want an e- commerce bookkeeper doing, even if you're not using EcomBalance, you don't want to just get your bookkeeper that was a referral from your friend, that's never touched an e- commerce business before. There's a lot of just nuances that you need to know along the way.
Ryan Cramer: Right. And like you said, the fees are constantly changing, the shipping costs and whatnot. How are you guys able to essentially aggregate all these data points into the constant changes in moving parts that might be unique to each business? At scale, that'd be hard. Is that hard to replicate or what are... how do you guys pinpoint all the exact numbers that are going on in a day in and day out with e- comm businesses?
Nathan Hirsch: Yeah. I mean, there're tools out there. A2X is a very popular one that we use. It really depends on the size of the seller. If they're a little bit smaller, we have manual process to do everything. If they're bigger, you really need a tool like A2X. It's something that I wish the marketplaces just did better and were more transparent. Or made it easier to just download reports or connect to QuickBooks themselves, but I recommend using tools like A2X to really get that down.
Ryan Cramer: So as a person you're walking through, what are the biggest... since you were selling... you're not still currently a seller, correct? Are you selling on Amazon?
Nathan Hirsch: Correct.
Ryan Cramer: Okay. Gotcha. So, as sellers are kind of going through this growth phase and kind of the changing around of everything, I would think that the biggest part would be to understand money that is earmarked for something such as an IO or an invoice for goods or services or anything of that, versus incoming numbers and revenue and things like that. Do you feel like you have to almost like reset people of," Hey, remember this money's already... you don't want to double dip in the same coffer, because that funds are going to your inventory. You want to reinvest." Do you feel like you're retraining people on how to understand money and like what is being called for and what you actually have in savings or anything like that for growth or opportunities? Is that what you feel like you're doing a lot?
Nathan Hirsch: Yeah. One of the big issues that you kind of alluded to is doing cash basis instead of accrual, because when you're doing cash basis for e- comm, you might buy inventory for the next six months. And that all appears on one month, when really that should be averaged out over different months. Or if you want to get more technical, you can assign inventory to when you're actually selling it. But on top of that, cash flow is so important. We have a client that is a very seasonal business. They're a huge company, they're doing 10 million plus a year, but they need to know that during the summer, when it's slow, they're not going to run out of money and not be able to pay people. So, they need to predict out cash flow, 12 weeks in advance at all times, and know within$ 1000 how much money's actually going to be in their bank account. And that might not be necessary for every single seller, but understanding your cost of goods sold, having accrual basis accounting, which also helps you get more when you sell your company, and making sure that you're projecting cash flow is very important. A lot of e- commerce sellers, I forget who said this, but most e- commerce sellers go out of it business, not because they're not profitable. They go out of business because they run out of cash. And if you're not planning your cash properly, that can happen to you.
Ryan Cramer: Right. I would think that would be the most important factor even now, as things get more expensive. We were talking PVC, we're talking shipping logistics. There's so many different cost factors that it's almost like a more of a pay to play industry now, than it ever has been. Are people coming to you even before starting on e- commerce and saying," Hey Nathan, I'm thinking about getting into this business. We have a retail store. We think we have a good product idea." Are they proactively coming with you with that advice now? Or is it more of the beginner segment that you guys are serving?
Nathan Hirsch: I would say anyone that's doing less than$ 150,000 a year is probably not the best fit for EcomBalance. We tend to be more for bigger sellers. With that said, we do have plenty of experienced entrepreneurs that are saying," Hey, this is a startup, I know I'm going to grow this company and can we get our bookkeeping set up from day one?" And we're happy to do that. Our minimums around 200 to$500 a month. So, you have to be comfortable with that and that might not make sense for the person selling on Amazon on the side, but it might make sense for someone who," Hey, this is company number four," and they want to get it set up right from day one. But as a whole, usually we work with bigger sellers.
Ryan Cramer: Sure. That makes sense, so that's a good notion to note if you're listening to this as a seller, when you should start. Is that typically when people should start thinking about bookkeeping service and maybe not doing on their own? I'm curious what you found that was..." Hey Connor, maybe we should think about having someone else do our books," and have that conversation as a partnership or doing it on your own. Is that level where you think most people should start to entertain that?
Nathan Hirsch: So, this is my opinion and this also comes from my hiring side. There's no situation where you as an entrepreneur should be doing your own books. First of all, most entrepreneurs are not good at doing bookkeeping. And I've gone through this myself, back with my Amazon business. Any bookkeeping work you're doing now, unless you're a CPA or a bookkeeper and you have a lot of experience, it's probably going to have to get redone later and it's going to be more expensive and take up more time than if you just hired someone else to do it. Now that doesn't mean you need to hire EcomBalance, but you could hire a VA or bookkeeper in the Philippines, or you could see if your CPA does it or has referrals or whatever, but you shouldn't be doing your own bookkeeping. So first of all, you're not going to be good at it. It's probably going to have to get redone anyway. And let's say you are good at it. And you are a bookkeeper by trade, but you're starting an Amazon business. It's not a good use of your time. Any time that you're spent doing bookkeeping, is time that you could be spending on sales, marketing, expansion. And at some point, it's going to get off your plate. You might as well get off your plate early, so you can focus on growing your business. As you know, when you're starting a company and you're working 40 to 80 hours a week, trying to get this off the ground. If you're spending 25 hours a month or whatever it is doing, your bookkeeping work, that is time that is not spent growing your company. So, bookkeeping is something you should get off your plate from day one. It doesn't mean that you need to go out and hire the most expensive bookkeeper from day one, but you as the entrepreneur shouldn't be doing it.
Ryan Cramer: What are some maybe things that people should know in terms of dates that in the bookkeeping world obviously are super important? Is there dates that you always tell people," Hey, this is when taxes need to be filed." Is that different versus personal? Or like paying your GST and VAT, you know what I mean? There's a lot of these nuances that at scale, there's going to be numbers or dates that you have to be aware of when money has to be paid to entities and certain important earmarked numbers along the way. Do you ever educate people like that? Or what are some of that people should be aware of, I should say?
Nathan Hirsch: Yeah. So, keep in mind right now we just do the bookkeeping side, not the tax side-
Ryan Cramer: No taxes yet.
Nathan Hirsch: And there are dates, like-
Ryan Cramer: We're not tax professionals here.
Nathan Hirsch: Yeah, exactly. And April 15th to do your personal, but what I also tell people is, there's been years in the past that I've filed extensions. It's not the end of the world if you're coming up, but let's say... I mean, right now we're filming this, it's March 1st, April 15th is around the corner. But if you have very complicated books and you need a bookkeeper to spend 60 to 90 days to really get it that's worth filing an extension. You can write a check as an estimate and get money back, pay a small amount of interest later, stuff like that's worth it. And I've had situation in the past... I mean, FreeUp is a great example. We went through selling FreeUp in November, and that was a very complicated transaction to go along with other income streams that I have. So there was no way my accountant was going to get it done by April 15th. File an extension, no big deal, wrote an estimated check to the government. So there are certain flexibilities. Now, I've also had people that have come to me and they haven't paid taxes in two years, and that's not great either, but there's a fine line between... bottom line, whatever it takes to get it done right, whether that's an extension or not, you should do. And then there's also dates throughout the year that you should be paying estimated taxes depending on how your business is set up.
Ryan Cramer: Right. No, absolutely this conversation is just giving me anxiety because I need to do my taxes still. But again, it's important to know. I think this is why EcomBalance is so fascinating. Again, accounting and bookkeeping services altogether as a whole, is so important as an entrepreneur, because if money is again tied up in so many different ventures, I'm always fearful that, like you said, there's this massive amount of percentage of entrepreneurs that are failing, because they think that their run rate is a lot longer than what it is. And just like any startup business or anything like that, you have to know your financials, your numbers, and what your cost of goods, everything like that, that makes your business worthwhile, especially in the e- comm Amazon world, so that you can grow and you can comfortably grow and take on more responsibilities. I just think that it's a next step that even though if you're not starting out strongly at the beginning, you're going to struggle and you're going to miss when you try to make that next stab at it. Yeah, go ahead.
Nathan Hirsch: One thing I wanted to add is, and this is very common too. Most accounting firms, and this is not all accounting firms. Most accounting firms are not set up to do month to month bookkeeping. And if you're expecting your accountant to do your books every single month on time, especially during times that get crazy for them like busy season in April and again in October for different due dates, that usually doesn't work out very well. And in addition, they're preparing your books from the standpoint of figuring out what to pay in taxes. They're not necessarily preparing your books for you as the entrepreneur to make decisions day in and day out with those numbers. And that's why I've always set it up, so I have an accountant and I have a bookkeeper and they communicate, they work together. But the accountant focuses on the tax side, the bookkeeper focuses on the month to month side. And that's going to make everything better for you as an entrepreneur, and you get two people in your court helping you make decisions, bouncing ideas, back off each other, and that can really help. And the other thing that I think we bring to the table is Connor, my business partner and I, we're entrepreneurs first. We're not bookkeepers first. We're good at hiring. We're good at processes. We have a great team of US and non- US bookkeepers, ready to help you, but we know what entrepreneurs want to see. We know how they need to be spoken to and how they can understand information. And for every client we get that knows technical bookkeeping, there're other clients that hate bookkeeping like the plague. But they still need to understand the numbers in their business, so bridging that gap is a big focus of ours because a lot of times bookkeepers or accountants won't speak the same language as entrepreneurs. And that's something that we want to take very seriously as we go forward.
Ryan Cramer: I agree with all that. I think when people are listening to this, I think there's that school of thought. People hate numbers. And I think it's funny to hear the number and amount of people that are like," I just hate knowing. I like the marketing side of things," like you said, or," Hey, we like the hiring side," or,"I like the scaling side of things. I don't want to know about like how much taxes I'm paying. I want to blindly write a check, not know how much it is for and be good with it." So Nathan, I think I jumped in a little bit too quickly, if I'm listening to this and I'm maybe in wholesale or I'm in a different drop shipping business, are you guys covering the whole gauntlet of Amazon entrepreneur or e- commerce entrepreneurs like D to C, Amazon, wholesale, the whole gauntlet, or are you guys more focused on a certain entity?
Nathan Hirsch: No, we definitely have sellers that are doing all different types. I will say that certain types of sellers are more complex and more expensive. Wholesale tends to be one of the more complex just because there's lots of different invoices, lots of different suppliers and vendors and stuff like that's always changing. The opposite of that is the private label seller, whose got like three products that are the same, day in and day out, and they're just placing bulk orders. So drop shipping, it tends to be a little on the easier side, just depending on how it's set up. But we can definitely handle all sellers, international sellers. We have clients outside the US. We also work with people that aren't sellers at all, whether they're agencies or coaches, we have a lot of experience from FreeUp billing clients, paying contractors. So, it's been kind of fun for me working with agencies and helping them really automate their billing and come up with better processes as well.
Ryan Cramer: So do you have... so I was kind of curious, what you thought was the most difficult... now you're in this industry, what's the most difficult in terms of the numbers that you've come across? Was this shocking that you said... like FreeUp was pretty easy in terms of, you know what to expect? Was it shocking to you once you got in the weeds of everything of," Oh my gosh, there's so many complexities. I can't believe this person is doing this." Like dot, dot, dot. Is there one of those, that you've had those moments?
Nathan Hirsch: Yeah. I mean, we had clients that'll have like 15 bank accounts or something, and they'll think that it's making it easier for them when really it's making it way more complicated. There's a lot of stuff... building a bookkeeping business has actually been pretty fascinating, because I feel like with FreeUp you're matching freelancers and you can kind of make processes as you go and solely improve over time. With bookkeeping, there's so much going on and so many different complexities adding in A2X and different QuickBook setups, that you really need strong processes across the board before you can even entertain adding clients. So, we spent the first 100 days, with just a few beta clients, just ironing out all the kinks and we're super grateful that those sellers helped or gave us time to actually figure everything out because you need those strong processes, so when we onboard a client, it's not just chaos, trying to figure out every little thing specific to this client. And you have all these different marketplaces, you've got international marketplaces, you've got all these different banks and credit cards, and processors and trying to figure out the best way to work with every single one is something you really have to do before you just open the flood gates to clients coming in, wanting pricing quotes. So that's been kind of interesting to me, but you got to remember that a lot of times simpler is better. If you don't need 10 bank accounts, go with two. If there's a certain credit card that is giving you maybe a good rewards points, but they're not compatible with QuickBooks, that's going to cost you way more money with a bookkeeper than you're going to make on those points. So, there's certain things like that I don't think people think about.
Ryan Cramer: Right. I mean, even on our side of things as kind of that entity that has coming and goings of financials, obviously with foreign exchange fees and obviously, the strength of currency versus one versus another. Do you guys work with... do you find it complex to work with international sellers at all? I say that of being, if they're located in the likes of like Italy and selling in the United States, or if they're selling in different marketplaces, is that probably the most unique complex ecosystem you can probably work in as a company?
Nathan Hirsch: I actually think that's less complex than someone-
Ryan Cramer: Really?
Nathan Hirsch: Doing, let's say wholesale. Keep in mind, we're not doing tax. So if you're in Italy, you need to have an accountant in Italy, but there's generally accepted accounting principles gap where bookkeeping's bookkeeping. If you're selling in Italy or the US or Japan, from the bookkeeping side, it's very much the same. Now there might be some banks, we have to do some research in and figure out the best way to connect them to QuickBooks or stuff like that. Maybe something that we're not used to. But that stuff is pretty easy to figure out. Most banks are compatible in one way or another and worst case, we get statements, but bookkeeping is bookkeeping.
Ryan Cramer: Yep. I just wanted to make sure the record's straight, so that's good to clear up that air. There was a couple of questions... or I had a couple more questions. In our episode today, if you're just tuning in, obviously we have Nathan Hirsch of EcomBalance as well as multiple other companies, helping people grow their businesses on Amazon and e- commerce. What Nathan, if you had to just say a generic term, obviously each business is different, and I always want to preface questions with that. Each business is different. What are the most important financials that people need to know and follow as a business owner? What are those key metrics that I need to be locked in, I shouldn't have to worry about and get shiny object syndrome and worry about everything else? What are the ones that I need to know as a business owner?
Nathan Hirsch: Yeah. So, there's three statements. Income statement, balance sheet, cashflow. If you have a good bookkeeper, you should be getting those three statements every single month. Now there are some businesses that you can ignore, let's say the balance sheet. Like FreeUp was a good example of that because it was very cashflow positive. It was a remote company. There was no inventory or capital expenditures or anything like that. So, the balance sheet didn't really mean anything. Most e- comm companies that it does mean something, and you want to take a look at that. And cashflow, we kind of already talked about is super important. So, those are the three statements. And then from there you really want to segment your bookkeeping, where if you're selling five different brands, you want to be able to see what you're making for each brand and how profitable those brands are. And then the last thing that I was actually teaching an e- commerce entrepreneur to go through, is just going through your expenses, line by line every single month. You'll find software that you forgot to cancel. You'll find your internal expenses are going up faster than your revenue. There's all these different nuances that if you're just looking at it as a lump sum," Hey, our expenses are 60 grand a month." That doesn't give you the full picture. You go line by line through it with your partner or leadership team every single month and say," Hey, what are the trends here?" I always like to compare the current month to the previous month and the same month, last year. And that usually gives you a very good understanding of what's really going on in your business.
Ryan Cramer: Right. Especially... and I think that this is the hot topic. I would assume that you have these conversations with people when they want to exit or sell their business, like you guys did. If a brand wants to exit, they're probably asking you," Hey, which ones do I need to be really focused on and honed in on and make sure that they look good? Everything is as expected." Are you having those conversations, both on the M and A side with businesses, what they're looking for, but then also on the seller side of," Hey, I'm the guy who's going to tell you, this is what all of them, or 90% of them are going to be looking for. That's why this is important."
Nathan Hirsch: So, we did a lot of research before starting EcomBalance. We interviewed, I don't even know 150 e- commerce sellers trying to figure out what they wanted, and what issues they had with past bookkeepers and what they liked, what they don't like. But we also talked to a lot of brokers. I mean, I know Joe Valley from Quiet Light. I know a lot of different brokers in the space and understanding what they see day in and day out. And those are a lot of partnerships and relationships that we have. Bookkeeping is the trust factor when you're selling your business. I mentioned when we talk... when one of our clients bought FreeUp, it started off with a bunch of initial phone calls. And a lot of those calls had questions that numbers came up and the trust factor was we spit out numbers on the call that later on going through due diligence, exactly matched the numbers that were on the document. And obviously, the numbers in our Zero, we were using Zero at the time, were accurate and could be tracked down. So, it's all about trust and display in a way that the buyer can trust and the seller can trust.
Ryan Cramer: Yeah. Well, I think that's always the top one I see is people have messy books and that's when you called me and messaged me and go," Ryan, I think we have a business in the bookkeeping space," and I go," Wow, he gets it. He sees the gap in the market." But what do you think is the biggest struggle for you, Nathan? Obviously, you said you're not the accounting guy, you're an entrepreneur at heart. You're providing a service. What's the most difficult thing on a day in and day out, as you're growing this business? What is that for you guys right now?
Nathan Hirsch: Yeah, so it's kind of changed over time. At first, it was how do we take our hiring processes and change them to be for bookkeepers, which took a little bit, but we have a really good process down. We just hired an all star bookkeeper that started yesterday and we've got a team of seven bookkeepers right now, both US and non- US. Right now, my focus is how do we make this as easy as possible for clients? We know that clients hate bookkeeping. We know they don't want to be stuck connecting stuff in QuickBooks and sending statements and view only access and all that stuff. But it's necessary. We can't do our job without a certain amount of access and documents and stuff like that. So, it's how do we take what the industry norms are and tweak them so that it's as easy as possible for clients and make it a very good hands- on white glove experience? And that's kind of my focus right now, is how do we streamline that process? So right now, a client... and this is all new. We experimented with doing pricing calls and all these different things, but it's an optional sales call. If people want to work with us, it's a pricing... or if people want to have a call. It's a typed form that people fill out and give us information. Plus, sending us access to their QuickBooks if they have one, or Zero. We take that, we give them a quote, they're ready to go. They add a payment method. And then the onboarding process is my focus right now. How do we have a kickoff call? How do we get the rest of the access we need quickly and efficiently for the client, and then hit the ground running to do any cleanup and catch up work and create a process for the monthly bookkeeping. So, I'm kind of looking at it as a process standpoint while our bookkeepers are figuring out a lot of the process on the bookkeeping side.
Ryan Cramer: Yeah, absolutely. That makes a lot of sense. So what ultimately in the couple minutes we have left, what's that goal for you guys? Is it a short term goal of maybe two, three years? Maybe like five years? Or do you have like... this is the last business you want to build and grow? I won't say last business because we all know entrepreneurs always have that itch. What's that goal for you guys? Do you want to service a certain amount of sellers or what does it... or I don't know. What in your mind is your goal for EcomBalance?
Nathan Hirsch: Our goal is 1000 clients. We kind of set that from day one. I think we've got about 25 or 30 clients right now. So a long way to go. It's funny. We've kind of turned on and off the marketing floodgates, if you will. I'm very confident in our ability to market. I mean, Conner-
Ryan Cramer: Oh, me too.
Nathan Hirsch: My business partner is probably one of the most underrated marketers in the space. I know I get a lot of credit for being like the face and going on podcasts, but he's incredible behind the scenes, but we just couldn't handle it. At some point we had to turn it off and be like,"All right, we need better processes." And now that we've hired more people and are building processes, we're kind of itching to turn hopefully the floodgates back on. That's kind of where we're at right now. The goal is 1000 clients, we still have a lot of work to do on our side, but we also just want to be known as the best, most quality bookkeeping service out there, that's very easy and efficient for clients. I think we did a good job of that for FreeUp. Connor and I have reputations that we hope to keep up, where we don't start businesses to screw people over or hurt people in any way. We want someone to love working with us and tell all their friends how great we are, and that takes work. You can't just snap your fingers and start a company and have that kind of experience. That's kind of our main focus right now.
Ryan Cramer: Absolutely. Ladies and gentlemen you'll know when Nathan Hirsch turns on the marketing, because believe it or not, he's everywhere. I don't know how you do it, man. It's super impressive, because I think it's a testament to what you guys do. I don't know if you guys are doing it yourself or you have help or anything like that, but the amount of content that you guys produce, but then also just the tidbits. This is as a marketer, I'm giving you lots of praise because there's content that you can do in terms of audio. There're visual contents. There's the case studies the customer know without... like, you guys have it down. I think that's no question. So, I'm always curious to see what that marketing, like you said, turn on, turn off button, when that actually happens. So, what do we expect from you guys this year? Is there a 2022 goal? Are you guys going to be at events and conferences speaking at different things? Prosper, perhaps? What is that goal for this year, at least?
Nathan Hirsch: Yeah. We won't be at Prosper this year. I think the whole conference is almost like the last piece of the marketing dial we turn on. I think there's a lot of SEO work and podcasts and even just blog articles and partnerships and other stuff that we have ready to go. We're also launching a portal, that'll have affiliate links and clients will have their own dashboard similar to what we did at FreeUp. Connor's on vacation right now, that'll be launching as soon as he is back from vacation. So yeah, a lot of marketing work to come. The conferences is probably the last piece of it. I am itching to get back. I feel like I was a big part of the conference community and the e- commerce community back with FreeUp. And I have a two years where I haven't really done much of that, plus COVID, which stopped a lot of conferences as well. So, I do want to get to that point, but I think it's important for us, and we kind of learned this the first time we turned the marketing switch on, is we need to make sure that our processes and our team are kind of ready to handle that workload.
Ryan Cramer: Absolutely. I asked because for myself personally, this will be the first conference I've been to gosh, in many years. Like the last conference I've been to is a Rakuten conference, believe it or not-
Nathan Hirsch: Oh, cool.
Ryan Cramer: In San Francisco, which was really neat. I got to... but that was just in the e- comm direct to consumer side. I've tried to expand into different marketplaces, so this would be the first, like Amazon specific one that I've been to, weirdly in person. Been to plenty in virtual ones, obviously in the COVID time. But I was curious if you would be attending to that or not. So Nathan, in the final minutes that we have with you, if people obviously... this is a big need, every person needs to look at opportunities and what it needs to work with and have clean books. I think we did a good job, but if they have questions they want to get in touch with you, what are the best ways to get in touch with you or the team at EcomBalance?
Nathan Hirsch: Yeah. I'm easy to find on social media, just Nathan Hirsch, Facebook, LinkedIn, Instagram, and go to EcomBalance. com. You get a month free of bookkeeping if you sign up. You can fill out a form right on our site to get a pricing quote. If you're interested in our hiring process, you can go to Outsource School and check that out. But I would love to work with people and thanks so much for having me on.
Ryan Cramer: Yeah, of course. And obviously with so much going on too, I love what you guys are doing. Keep up the good work. And again, friend of the show, anytime we can have you on here in the future that you have just tips and tricks, or just things that you're seeing, that's different now as a friend of the show, you're more than welcome to hop back on-
Nathan Hirsch: Thank you.
Ryan Cramer: Crossover Commerce. So that being said, thank you so much again for hopping on today, from... you're in Colorado now. You were somewhere else last time we were chatting-
Nathan Hirsch: Florida, yeah.
Ryan Cramer: Florida.
Nathan Hirsch: inaudible the Colorado life.
Ryan Cramer: Are we? Okay, I was going to say mountain... I was going to say winters there are a little bit different from Florida. So, are you hanging in there or not?
Nathan Hirsch: So, I'm actually from Massachusetts, originally and Colorado winters are a hundred times better than Massachusetts winters.
Ryan Cramer: Yeah, it's a little bit nicer, a little bit expected all year round, but yeah, Massachusetts is rough. Yeah, Indiana's like all," It's going to be 60 degrees here. And then it might drop to 30." We don't know. It's a guessing game at this juncture. So at least you have-
Nathan Hirsch: It went from 4 degrees to 65 degrees in 24 hours.
Ryan Cramer: Oh my God. Yeah. Let's not get a geo... there's no global warming, right? I don't know what to expect anymore. It's just going to keep me on my toes, but thank you Nathan, for hopping on Crossover Commerce today. I appreciate it, man.
Nathan Hirsch: Thank you.
Ryan Cramer: Awesome. And thank you everyone for hopping on episode 224 of Crossover Commerce. Nathan Hirsch, obviously, as you can hear from him, just building, inaudible great processes, helping entrepreneurs grow. That is in that guy's blood. It is so awesome to hear. I can't tell you how many talks, I just listen and just take notes. It's awesome to just sit back and ask simple questions, but hopefully everyone in the podcast arena here watching live or listening later on, got a lot out of this today. I think it's just pretty simple. What I got out of it, if you're in e- commerce I think having someone double check your numbers, triple check it, you can't go wrong with that. I think whatever that looks like as a partnership, as a business, you need to make sure that you can continue to succeed, to grow and be able to invest in yourself. So, whatever that looks like. Obviously companies like EcomBalance, go and check them out. Obviously, Nathan and team will take care of you, but check out their website, obviously, EcomBalance. com or just follow him on social media. You won't go wrong there. That being said, this has been episode 224 of Crossover Commerce. We have two more episodes this week. We'll just flash them up there, All About E- commerce Payments With Breach with Matt Stein Brecker, and we have... kind of rounding out our week, we'll have Brighter Click, How To Test With Purpose, Using Audience Creative and Copy Structure. Excited to know more about those businesses and companies, and obviously just to get their insights and expertise in the Amazon and e- commerce space and what that looks like for you as an entrepreneur. So that being said, I'm Ryan Cramer. This has been Crossover Commerce. We'll catch you guys next time. Take care.
On Episode 224 of the Crossover Commerce Podcast, Ryan Cramer talks with Nathan Hirsch of EcomBalance. They'll cover the biggest bookkeeping mistakes sellers are making. They'll also talk about the signs entrepreneurs should look for when it's the right time for them to pass it off their books to a professional.
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