Welcome to the Eventual Millionaire Podcast. I’m Jaime Tardy and today we have Ren Carlton on the show. Ren runs Dynamic Advisory Solution and they provide virtual CFO services. He also wrote the book Profitpreneurship: Creating a Business that Produces Outstanding Financial Results and I’m excited to delve into what he teaches about business and finance today. So thanks so much for coming on the show, Ren.

 

REN CARLTON: Well thank you so much for having me. I’m a big fan of millionaires, yeah, let’s talk about it.

 

JAIME TARDY: Perfect. So let’s first start off with getting to know a little bit more about you and sort of how you started in all this. How did you become a business owner to begin with?

 

RC: Well I love the questions and basically when I was in college I said two things I would never do and one was to do taxes, the other was to start a business so I broke both of those promises within about three years of graduating so it’s kind of funny how life works out and takes turns. I mean long story short, I took the scenic route through college and went to Oakland University. It took me about six and a half years. Did little projects here and there. Took a job, quite for awhile, eventually graduated with an accounting degree.

 

When I did get into the accounting field and became a licensed CPA, it was very tough to do because I’m not wired to work for other people. I had four jobs in three and a half years of graduating and different public accounting firms. I actually worked my way into a CFO position but nothing really resonated the right way. Nothing really felt right I guess would be the best way to put it, which is funny because when I had the CFO job, it was, I mean it was a dream job. I mean for a guy my age to work myself into that was just a miracle number one but I had a company car, I had a light work week. I mean it was a good situation to be in for most people on the surface but a couple things made me not want to stay.

 

The primary reason was because I was bored. I mean there wasn’t a lot to do. It just wasn’t that interesting to me. It came pretty easy. Number two was because I saw what the owner was doing and the owner didn’t strike me as overly brilliant at the time or as he had this business, he’s making a killing in terms of financial rewards. He had a boat, he had a plane. He was living the life. He was in Florida half the year. It was a great situation and I figured wow, if this guy can do it, why can’t I? So I ended up doing it and by the way I have a lot more respect for that guy now. I realize how hard it is to actually do the work and become an entrepreneur and be successful at it. So, at the time, the perception is not always reality and that was definitely the case/situation then.

 

JT: I want to stop you for just a second. What made you not want to ever be an entrepreneur before because it sounds like it’s sort of something that you really had in you? Why didn’t you want to be before?

 

RC: I just thought it was too hard of work. I just thought, I mean there’s too much, it’s too hard to sell. I had some sales experience when I was in college and realizing that you would have to sell a lot. I’ve become very comfortable with that at this point and I am actually a pretty decent salesperson. I just thought gosh how do you start something from scratch? It just seemed like it was such a daunting task. I just couldn’t believe anybody ever did it going through college and seeing what big businesses did and everything.

 

It just kind of evolved. I mean I know it’s not a great explanation but it’s the reality. I tried other things, I saw this guy do it and it came to a head one day. The owner was on one of his tirades and I said, “You know what, that’s it. I’m just going to do my own thing” and just kind of did. I mean fast forwarding a little bit, I mean I did everything wrong. I didn’t do a business plan. Just started from scratch. One thing I did do right is leverage my network which was one person at the time.

 

JT: Your network was one person. That’s great.

 

RC: That was my only network was a baker that came to call on me when I was a CFO and I called him and said, “Hey look, I’m starting this business, this is what I’m getting ready to do” and he actually introduced me to a client, actually a prospect that turned into a client which actually worked out to be my first engagement. So I thought wow this is going to be easy until the client fired me two months later. So kind of the trials and tribulation of the startup but long story short, I mean didn’t have clients, didn’t have prospects and figured it out.

 

I mean figured out how to network. Figured out how to do a business plan and it was timely and it was arduous. It took forever. It didn’t make money for years. But flash forward to today, I mean we have a great organization. We created a niche in the space. I mean this is our 13th year of business. We’ve got great employees, great contractors and it has worked out.

 

JT: That’s an amazing story and I can’t wait to delve deeper because you told me all these things that took you forever to learn and I want your knowledge now so that way all the people listening don’t have to go through years and years and years of struggle. So let’s first start off with when you very first started, I mean this was back in 2000, right, was when you started?

 

RC: Yes.

 

JT: Okay. So back in 2000 when you first started, and your first client fired you after two months, number one, how did you get up from that because that’s kind of hard? I mean I know talking to entrepreneurs in general that first like oh my gosh can this actually work after that is really difficult. How did you deal with that?

 

RC: Great question. It was tough. I mean because it was a decent size client. I mean I was out there a couple days a week doing the CFO thing and I learned a lot of things. I mean it was a great educational tool but I mean the first thing I figured out really quick is you don’t want to have all your clients concentrate on one relationship, which is funny because I see other big, like we’re in Detroit here and a lot of businesses that went through a lot of trouble that we dealt with firsthand were concentrated on one client or a set of clients take the OEMs for example, the big three automotive. I learned really quick I don’t want to be tied to one person. I might was well work for someone if I am going to be tied to one relationship. So number one, I really learned that and that helped recover.

 

Number two, at that point, I figured I liked this. I retooled it. I figured out a couple, another thing I really figured out was, in that situation, was that when I started working for this client, I stopped selling. I stopped marketing. I was a one-man band and you can’t sell if you’re working it. So I learned that vicious cycle of entrepreneurship really quick that if you’re small, you got to hire fast because if you don’t you’re going to get too caught in the weeds, you’re never going to grow. It’s this weird dynamic that when you’re selling you’re not doing any work and when you’re doing work you’re not really selling. So I figured out I had to get beyond me. I had to get contractors or employees or something fast and not make money for awhile which was tough.

 

JT: So how did you do that? Like who was your first hire?

 

RC: Well my first hire was I started hiring contractors a little bit, so getting people and I was actually doing part-time teaching to make ends meat in terms of bills and things like that. I was hiring student contractors because I was doing accounting classes so I would figure out which kids were sharp and I would say, “Hey I’ve got some work for you. You want to work and make $20 an hour which would be great for you” and bill them out at $50 and it was a good little situation. So I was doing some of that. My first few hires were nightmares. I hired people, didn’t have much money. Didn’t have really the financing in place to do big hires so I was hiring generally low people, intern, trying to improvise, trying to bootstrap and it’s tough enough to find talent, even today and we’ve got a budget to afford talent.

 

But take away the budget, I mean you think people want to be in an entrepreneur environment? They really don’t. They want a paycheck. So if you get a bigger paycheck and attract these people say, “All right I want you to come work for me when it’s very unstable, we hardly have any clients, you may not get paid and by the way I’m not going to pay you market rate for your services.”

 

JT: They’re like woo sign me up, right?

 

RC: Right. So one of the things I ended up doing early on when I started getting some traction, started growing was I actually gave away some of the business and I hired a person that was a prior CPA and give away the strong word I basically said, “Look, if you work for me for X amount of months, I’ll give you X percentage of the firm.” It worked out really well. So I built it out over two years saying he could earn up to X amount percentage of the firm over two years. After six months we were doing so much better because I had the talent now which was her at the time that could say I could either pay you market rate or give you more equity. She opted for more compensation and we went from there and she has been with me ever since.

 

JT: So how did you find her?

 

RC: Just on the job boards and things like that. I mean it was just a normal job posting which is not what we do now. I mean we really leveraged our network to find people. Our last couple hires have all been from networks and relationships.

 

JT: See and that’s the thing because what you hear a lot about is you find people on a job board, especially someone that you’re going to give equity to and you hope, you cross your fingers that it was a really good idea. I’m really glad it worked out. It sounds like it worked out really, really well for you but sometimes you don’t know. I’ve talked to other people who are like yeah we had a business divorce, it didn’t go very well. So what did you see in her that really made it work for you guys?

 

RC: She has a great personality. We were just a good fit, good skill set and it clicked. One of the things, I mean I really hire on my gut. At the end of the day there’s all kinds of criteria and skill sets and things but, at the end of the day, I mean I trust the gut feeling. Is this someone I want to work with? If I was a client, would I hire this person? Would I get the warm and fuzzy? We’re in a unique niche. I mean we do the CFO/Controller services so we’re finance and accounting people but we’re not mandatory.

 

We’re not a necessary evil like an auditor or a tax return preparer so people not only have to respect our skill set, they’ve got to want us there. They don’t have to use us whereas they have to get their taxes done, they have to get their auditor to do books or review books. They don’t have to use us. So we not only need technically strong people, we need people with good personalities which isn’t the easiest thing in the world to do in our industry unfortunately.

 

JT: I’ve heard that before.

 

RC: Me too! I can speak about the industry because I’m part of it and I get that. So getting that mix is just challenging a lot of times.

 

JT: So what kind of services do you actually provide because I know even like the tiny, tiny small businesses don’t know that much about CFOs and what they provide. So tell me what you guys actually do for people.

 

RC: What we like to do is provide an outsource solution to clients. So basically we help businesses make better business decisions and business owners. So we help with the historical stuff making sure they’re getting accurate financial data about their business and that they understand it. Most business owners get sales and cash and things like that but what business owners sometimes stumble on is going forward now. So you have all this great data about your business. You see where you’ve been, now where are you going? What’s likely to happen in the next year or five years? What if you want to double that?

 

What investment is required? What types of moves you have to make? What type of strategies or financing do you need to line up or what type of salespeople do you have to hire and that’s where we really start adding true value because a good accountant is going to give you a good set of books but what we do is really using that as a tool to say, “Okay, you want to grow to ten million in five years, let’s do it. Let’s build a plan that’s going to actually do that and hold you and your team accountable to those plans.”

 

In a nutshell, that’s what we do and we help business owners make that decision saying do I hire that salesperson? Do I buy that piece of equipment? Do I expand into another office? In a nutshell, that’s what we do.

 

JT: So you pretty much just look at the data and then tell them based on the data that you guys looked at this is the sort of suggestions that you have?

 

RC: We’ll help pull the data together too because you can’t, as far as the foundation is, you can’t make those decisions without good data. So we’ll validate the data, make sure they’ve got good financials, make sure they’ve got good income statement balance sheet and good metrics for measuring their staff, things along those lines. Then utilizing that as a tool to say, all right, this is where you’re at today, where you would be next year if you continue this course. Now what if we tweaked the plan? What if we make an investment here or in three months we do that? And by the way there’s this tax credit you didn’t know about.

 

We had a great example of a client, it was a staffing company that missed last year’s higher tax credit and if you’re familiar with that, the higher tax credit was this massive tax savings for people that were hiring people that were unemployed. Well we ended up helping them get that and you’re talking hundreds of thousands of dollars in tax credits that could have been missed. So it’s just an example of where finance and accounting can actually add value both in the growth and the planning of the sheet of vision but also can be real dollars missed if you don’t do it the right way.

 

JT: I bet they loved you guys.

 

RC: Yes.

 

JT: What’s like a typical small business owner that you work with? When you first start working with them, you know, someone that might even be sort of avoiding looking at the finances, they know they need it but they haven’t really had the time or energy to do it, what’s the first step that you usually do with them?

 

RC: Well first step is to do is we build a process called our 16 point diagnostic process that we get into a company and we look at 16 areas of their business to make sure that they’re functioning the right way. So most people, even accountants don’t realize there’s 16 areas and that’s what makes part of our services unique that we have really developed these internal processes to provide the CFO/Controller services we do. So we get into their budgeting, gets into accounting software, gets into staff training and development, how strong the staff is. It gets into their dashboards and how they measure performance.

 

So our first step is to really do a deep dive and see how strong these 16 areas are in the company. We’ve never gone in the situation where something is not broken but again, if nothing else, it helps the prospect/client at that point figure out okay here’s my blind spots, here’s what’s not happening, here’s what is working pretty well.

 

JT: Perfect. So what are some tangible tactics? Like what’s a typical thing that you guys either have them do or you work on that maybe someone who is listening right now, they can’t afford you right this minute but they need to get their finances in better shape. What would you suggest them to do?

 

RC: Well you have to have some sort of bookkeeping. I mean if you don’t have the bookkeeping you’re not going to understand where you’re at. I mean the data, you can manage your business on a checkbook for so long. If you want the small type of business, I mean, if you’re looking to be a millionaire, that’s not the way to do it. I mean you can only go so far with the checkbook accounting system. There’s obviously exceptions out there but 99.9 percent of the population that does well with their businesses has a decent set of books. So they’re going to be on a QuickBooks or a Peachtree bare minimum.

 

So they’re going to have their accounting software up. They’re going to be posting on a regular basis and they’re going to have that data available. Number two is using that to say, “Okay, now where am I headed?” So I want to be, last year I did a half million dollars or 520, just inject a number. Okay, where are you headed right now? So what’s the determining fact? What makes that plan at risk? W hat makes that plan, how can you double or add 30 percent to that or 40 percent? You’re really doing the deep dive in there figuring it out.

 

A lot of the kneejerk responses we get, especially on smaller businesses that have never been there done that is I can’t project revenue. I don’t know how to do it. At the end of the day, no one knows how to do it for 100 percent certainty because it’s a budget. I mean the first thing about budgets and projections is that they’re wrong. It’s a plan to get you there. I mean there’s going to be bumps on the road. Things are going to change but at the end of the day building that plan and building that budget to say I want to do this. I’m a numbers geek by trade. I love the process because it really shows you what you can do if you really do the deep dive and then it’s about executing.

 

JT: So how do we do that? Tell us some tips for projecting revenue for someone that has never done it before.

 

RC: So at the beginning it’s the data. It’s looking at the data from history saying okay what were my fails the last couple years, two, three years and then figuring out what correlated to that. So what factor, I mean did you have salespeople? Did you have one or two big engagements? Did you have ten? Did you have more customers? Did you have more traffic? Then figuring what you’re closest correlation to revenue? What’s going to make that number predictable and increase it? There’s all kinds of neat tools out there and if one of your listeners is looking for something along those lines they can always reach out to me and I am sure you will put your contact information on your blog.

 

But we’ve got tools that say, for example, if you use call centers which again most people don’t these days, but let’s say you are in a business that you do use a call center. For every 1,000 calls should result into 50 appointments which should result into 30 agreements which result into 5 sales or something along those lines but then you’ve got your secret sauce and again some sales aren’t that direct and simple, it’s including our own by the way, but there’s factors that we do as well but again, coming up with some mechanism to make a prediction.

 

So let’s say you’re a one-person job for example and you’re doing it and you say, okay I’m making five sales a year. Okay great, if you hire another salesperson you should have ten, right? But you say I can’t afford it. One of the great sayings in the industry or like what the catch 22 is, you can’t hire a salesperson if you can’t afford it but you can’t afford it because you don’t have a good salesperson. So I mean do the math. You invest, you do financing or you work more hours. I mean the math isn’t that complicated.

 

JT: See, that’s what I love about numbers. They sort of tell it like it is you know what I mean? There’s only so much. There’s no emotion in it. It’s like well you either have to work more or you have to get financing. It’s a lot more black and white because of that. So were there like key performance indicators that you go by? Is it mostly just okay how do we get our sales? What are the numbers to sales because what it sounds like is it’s not just the numbers you’re talking about as far as budgeting goes but you’re talking about sales numbers and stuff like that? Does a CFO go into sales and get you data that way too?

 

RC: We do. I mean to say CFOs, so one of the things that happens out there in the privately held businesses is that there’s a lot of titles. I mean there is CFOs, controllers, director of finance, accounting manager, bookkeepers, whatever you want to call it but at the end of the day, in our mind, the CFO is someone that’s perspective, that really doesn’t look to history but is more of where we are headed type of person, can do an F&A, can do analysis, can do those types of things. So if we’re talking about a true CFO, the answer is yes.

 

The CFO should have a handle on what we just talked about and we do a lot of work with that type of information so we do definitely build metrics for sales departments and teams whether it’s volume in call center, whether it’s activity, whether it’s salespeople, the amount of calls they do but really breaking it down to the data because again, data is predictable. You can manage to it, you can hold people accountable. I mean it’s just the only real way to do it. I mean you can put your thumb in the air and say, “Okay this is my guess, what’s the reality?” At the end of the day, data is what matters because data is going to be, you’re going to have data based on your sales, your cash in your bank and that’s what is going to be used to determine if you’re successful or fail or somewhere in between.

 

JT: So going forward, so say someone starts gathering the data and of course the data has to be accurate. I work with small business owners and it’s like oh! Especially when you first start out, it can be hard to try and make sure that that data is accurate which we always sometimes forget about. So you guys I’m sure help people actually this is sort of a side note, you must help people get their data be accurate also, right?

 

RC: Correct. Oh yeah, absolutely. We do the deep dive, we train the accounting staff, I mean we train the sales people that build those report and give us data that we can utilize that we build into the software. I mean right now we just released last week an app for the iPhone that basically tracks the key metrics of data, we call them dashboards for our clients. Now we’ve got this neat dashboard tool that they can see the metrics of the business at their fingertips whenever they want to pull it up on their phone.

 

JT: Nice and that’s only for your clients? That’s not for anyone else?

 

RC: Right.

 

JT: Good to know.

 

RC: Just enhancing the relationship and doing more things better, faster, quicker.

 

JT: Yeah, that’s a great idea. Great customer attention too, right, for you guys.

 

RC: Exactly.

 

JT: As far as budget goes, how do you have people start a budget and then how do you track? Do they do it every single month where somebody pulls up a budget and bases it on last year or what your how to on to create a budget and then work with a budget in the future?

 

RC: Well in terms of work with a budget, I mean yeah, definitely you create the budget, you build it out, it’s based on last year and then you tweak it, add it, build it up and make it more powerful. Then some of the things we do to use it going forward is number one, we put up line out of accountability. So essentially everybody, someone is responsible for every line in the budget. Ideally it’s not the business owner. Ideally it’s other people on the staff that you can delegate to because the owner is responsible for everything anyway.

 

So then using it as a tool going forward saying okay this person is responsible and then tracking it to actual data on a monthly basis. So then you go through the numbers and say okay we’re at the end of November this is what happened, this is the results we had, this is the budget and here’s variances outside of the 10 percent range or whatever that we think is acceptable. So if that’s the case, then get in there and so okay so Bill from shipping is responsible for this, Bill what happened? You can do this for any company, any size as long you have employees I guess.

 

JT: That’s great. What I want to know from you too is how do you find your clients? I mean these are small business owners. How do you know whether or not they have finance issues? A lot of business owners don’t like talking about their finances in general especially with people they just meet. So how do your people get in contact with business owners?

 

RC: Being in an entrepreneurial world, I mean being out there with business owners, talking to business owners, being in that environment, we’re very pro-entrepreneurial. I do a lot of work through groups. I do a lot of free public speaking in terms of entrepreneur groups and chambers and things like that. Wrote the book Profitpreneurship, which is designed for entrepreneurs that try to do some of the work themselves.

 

It’s just being in that space. I mean realistically I’ve got full time sales staff. I’ve got full time people working out there. We’ve got social media. You name it, we have a lot of lines in the water so to speak so people know what we’re about. I mean shows like this, these are fantastic to entrepreneurs that someone is out there listening, they say oh yeah this resonates. I can’t spend $125,000.00 a year on a CFO but I might be able to afford DAS. That’s the type of marketing we do.

 

JT: Great. I want to talk a little bit more about your book too. So tell us sort of the key concepts of the book and why did you end up writing a book, just to try and get more clients out of it and use it like, how they say, the business card, you know, your book is your business card kind of a thing?

 

RC: Yeah, there’s definitely an element of emotion to it but it’s also an element of help too. So I mean at that end of the day entrepreneurship has been very good to me and my family. It has afforded me a great lifestyle. It has afforded me the freedoms I’ve wanted. It has afforded me the ability to basically play instead of work. I mean I enjoy every day I come in here. I can’t wait to get in. I can’t wait and then it’s hard to leave. Not to say there’s never challenging days but it’s part of it and this is what I’ve wanted and this was what I was bored with at other places, where I’m very fascinated. There is always something to do here.

 

There’s definitely an element of that. In my mind of giving back, part of it is helping entrepreneurs and some entrepreneurs quite frankly can’t afford our rates. I mean they’re too small, they’re in startup range. So the book is designed to be a self-implementation tool that it basically gives away some of our secrets. It gives away how to do it. It gives away how to do a dashboard. It gives away how to do budgets the way we do. It gives away how to do employee scorecards and gives away how to get financing for your business. I mean the reality of it – the good, the bad and the ugly – on who you should talk to and what’s a waste of time and what isn’t and those type of things.

 

So that was the reach of the book is to reach out to those people that can’t really afford us, to give them some value and hopefully they grow their business to a point that now they need someone like DAS.

 

JT: That’s great. Help them up so that way they can help you too. That’s great. So give us a taste in the book. So what’s, I know I’m sort of putting you on the spot, hopefully you remember everything that was in the book, right? It’s funny because authors, you know, years later it’s hard. So give us a taste of like one how to really great juicy tip that someone, especially someone who is like a solopreneur right now can do from the book.

 

RC: So I mean for a solopreneur, I mean the biggest thing is if you’re trying to get financing, unless you’re talking to friends and family, I mean you have a real tough route to go. I mean if you’re looking for venture capital and things along those lines, not to say we don’t have clients in that space because we do and we actually have sources of financing, but generally speaking unless you’re some high tech, innovative, creative crazy thing that’s in a different space, financing and fundraising is tough. Not to say it’s impossible because it’s not because I’ve seen people do it, but I would challenge business owners out there.

 

Again from my experience, seeing what works and what doesn’t, you would be much better served spending your time generating revenue than trying to raise financing; if you can bootstrap, if you can do something some way to start showing base hits. It might not be the slam dunk million, multimillion dollar equity raise but that’s the reality of getting started; showing that you have a business, showing that revenue generates and I have always been of that mindset.

 

Other people greatly disagree and they can tell me why I’m wrong but from my business model and we’re in a stage now that we have financing to get more and we probably won’t because I’ve always been of the belief of I’d rather go out in the market and earn it. I’d rather spend my energy and time bringing in business than trying to spend my time raising financing that may or may not come because then I don’t have to give the money back.

 

JT: That’s a good way to put it. That’s my money!

 

RC: Exactly because loans are intended to be repaid. Whether you do or not is another story but it’s the implied contract that you’re signing or not just implied, very well defined contract. Financing always brings in some sort of hooks or some sort of accountabilities. Most entrepreneurs don’t want that. I don’t like the idea. One reason people are entrepreneurs is because they don’t want to be accountable; they want to do their own thing. Well, financing you’re going to be accountable to someone on some level.

 

JT: So what do you give for advice though because someone who knows that maybe they need quite a bit of money and they’re like oh gosh I have this huge goal, I don’t want to get financing. You know, Ren told me not to get financing and just hit the streets and build some revenue but they’re looking at like this huge mountain to climb. So since you guys sort of work on that side of the coin too, what would you suggest to somebody who is trying to climb that hill?

 

RC: Well if you’re trying to get the hill and you’ve got something that really works and you got the viability and you think okay this business is viable, if it’s a start up and it’s not by what I would call tangible assets, so let’s take a step back. So if you’re talking to banks and you’re not financing tangible assets, it’s probably a waste of time, it’s 99 percent likely a waste of time because banks, in general, are what are called asset based lenders meaning banks like to lend on equipment, real estate, accounts receivable, stuff that’s very liquid. Something they can turn into cash.

 

Sometimes inventory but at the end of the day banks are asset based lenders. So depending on what you need that money for, that’s number one. If you’re a start up, you’re going to need something like the SBA to help you get the funding, get the equipment or whatever because banks don’t like start ups. Banks like to see strengths, stability, track record and things along those lines. So if it’s not tangible assets, if it’s an innovation high tech, R&D heavy or something along those lines, then it’s going to be some sort of private equity and the best way to do it is friends, families, relationships, you’ve got. I mean leveraging those relationships and going out there.

 

If you can’t do it that way and you want to go the VC route or if you’re looking for the private angel, tighten your pitch. I mean make sure that you know how to sell the value of what you’re selling and make sure that there’s a market for it, that you can prove it in a space, the hotter the area the better. I mean I’ve seen some very mediocre IT companies get funded just because they’re IT or three companies.

 

So if you’re going the VC route without a relationship, I mean it’s got to be in a hot space. It has got to be somewhere that people are throwing money. The internet is still pretty hot. I mean there’s a lot of stuff with social media, a lot of businesses around that. Some very hot companies want to throw money at it. So that would be my advice in that space if you’re intent is you must raise financing.

 

JT: Can you tell us a little bit about SBA loans because I know there’s information online and stuff but gives us sort of a breakdown on who should get an SBA loan and like how much does the typical lending numbers and stuff like that?

 

RC: I don’t know the numbers like for everything. Those are easily researched online but in terms of the framework, it’s still a bank loan. It’s just guaranteed by the government essentially. So you’re basically still going to a bank, you’re still talking to them but they’ve got SBA specialists that you talk to. It’s just to bridge the gap. The goal is to say okay you’re not bankable without help. The government wants to be a help. They want to be the big brother to say, or the helping hand to say, all right I’m going to help you get this financing.

 

You’re not good for it on paper but we think you’re good on it based on this and we’re going to bridge that gap with the bank. So that’s what the SBA’s function is. That means it’s still an asset based loan so it still has to be backed by real estate, equipment, receivables, inventory, something along those lines. So it’s not that different than a bank loan. I mean it is a bank loan, it’s just guaranteed by the SBA.

 

JT: What sort of info do you have to bring? I’ve worked with small business owners and they have, banks ask for a lot of information in general. So tell me some of the stuff that you help prepare in order to get small businesses to get their loan. Like what does an SBA loan or a regular bank want to see?

 

RC: I mean they want to see historical financials, historical tax returns. They want to see your business plan, see your budgets and see your projections. They want to see your personal net worth. I mean that’s a fraction of the stuff, especially with the SBA because it’s so highly government regulated. You have to fill out a bunch of applications. I mean it’s a lot of data. You’ve got to have your ducks in a row and have something pretty solid to sell. But strip all that away, if you don’t have the assets, you can spend all the time in the world doing all that stuff, it’s not going to get you anything anyway.

 

JT: That’s great. That’s sort of the thing, I mean that’s why you said if you cannot get a loan and just sort of bootstrap it on your own because the time and the amount of work it takes to go in to get all that stuff is pretty crazy.

 

RC: Again, I hang around with a lot of entrepreneurs. It’s, again, getting financing is the very rare exception to the normal rule of how people do it in the playbook and the normal playbook is they go out there and they go out there, they start selling stuff and they start getting traction and they prove their business and it goes from there and it’s that much easier to get financing, even VC money, if you can prove revenue. If you have a case for this is profitable, this is why it is proven, now get the funding.

 

JT: So let’s go back and talk about you because I mean you grew your business. I mean you guys have been around for 13 years. So how did you really prove it because you said you weren’t even profitable for a couple years because you had to hire people? How did you prove that you knew that this could work?

 

RC: Well realize I didn’t get financing. That’s part of the key. I bootstrapped it and that’s one of the things that I did in order to avoid that pressure is to say, “All right I’m going to bootstrap.” I mean I did get a bank loan when I got into my first office around 2002 and that was just to get furniture and computers for staff and cubicles and things like that. That was when I already had proof of concept. That was already in business for two years so I could get a bank loan to do that type of thing.

 

Again, if you’re looking for an unsecured loan for under $100,000, you could probably get it without asset based purchase, if you’re looking for a small micro loan type of thing. I mean those things are available if you’re in business for a couple of years and you’re in the right industry. Again some of the things I’m talking about is the space we deal with. Most of our clients are a little beyond the startup phase. They’re going to do a million or so in revenue at least up to about 50 to 100 million.

 

JT: So going back to you, so 2002 you’re starting to have cubicles and stuff like that, what do you know now that you sort of wish you knew way back then?

 

RC: What would I have known now? It’s a great question. I mean I guess the maturity factor would be the best thing that I didn’t have then. I mean it’s funny, one of my neighbors put it really well that the reason why you became an entrepreneur is because you’re too young to know you couldn’t do it. I think there’s a lot of validity to that but there’s a tradeoff too. I mean there’s relationships, the reason why I lost that big client I had initially was because of a fee dispute that I spent a lot of time and energy doing work for them over the weekend and the owner said well I do enough business with you, I don’t think I should have to pay this invoice, the one that I spent all weekend working on.

 

As a solopreneur, I was like wow that’s horrible. I spent X amount of hours, blah, blah, blah so I lost it, lost the client and it just was not a good thing to do. Not lost it temper wise. I just didn’t handle the situation well and long story short, the client terminated me and we said okay we’re not going to do any business with you anymore type of thing. From an integrity standpoint, yeah, he was wrong but as a client, if that situation occurred today, it would not be handled the same way just because if a client did a huge volume of business with us and they said I don’t feel I should pay this, I’ve already done enough business with you, there might be a discussion we had because they might be right.

 

So the maturity, I think it’s more than just the maturity which is tough to say go back and teach because I was young. I was in my 20s, it was fun, it was cool and made some stupid decisions.

 

JT: You can blame it on that, right? I was young, come on. How old were you when you started your business?

 

RC: I don’t even know. It was mid 20s; somewhere in that ballpark. I‘d have to do the math.

 

JT: That’s great. So how big are you guys now? Like how many employees do you have right now?

 

RC: We’re about a dozen employees and about 20 contractors and we’re definitely looking to hire. We’re looking for any CPA, a CPA at any level in the metropolitan Detroit area we’ll talk to you because we just have that much demand for what we’re doing right now.

 

JT: Really? Okay, it’s funny because you talk to a lot of small business owners and they’re sort of like we’re pinching pennies but you guys really see a lot of demand.

 

RC: Yeah, we’re paying a premium for people now because we want them. I mean we need them. I mean we just have so much activity because our marketing is really firing. Our activity and clients love us. I mean there’s not a real viable alternative to us in our space which is really good. So, in terms of finding talent, that’s our biggest challenge is finding talent which is a great problem to have because I’ve had the other side too.

 

JT: Yeah. So you’re only based in Michigan? You guys don’t do anything anywhere else in the U.S.?

 

RC: No, we do stuff out of market. We just need someone here though. So if someone wanted to interview for a job here out of state, that’s fine but they’d move here. What we need is local people here because there’s the contractor side of our business and the employee side of our business.

 

JT: So you can actually be a virtual CFO for anyone in the U.S. though? It’s not just your local area?

 

RC: Correct. We have large relationships out of state that we manage on a regular basis because, if you think of all the technology today between internet, phone, remote access, I mean it’s not very difficult to stay plugged into a client regardless of where their geographically located.

 

JT: Well that’s what it seems like. Now you don’t have to be face to face. I mean you can be face to face via Skype, you know what I mean, and we can share screens and we can deal with all that data back and forth pretty easy.

 

RC: Exactly.

 

JT: So is that why you sort of started in social media and stuff to sort of get out there a little bit more and tell me about how you guys are working social media.

 

RC: So we do a lot with social media. I’m active in LinkedIn, Facebook, Twitter. I blog. It’s just another component of giving back plus brand awareness. I mean it has mutual benefits from doing it. So it’s a matter of putting activity and letting people know what we’re about and what we’re working on and just throwing out, if you’re interested, we have great articles, great data. I mean just stuff on the blog. I put anything interesting I ever find out I put on the blog just so I have a place for it number one.

 

Number two so other business owners. I find out last year, again I’m a CPA/CFO. I have a CFO business that bouncing a check is a felony. I mean I had no idea that and the punishment associated with that. So just weird data points that you might never come across or what does a CFO make? What does a controller make? What does that look like for my budget? Why should I hire this person? I mean just random tidbits and data and information so people can get the flavor of what we do and get some of the value without actually hiring us.

 

JT: Excellent. That’s a great, I never knew that either. That’s something that most people need to know. That’s kind of crazy. So what do you think as far as social media, because I know a lot of people, especially I like talking to business owners who aren’t like social media gurus on what they’re doing so that way we sort of get an in the field view. What’s the best return or which social media platform like is LinkedIn the best for you or what do you feel like has really given you the best return?

 

RC: Well I’ll give the advice that someone gave me at one point. I would say if you’re looking for one to pick, pick the one that you’re most comfortable with and do it well. Now again we’re pretty young, energetic and entrepreneurial so we can manage multiple ones, multiple platforms but I would say for anybody out there that’s looking to get into it, just pick one and do it really well. I mean it almost doesn’t matter because they’re all the same concept if you stripped it. I mean it’s staying connected, offering activities and staying plugged in.

 

There’s different flavors and different spins and different tools and everything like that but for my experience anyway it has been just doing well. For us, LinkedIn has been great. To answer your specific question, LinkedIn has been a great resource because we’re in the finance and accounting space. Our biggest issue is finding talent. So, if that’s the case, LinkedIn is a great recruitment tool. It has got all the data points we need to be able to find people.

 

Now Twitter, that’s something else. I mean if you’re more of a marketing person, Twitter is probably more wired towards what you’re looking to do because you want that constant touch, feedback, this is what we’re doing, this is what’s going on, this is what’s current. This is what’s hip type of thing. I mean that’s just my take on it anyway.

 

JT: That’s really good to know. Yeah, LinkedIn is definitely a good tool. Do you guys get clients from LinkedIn too or do you mostly use it just to hire with?

 

RC: Great question and I can’t even give you an answer to that. The answer is probably. Most of our clients come from multiple touches so it’s not like someone picks up the yellow pages and say, “I need a CFO services. There’s DAS, let’s hire them.” They probably did research. They probably Googled. They probably did stuff so we’re searches optimized, we’re on the blog, we’re on LinkedIn/Facebook. So do we find people from those type of activities? Absolutely.

 

Now which one pushes them over the edge to actually pick up a phone and call us, you can’t know. I mean you really don’t because we’re just out there so much. I mean some prospects have bought the book. Some employees have bought the book. It’s all, it’s a big machine.

 

JT: Yeah, it all works together instead of being separate parts. That’s good though. Like you said, that’s multiple touch points which is what sort of sends them over the edge. If they looked your site up and only saw one thing and was like mmm, but if they can see you in a bunch of different places, that’s a really good thing too, which is hard for entrepreneurs, especially people that don’t have the budget to deal with social media or the time to really deal with it. So I really liked your advice on going pick one, you don’t have to be everywhere right this second but if you can pick one and then build on it, it makes a big difference. Great.

 

RC: Right.

 

JT: So what’s some resources, I mean you’ve been doing this for 13 years, what’s some resources or books or anything that you’ve done or used that really have helped your business?

 

RC: Well I always obviously recommend my book Profitpreneurship. Someone that’s not strong in finance and accounting, I think it’s a great book. I think the E version is less than $10. The paperback is $15. It’s all on Amazon. You can go to our website – DASPC.com to get it. It’s Doug Apple Sam Pie Cat dotcom or RenCarlton.com. Either website you can get to the book. But in terms of other resources and books, I mean there are entrepreneur groups out there.

 

I’m a member of EO which used to be YEO which is an entrepreneur peer to peer group which is a fantastic organization. I have been a member of that for about five years. I would highly recommend that. In terms of resources and books, I’m a geek. I absorb all those things. I mean there’s obviously eMyth, Good to Great, Built to Last all those books. Phenomenal data in theirs. I mean I can go on for hours and talk about books. I just devour them. I think that’s important though is being current and reading and just because all the data is out there. I mean anything you want to get answers and Google at this point. It’s just a matter of finding it.

 

JT: I think that’s what so kind of crazy though is separating books and the internet though because usually yeah you look up a question on Google you can find the answer. But like you said, there’s so much more data when you actually read a full book, a Good to Great or any of the books you mentioned. It’s kind of amazing to sort of get the full aspect picture and that’s why I think so many entrepreneurs that I interview love books too. Like are obsessed like I love books so much because they really give you a bigger, better, deeper picture than just Googling something or looking up an article or something like that.

 

RC: Right. I agree with that.

 

JT: Beautiful. So what, for the last question, is what is one action that listeners can take this week to move them forward towards their goal of a million?

 

RC: One of the things that I love to do is just do it. Just like the old Nike phrase. Just get out there and try something different. Be innovative. Be creative and I can’t tell you how many things have worked and have flopped quite frankly from just trying something and being out there. You can’t do a business by analysis. You can’t be in business by analysis. You can’t hide behind and I’m a finance guy saying this by the way, you can’t hide behind the spreadsheets. You can’t hide behind the plans.

 

At the end of the day, you got to go out there and do stuff. You got to try stuff. You have to tinker. You can’t develop this huge mastermind marketing sales plan without seeing does anybody want what you’re going to have to sell. We do that all the time with our services and throw things out there. The app is a perfect example. The app has a lot of work to be done but we have something that works on the iPhone that is functional and we give everything that we promise to deliver.

 

We tried it out. We did a press release. People talked about it. Got a little buzz on it. Not sure it’s worth to make the investment to get it ready to work on the droid or work on some other platform that is out there. It might not make sense. It might not make sense to make that investment but what I see a lot of entrepreneurs get caught up on is it’s so much easier to spend and make those investments rather than go out there and see if it makes sense.

 

JT: Like testing and actually going and trying it. Sorry and now I have a follow-up question. What about fear though? A lot of people won’t do it like you said, they’ll hide behind spreadsheets or they’ll hide behind the plan and go this is a good plan and keep reworking the plan. Well maybe it’s not good enough because they’re fearful. What tip do you have to overcome that fear?

 

RC: Fear is a very expensive trait to have. I mean it just, I have experienced. I’ve had tough times in my business. My head is screwed on very right at this point. It hasn’t always been in terms of getting caught up with. I mean there’s fear, there’s guilt. There’s all kinds of things but at the end of the day, it’s a dangerous emotion to deal with and you got to put it aside. If you don’t, it’ll kill you. I mean inactivity is the worst thing you can do in the business world. You got to be out there mixing it up.

 

JT: I love that. Fear is a very expensive trait to have. That’s perfect. I’ll have to quote you on that for everything. That’s amazing. So where can we find more about you and online, social media and your website?

 

RC: Well if you want the free content, which I have a ton of it out there, all you have to do is go to my personal website/blog and it’s RenCarlton.com one world. So it’s www.RenCarlton.com and that connects to everything else. So if you want to read about the stuff I’ve had, the blog, find out about the book, you want to hire us, I mean that’s a good center point. I mean we’re actually offering franchises and our goal is to open up satellite offices next year. So we’re pretty fired up about that.

 

So if any of those things interest you, I love talking to entrepreneurs whether it’s just you have a question on this or that or whatever or you just want to brainstorm about something, always more than happy to have a conversation off the clock to see is there something that’s going to point you in the right direction because again I love it, I breath it and it has been great to me so I love to give it back.

 

JT: Fabulous. That’s really great that you even will talk to people. A lot of the times people are worried that the people I interview, you know, are like they’re too busy. I can’t talk to them so that was really sweet to be able to offer that too. So thank you so much for coming on today. I really appreciate it and I know the listeners will get a ton out of it and I hope you have an amazing day, Ren. I’ll make sure to link up everything too to your website in the show notes so everybody listening make sure to take a look at that. Thank you so much for coming on, Ren.

 

RC: Well thanks for having me, I enjoyed it.

 

Just to note, you can download the Top 10 tips from these millionaire interviews on the blog.

 

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