0 (2s):
Who's ready to rock today, Fire Nation? JLD here and welcome to Entrepreneurs on Fire brought to you by the HubSpot Podcast Network with great shows like Being A Boss. Today we'll be breaking down managing your money. To drop these value bombs, I have brought Robert Gauvreau into EOFire Studios. Robert is the founder of Gauvreau: Accounting, Tax, Law & Advisory, an eight figure professional services firm, working exclusively with entrepreneurs to save tax, make more money, and build wealth. And we'll talk about the most common financial mistakes that entrepreneurs are making. Today, Fire Nation, we'll talk about cash flow, we'll talk about paying too much in tax and why that's so painful and the long term goal of every business owner.

0 (46s):
We'll talk about that and how to achieve it and so much more.

Shopify (50s):
And a big thank you to sponsoring today's episode goes to Robert and our sponsors. Now that is a sound I like to hear. It's another sale on Shopify and right now you can sign up for a $1 per month trial period at shopify.com/onfire, all lowercase. Go to shopify.com/onfire to take your e-commerce business to new heights.

Marketing Made Simple (1m 12s):
Marketing Made Simple hosted by Dr. JJ Peterson is brought to you by the HubSpot Podcast Network. The audio destination for business professionals marketing made simple brings you practical tips to make your marketing work. In a recent episode, Amy Porterfield shared her five email Marketing Secrets for long-term business growth. Listen to marketing Made Simple. Wherever you get your podcasts,

0 (1m 33s):
Robert, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with.

1 (1m 42s):
Good morning, Fire Nation. Absolutely, one thing that people will probably challenge for me is that making money is the most important thing that you can focus on in order to get the results you're looking for in your business.

0 (1m 57s):
A leaky bucket never gets filled with Water Fire Nation, something we'll be talking about today when it comes to managing your money. Now, Robert, as you know, Fire Nation are entrepreneurs, small business owners and we make lots of mistakes. But what are the most common financial mistakes you see entrepreneurs make?

1 (2m 16s):
Well, I would say the biggest mistake, which is easy to fix, is that people don't have optics in their business, financial optics of how their business is performing. And I like to think of this as going to maybe a basketball game where, you know, there's lots of moving parts, the score is really high, there's lots of shots taken. If you were to enter into a stadium, you know, 15 minutes late for a game and you were to look up and see that there's no scoreboard there, how would you know what's going on in the game? Who's winning, who's losing, and what the right strategy is for the team to win the game? And I feel it's the exact same for small business owners. So many of us, me being one of them as a small business owner, don't have financial optics in our business.

1 (2m 60s):
And if we don't have financial optics, we don't know how to win the game. We don't know how to be financially successful, we don't know what strategy to implement right now so that we can realize that financial freedom we're looking for. So that would be probably number one. And then, you know, I could probably, I could go down the line with a, a whole bunch more. I would think paying too much tax is a big problem because it's wasted money, mismanaging cash flow, huge issues inside businesses and, and if we're happy to dive into those, I'd love to share a little bit more.

0 (3m 37s):
Yeah, share a little bit more because I really think this is the kind of stuff that our listeners need to

1 (3m 42s):
Hear. Absolutely. So let's start with cashflow, right? Because you know, I'm predominantly a, a cpa, I've got 80 employees, we work with just entrepreneurs alone, right? It's our focus, our market. One of the biggest questions I get every single year is, well Bob, this is great, you're showing me that I made a hundred thousand dollars or 60 or 500,000 or a million dollars, whatever that is, but we don't have any money left. So we're really confused as to, you know, what has happened to that money. So profit is not equal to cash flow and it's a huge challenge for a lot of business owners is the mismanagement of cash flow.

1 (4m 24s):
Now there's a lot of, like you said, as we kick this off the leaky bucket, right? We can have profit of a couple hundred thousand dollars and still run out of cash and 82%, 82% of business owners are on a cash flow basis of week to week oof making payroll, right? It's terrifying. And, and we, I worked with Tony Robbins for a few years at his Business Mastery events and we really focused on cash flow. Now I'll give you maybe five tips for the small business owner, the entrepreneur, to rectify maybe some of their cash management issues. Number one is stop taking all the money out of your business.

1 (5m 7s):
I know as business owners it seems great, you know, we might be collecting a whole bunch of cash upfront. You know, you think of gift cards or deposits upfront for work that we're gonna deliver in the future. And we look at our bank balance and we think this isn't that great, this is all our money. But we essentially, when we go to deliver those services, there's costs associated with it. If that money is gone, we get into cash flow issues. So stop pulling all of the money out. Let's focus on a long-term plan to reinvest in our business. The second major cash flow issue that I always see inside a business is that individuals go and they, when they do have cash in their business, they go and they reinvest in equipment, they take it right out of their cash flow or vehicles.

1 (5m 52s):
How many business owners have we talked to who said, oh, I just paid cash for my truck or my car this year. And you go, well that's great, but that's all of your operating cash flow. Why don't we, instead of doing that, which is a silly thing to do, why don't we finance the vehicle or lease the vehicle, keep all that cash inside our business to reinvest instead of drawing it all out for this asset. And yes, we have to pay a little bit of interest when we when we focus on that, but what this allows us to do is when we have this equipment or this vehicle and we're using it for business purposes, it's generating revenue for us in the future, that income can pay for itself instead of taking all of our cash out of our business right now and spending it on investing in those assets.

1 (6m 42s):
So I would say those are two big ones. The last one, and this one always drives me crazy and I've never been great at it, is going after people who owe you money or eliminating the transaction that allows you to deliver a product or service for your customers without getting paid, at least at time of delivery. So one of the focuses for small business owners needs to be how do we push that cash transaction value from after delivery to way before? So we're collecting money upfront. That will be a huge influence in positive cash flow in your business fire

0 (7m 16s):
Nation. There's some really important things you need to be really thinking about with everything that Robert's sharing here. And I love that first sentence that he started off with is that profit is not equal to cash flow. I mean we really need to hammer that through our skulls that profits is not equal to cash flow. So we really need to think about that and understands the functionality of what it is to run a successful business. Now Robert, I lived in California for a stretch, so I'm well aware that paying too much tax is a big issue. I mean, I'm one of those people that was making seven figures a year, also paying seven figures and taxes a year.

0 (7m 57s):
So at the end of the year I was looking at my bank out saying, where'd all the money go? So let's talk about some strategies to ensure Fire Nation is paying the least amount of tax legally possible without of course just doing what I did up and moving to Puerto Rico in 2016.

1 (8m 14s):
Although that is a great job, John. Like I can appreciate that move for sure. I can focus on some strategies that again, Fire Nation can implement now to make sure we're paying the least amount of tax possible. But although I completely agree and I, my focus and my profession is built around the idea of paying the least amount of tax, I want to maybe just deal with one misconception before I jump into that. Because a lot of people will come to me during the year and say, Bob, what is it that I need to spend money on right now in order to save the most amount of tax? And typically as a joke or, well probably true in most cases, I say, spend it on me, right?

1 (8m 57s):
If you wanna give me $10,000 to give you a really good strategy, great, I can definitely save you a lot of money. Spend it on something that is necessary though, because I think a lot of people look at it and go, what do we spend money on right now? So we're not paying taxes, but let me just do a quick calculation for you. In North America, not in Puerto Rico, cuz John's smarter than all of us, but in, in North America our tax rates are somewhere between 12. And if we include personal, let's say 55% tax, okay? So for every, let's use 50% just as an easy calculation for every a hundred dollars that we have and we say we wanna spend it to save tax, we're going to save $50.

1 (9m 40s):
So if we're spending something just to spend money, we're saving 50 and we're out 50. So we started with with a hundred dollars and we're left with $50 because we're just saving that tax money, but we've wasted it. So why not invest that money on something that is going to help grow our business, spend it on marketing. You know, if we're gonna spend a hundred dollars on marketing, we're gonna get the tax deduction, but it's gonna help us build and create more income in the future. So what I don't wanna see is people are just spending frivolous dollars just for a tax deduction. It's gotta be for a business purpose, otherwise we pay the tax as necessary.

1 (10m 21s):
But there's ways to get that lower and that's what I wanna share with you guys right now. So couple ideas, this is my favorite one. If you have kids pay those kids, they deserve to be on payroll. Oh yeah. And right, so one of the things that we focus on, you know, I've got a 14 year old and a 12 year old and they're on payroll and how are they on payroll? Well, they're being paid a reasonable wage for reasonable work in exchange. Now I pay them about $12,000 a year strategically why my business gets a full deduction for that payment. So that's $24,000, I get a full tax expense.

1 (11m 1s):
But because their personal tax rates are below the exemption, they don't pay any tax on that either. So that is a 100% complete deduction. We do have to make a business case that they are providing value and and equal exchange value to the business in order to put them in there. But I think that's an easy argument for us, right? Our kids can push brooms, they can, they probably know social media more than any of us do. I know my daughter is a master on TikTok, so let's make sure that we're paying them, we're getting that deduction and they're not paying any tax. I think that's a, an easy quick win for so many people. A second maybe component is looking at strategic timing.

1 (11m 44s):
So for example, let's say our we're paying tax on a calendar year and we've got some equipment or some repairs and maintenance that we, we have to incur in the next six months. Strategic timing says let's pay for that in December. So we pay for it in December. We get access to the tax deduction now as oPodopolosed to a whole year from now. So timing in how we invest in our expenses or in our equipment or reinvesting back in our business, that timing can really save us a lot of tax money upfront. And then maybe the third one, cuz I want to give you three, is to look at bonuses.

1 (12m 24s):
So for you as an individual and maybe any of those family members, we're allowed to issue bonuses during one tax year and pay out those bonuses in a subsequent tax year. And I know specifically in Canada, if you're a Canadian entrepreneur and it's very similar in the us, if we declare a bonus for our December 31st, we get access to that full deduction, then we don't have to pay out that bonus until June 30th the following year. So it gives us a really great upfront deduction, saves us a whole bunch of tax money and we deal with the the payout of that in a future period.

0 (12m 58s):
Fire Nation, I hope you're taking notes, I'm over here typing away because this is some critical things that we need to know as owners, as entrepreneurs. Because if we're gonna work hard, let's also work smart when it comes to keeping the money that we make. And we have a lot of things to talk about around this topic when we get back from thanking our sponsors.

Shopify (13m 21s):
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Shopify (14m 5s):
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Hubspot (14m 21s):
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0 (14m 51s):
Bob, we're back. And this is definitely something that you and I both resonate on because a lot of people say they wanna have a bigger impact on this world. Okay, that's awesome. And you and myself as well believe that making money needs to be our number one priority if our true purpose is to maximize impact because more money allows for more reinvestment and growing and of course helping more people. So share some of these top tips that Fire Nation can implement to help us make more money.

1 (15m 24s):
Absolutely. And you know, I think it is a very key topic and and that's how I essentially kicked off. You know, what's one thing that people disagree with more than anything? And I would say that the primary focus needs to be making money, right? If we don't have a financially viable business, then there's no way for us to grow it. There's no way for us to engage more team members, impact more employees' lives, deliver more services to new people, expand globally, have a greater impact on the world. If we don't have a viable business option, then we can't reinvest in that. So the goal is to continue to maximize that income.

1 (16m 5s):
So here's one way that we can definitely maximize the income and I'll, I'll once again, I'll give you three. My favorite is looking at our pricing and our pricing strategy in our business. The reason pricing strategy is the most important element for me in maximizing our profits is that when we increase our prices for our consumers, for our services, our goods, there's no extra cost that goes into that when we increase our prices. So what happens? We sell something for a hundred dollars, it costs us 50, we've got a profit of $50, we can reinvest that $50, but if we sell it for 110, we actually have $60 a profit.

1 (16m 48s):
So not only we're we're just doing a 10% increase, but it's a 20% increase in our profitability, which is huge, right? So the number one thing we need to focus on is our pricing and getting it right. And I think Dan Kennedy says, raise your prices as high as you can without cracking a smile, right? We wanna be able to push prices up where people still feel like they're getting a more value in exchange, but we don't wanna underprice ourselves because that restricts our ability to impact the world globally, right? In what we do and how we offer it. Two other areas that I want to focus on for maximizing the profits in our business and really in our lives.

1 (17m 30s):
We can incorporate these into our lives too. There's two types of costs that we have in our life. One is considered like a cost of good cost of delivery. I call them direct costs. So for every dollar of revenue that you're generating inside your business, you have costs to deliver that. So one of the of the ideas would be, of course, pricing helps increase our profits, but if we can find ways to decrease our costs of delivery, we can also maximize our income. So here's a couple ideas for you right now. Obviously we're in a time where there's last few years have been crazy economically. There's opportunity here to leverage our relationships with our suppliers.

1 (18m 14s):
Everyone should go out and ask for reduced pricing. Here's an example, contractor, electrician, right? We go in and we get materials to install the electrical for a new house and we go back to our supplier and we say, listen, we're gonna be here for the long term. In actual case, we're gonna expand our business and our investment in supporting you. In exchange for that, we want to get a better pricing. And right now, because the suppliers are all fighting for that limited business that's there and they're watching some of their customers sort of fade off. Not this community though, but we're watching some of those customers fade off. We now have more power in that relationship, especially when we start talking about how much money we're going to make them in the future.

1 (19m 0s):
So by getting decreased pricing, we are going to increase our profitability on delivering all those jobs. Other items that are in there, you know, costs, costs of delivery are labor costs. How do we continue to create more efficiency in our labor? Is it creating better systems? Is it more performance incentives, but really looking at decreasing the costs of delivery are massive. The other area that we need to touch on is those fixed expenses. So those are the items that don't really change month-to-month. If we have a million dollar revenue business or a $2 million revenue business, the fixed expenses are the same.

1 (19m 41s):
So we're talking about rent, insurance, dues and subscriptions. Anything that's fixed on a month-to-month basis. And I can tell you embarrassingly enough, as a financial professional, I have had dues and subscriptions that are sitting in my business that I'm not using. Right? Apple and other companies who are, who get us on memberships, it's easy and it's a great business model if you are selling right? I have memberships and subscriptions. It's great because people have to consciously, consciously reduce those membership costs. I've had multiple CRM platforms in my business that I continue to pay for and I'm not using. So we need to review those fixed expenses in our business, in our life, anything that we're spending money on that we don't use, we need to eliminate it.

1 (20m 28s):
That goes straight to our bottom line and allows us to reinvest in growing and impacting more people.

0 (20m 34s):
All right? I mean, Fire Nation, this has just been so much value throughout this entire episode and I really wanna end with a bang because this is for sure. I mean, having interviewed over 3,700 entrepreneurs now, I know that the long term goal of almost every business owner, of almost every entrepreneur is to achieve financial freedom. Cause once you have that, then the sky's the limit. Then the world is your oyster. How do we get that process started? Bring us home, Robert.

1 (21m 1s):
Absolutely. This is one of my favorite topics because this financial freedom is essentially what most people are looking for, right? We wanna make sure that we maximize our impact, but we want to make sure that we get financial freedom, financial freedom, meaning that we no longer have to worry about money because our income that's coming in is supporting our lifestyle, right? So let's all get there. Here is the number one tip that essentially everybody needs to put in place. We need to talk about creating an automated savings plan. Now, I want to say there's lots of different types of investments out there. I love real estate, I love stocks, I love a ton of different investments, insurance products, different funds, index funds, right?

1 (21m 46s):
I love those different elements and everybody's gotta find their their right fit and right portfolio balance. But in order to get there, we have to alleviate the funds. So aside from our business, maximizing our profits, which I think we already talked about, what we want to do once we have those profits going is we wanna automate a savings plan. Now, what does this mean? This means that in our business, every single week we know that we have a little bit of a surplus that comes in there. For some people it might be $10,000 a week. For some people it might be a hundred dollars a week. Instead of leaving those funds in our account, in our personal account, inside our business account.

1 (22m 25s):
Psychology of spending says if it's there, we will spend it, especially around the holiday season and those types and times of year, we wanna make sure that that money gets out so that we don't see it as available to spend. So let's set up an automated savings plan. We can set it up through a Quest trade. A well simple. You can have a broker or an investment advisor pull money directly from your account on a weekly basis, which starts snowballing, compounding, and creating wealth. Even if you start with a hundred dollars a week, which would be $5,200 a year, you'll be shocked at how, how quickly that continues to add up and grow.

1 (23m 5s):
Now, why do I love this so much? One, we are the biggest obstacle in our own way of starting to build that wealth. So when this can happen without us having to do a transfer, it happens automatically. We get out of the way, we get out of our own way and we start building that wealth. Second, once we get that into a savings plan, once we accumulate enough, that can be a deposit for real estate. It can be choosing different stocks at strategic timing. It can all go to an investor, whatever is the best fit for you. But what happens is once this is automated and we continue to reinvest in this, we start building passive investment income from those investments that support our lifestyle.

1 (23m 48s):
And once we get to the high enough point, that's when we achieve financial freedom. Start small and get big.

0 (23m 56s):
Robert, I want Fire Nation to connect with you to learn more from you. Give us a call to action you have for our listeners here today, the best ways to connect and then we'll say goodbye.

1 (24m 6s):
Absolutely. And this has been an absolute pleasure. I love supporting entrepreneurs. Yes, feel free to reach out to us on our website, gauvreaucpa.ca. Would love to connect with you guys, follow us on Instagram, Facebook, however you want to connect. We're there and we love working with entrepreneurs and maximizing that impact and creating financial freedom for business owners.

0 (24m 31s):
Fire Nation, you're the average of the five people you spend the most time with. You've been hanging out with RG and JLD today, so keep up that heat. If you have any direct questions for Robert, find this episode on the podcast listening app. Podopolo post a comment, ask a question, get the conversation rolling. That's Podopolo, and of course the show notes page will have everything you need links wise. Robert, thank you for sharing your truth, knowledge, value with Fire Nation. For that, we salute you and will catch you. On the flip side, hey, Fire Nation, the huge thank you to our sponsors and Robert for sponsoring today's episode in Fire Nation. Are you ready to rock your very own podcast?

0 (25m 11s):
Check out our free podcasting course where I will teach you how to create and launch your podcast for free. freepodcastcourse.com. freepodcastcourse.com. I'll catch you there or on the flip side

Shopify (25m 26s):
. Now that is a sound I like to hear. It's another sale on Shopify and right now you can sign up for a $1 per month trial period at shopify.com/onfire. All lowercase. Go to shopify.com/onfire to take your e-commerce business to new heights.

Marketing Made Simple (25m 42s):
Marketing Made Simple hosted by Dr. JJ Peterson is brought to you by the HubSpot Podcast Network. The audio destination for business professionals marketing made simple brings you practical tips to make your marketing work. In a recent episode, Amy Porterfield shared her five email marketing secrets for long-term business growth. Listen to marketing Made Simple wherever you get your podcasts.