Faisal Hassan, Author at Automate Your Follow Up | Close More Business

Best Record Keeping Practices for your Business

Private business owners often analyze their financial statements only when it’s time to prepare taxes. However, there is a lot to be gained from monitoring your numbers more regularly and even getting professional input for better results. In this episode, we talk about keeping an eye on the numbers, best record-keeping practices, and the role of a CPA as your trusted advisor.

Today, we are joined by Richard Lindsey, CPA, from Lindsey & Waldo, LLC in Mobile, Alabama.
He has been a CPA for about 26 years, and his focus is primarily on small businesses and individuals; helping them with financial statements, payroll management, tax planning, and tax returns.

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Best Practices in Record Keeping – You will hear about:

The difference between an accountant and a CPA.
Working with a CPA across state lines.
Who is responsible for recording daily transactions?
Bookkeeping systems: some pros and cons of online solutions.
How to share data with your accountant.
Profit, cash flow, and revenue: the similarities and differences in these financial terms.
How a profitable business could end up with a cash crunch.
Using financial statements to determine the right pricing model.

So, Let’s get started.

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Appreciation for Hans Hegge

“Hans has a brilliant mind for business. He always seems to be thinking ahead of “what’s next” and helping look at the whole picture all along the way. His planning and processes are a huge time and cost saver and the way he approaches complex situations is remarkable.” ~ Paul Chambers

The Dirty Details of Flipping Homes: Drugs, Broken Doors, and SWAT Teams

Merry Christmas From The SWAT Team

Flipping homes can make you good money, but nobody ever talks about the nightmares that come with it. It was Christmas Eve of 2006. I was spending time with my family drinking and enjoying the holiday. We were laughing together and Santa showed up to entertain the kids. Suddenly I got a call on the phone that I will always remember. I stepped away from my family for a moment when I heard yelling in the background on the other line as a gruff voice asked, “Are you the owner of 123 Main Street?” “Yes,” I answered, alarmed, “I am. Is there a problem?” The gruff voice identified himself, “This is the Michigan state SWAT team.”

My stomach sank. Suddenly I felt sick. The gruff voice continued, “Well sir, we’re here at your apartment building because somebody just got out of jail and he’s held up in your apartment building. There have been lots of shots fired and we had to kick in three doors, hold on! Hold on!” He then put me on hold for what felt like two to three minutes. All I could hear was yelling in the background on the other line with an occasional gunshot. He comes back on the line, takes a breath, and says, “More like five or six doors were kicked in, and two windows are broken. You’ve got to get over here and fix these up tonight.”

It was the night before Christmas and I was out of town Flipping homes and visiting family. How was I supposed to get over there that night? I said to the man on the SWAT team on the other line, “You guys are the ones that kicked them in. Why don’t you fix them?” He laughed. “That’s not our responsibility. That’s your problem.”

When You’re An Entrepreneur, You Need Friends On your Side

I called a friend of mine in the area who always helps me with fixing things around my units. I said on the phone, “I know you’re busy with family and it’s Christmas Eve.” He replied, “No actually I’m just sitting here doing nothing, drinking a beer.” I explained to him what happened and asked him if he was able to go over to the units, screw in some doors, and put some plywood over the windows until the next day when we could figure out what to do. “Can you help me put a bandaid on this thing until tomorrow?” He did and I was able to come over the days following.

To think that a dozen bulletproof vest-clad SWAT team members had marched over to one of my properties was nuts. When I was over there I could see the dents in the building where bullets had hit the brick and holes in the drywall. The place was trashed. It cost me at least $5000 to fix everything. It had to come out of pocket because the jailed gunman didn’t volunteer to put up any cash to pay for the damages.

The Savvy Entrepreneur

In another town where I invested in Flipping homes, I had a tenant named George who was remarkably savvy. He had a bunch of small odds n’ ends types of businesses. He set up his own garbage route. In this town, each home had to pay for its garbage to be taken. There were two or three main companies that did it. George got two or three of his friends to drive around in a pickup truck and pick up the garbage. He never got out of the car. He’d drive around and his friends would put the garbage in the back. He created a route and count how many properties he had. Then he’d charge us and his rates were always a little bit lower than his competition. We actually hired him for a couple of years.

He had another business with cell phones. Remember when you had to pay for a certain amount of minutes each month and for a certain amount of text messages? If you went over your minutes, you’d get the bill at the end of the month. You could either pay for a refill on your minutes or you could just call after 9 pm free of charge.

George had a business that helped the people in his neighborhood cut costs on cell phones. He’d given them walkie-talkies and they’d use them to call George who had hired someone to use the cell phones to deliver the message. He charged a fee to neighborhood members who used his service. I thought that was so creative.

Everyone really respected George in that neighborhood. Whenever you went to his house, there were always ten to twelve people there. When you’d leave his home, everyone was very respectful and cordial to you just because of your association with George.

Buying Property and Flipping Houses: How I Overcame College Boredom

I went to college in Detroit Michigan in 1999. Imagine a kid who was fascinated with the stock market and the finance industry. I started to develop a taste for owning property and soon became disillusioned with sitting at my desk in my business classes, listening to professors day after day. During my college courses, I often found myself planning out my next move. I’d soon invest in an FHA loan from the bank and buy my first few properties. Sure, I was young, but I was excited about getting started on this new entrepreneurial adventure where I’d soon make a lot more cash than the students with whom I went to school. They spent their days working part-time jobs or doing what they could to make ends meet, including just getting funded by their parents.

Property Flipping Taught Me More Than Books

While my friends and classmates studied, I’d visit my properties and learn what I needed to do to be an effective manager. I soon learned that as the money was flowing in, much of it needed to flow out to cover expenses that came with property management. At twenty years old, I was figuring out how to fix appliances like furnaces that had gone out in the winter or pipes that had frozen. I learned a lot on the fly and that ability to roll with the punches helped me immeasurably.

Without a mentor growing up or entrepreneurial parents, I didn’t have the upbringing that allowed for financial frivolousness and lavish spending. I came from a hard-working family. My grandparents were farmers who immigrated to the United States. I started working in the tenth grade and I never stopped. I know how to roll up my sleeves and learn things by doing. I’ve learned to work hard and take responsibility for my effort, however, a mentor was never part of the equation.

Don’t Limit Yourself: Age Doesn’t Matter

It was 2006 and I was twenty-five years old. I had about $25,000 coming in each month from my properties and $1.5 million dollars in equity. Sometimes I’d buy two to four properties at once, fix them up and sell them directly to new owners. I’d take the money I made and put it right back into buying the next property and doing it again.

I’ve learned that people limit themselves by their comfort. Say you’re working fifty hours and then you have to work another ten. In six to nine months, sixty hours is your new normal. You create your own comfort levels. I learned that without passion, working feels like work and you won’t want to do it. I’ve learned that passion is the key to success. And then came the Great Recession of 2008.

Thinking Bigger: Double Your Success

I recently went on a vacation during spring break to Florida with a friend and his business partner Thinking bigger. They rented an amazing house on the ocean. The house was 8,000 square feet, had 8 bedrooms, 7 1/2 bathrooms, and an infinity pool. It was right on the ocean with surround sound speakers and climate control for every single room. It was an absolutely stunning place.

When we were there, the three women would go out and exercise in the morning. The three dads stayed back to fix breakfast for all the kids. When the ladies returned, it would be our turn to go exercise. We would start off with a run on the beach for two miles, which, if you’ve ever had a run on sand, is almost impossible to do. In between, we would do pushups.

Lesson Number One In Thinking Bigger

I dropped down to do pushups. I was going to do my normal set of 20. My friend ended up continuing his pushups even after I’d stood up. “How many are you doing?” I said. He answered, “40.” I said, “Okay. There we go. I gotta do more.”

We continue to run about another half mile down the beach, and then we make a left. We start running away from the water and I look over. It’s a gated community of all single-story ranch houses in a retirement community. I said, “How great would it have been in 2008 to have the extra capital to buy some of these?” He said, “You mean buy some of these subdivisions? Or the land to build a subdivision?” I said, “No. To buy one of these houses and rent it out.” There was lesson two in thinking bigger.

As we jogged up, we made a left on the main drag. We started heading back toward our compound, which was another two miles. In between there, we stopped and did three more sets of pushups, of which I still only did 20 and he did 40, until the last set, which he couldn’t do. I need to think bigger.

Think: When You Have An Idea, How Can You Double It?

I didn’t realize it at the time but what I thought was thinking big just got doubled. So I am going to start to think bigger and challenge myself that when I think I have an idea, how can I double that? What’s also funny is his wife, who when every time he brings up something, always says, “Add a zero. Add a zero.” This makes total sense.

How could my other businesses in the past have been bigger and better? If I were able to double what we were doing and add a zero, we would’ve grown much bigger. Instead of a $ 79-a-month subscription to the last company we had, what if it was $790 a month?

Going forward, I’m going to challenge myself to think bigger.

Who do you have in your life who challenges you to think bigger?

Learning About Stocks: My Nephews Stock Pics

Earning Money As A Child

Over the weekend, I had my family stocks come in from out of town and they spent a week with us. My nephew made the Junior Olympics and was out in Colorado for two weeks before that. It costs a lot of money to ski, and so we sent him a check as a “donation” to help him get out there and to pay for the runs and the lift tickets and the entry fee and everything else.

His dad, my brother-in-law, said that he wanted Aiden to work off the money that we gave him. When he came down, Aiden thought I was going to give him physical labor to do. I said, “Nope. You’re coming to the office and we’re going to talk stocks.” Which he was totally confused by, which just made it all the more awesome.

Learning About Stocks

When I was younger, I think in sixth or seventh grade, my uncle gave me a little blue book that would come out monthly that had every single ticker symbol, the volume of shares, price, yield, dividend, and all the stats in the book. I would go through them one by one and I would have to find certain companies based on the parameters he gave us. One of the parameters he gave us was to look for a low PE ratio, that’s a price-to-earnings ratio and a high yield.

The PE ratio is the ratio of a company’s stock price to the company’s earnings per share. The PE ratio is used in valuing companies. The average PE of the market varies in relation to the predicted growth in earnings, the expected stability of those rising (or falling) earnings, inflation, and yields of competitor investments. Yield is the quotient of earnings per share divided by the share price. It is the reciprocal of the PE ratio. This number can be used to compare the earnings of a stock, sector, or the whole market.

He would then use our picks and evaluate them to see if he wanted to purchase the companies. We would find usually a dozen.

Teaching My Nephew The Way That I Learned stocks

I thought, let’s do the exact same exercise with Aiden. I first instructed him to, “Go buy Barron’s paper and a Wall Street Journal.” Come to find out, Wall Street Journals no longer put the ticker symbols in there on there, at least in this daily version. Maybe on the weekends, they do. Luckily, he bought a Barron’s and it had the New York Stock Exchange in there along with the NASDAQ.

He went through and picked out 24 companies that had high yields and low PE ratios. All the PE ratios had to be around 10 and all the yields were over 8%. What we’re looking for here is not growth companies. We’re looking for was the opposite. Low-growth companies pay out a large percentage of their earnings.

POST HERE

The Unexpected Outcome of My Nephew’s Research

My initial thought was we were going to get a lot of oil companies or finance companies or we close-end funds. Closed-end funds I want to stay away from. We were going to get energy companies and real estate companies too, that was my guess. Of the 24 he came back to me with, he decided to pick six of them and narrow it down. See the stocks that he picked here. The different colors represent the different industries.

Building stocks Exposure For The Next Generation

To make it interesting, I said, “Aiden, what happens if we opened up an account, a brokerage account? We’re not going to mention any names. I wrote a check and we put money into each one of those. You could track it on a daily, or weekly basis. It’s up to you to decide when to sell and when to buy. Oh, by the way, if you want to throw Nike and Under Armour and Snap Chat in there you can, some of these other companies that resonate with you, please do that.” I told him we’d split the profits 50/50 but he has to manage the portfolio.

My goal with all of this is just to build exposure for him. I also turned around and recommended he read Rich Dad Poor Dad, which was, as you can see in some other blog posts, the jumping-off-the-cliff book that I read, but not until my senior year in high school.

Are You Pivoting On Technology Or The Market

Great Ideas Come From An Inflection Point In Technology

Andy Rachleff was a big hedge fund guy that helped start Benchmark Capital. If you’re in the startup scene, Benchmark Capital will not mean a lot to you. But Benchmark went on to fund Uber, Snap, eBay, Juniper Networks, and many more. I felt compelled to write this post after I listened to the podcast. In fact, I listened twice. He said something that I found very interesting. He was talking about startups and positioning and how most people do things backward. Most people sit around and look at an industry and try to find the holes or the problems in that industry and then build solutions around that. Andy says, “Great ideas come from an inflection point in technology.”

He says, “You should start with the technology or the product and then figure out people or industries or markets that need it. That crave it.” Once you think you found the market, he says, “Start with and define the value hypothesis before you define the growth hypothesis.

Three questions: What, Who, and How?

So what is a value hypothesis? Three questions: What, who, and how? So what are you going to build? Who is desperate for it? How will it be delivered? In other words, what is the business model? There are two key tests you may want to put your business through in order to ensure the greatest potential outcome of success. What are the value hypothesis and the growth hypothesis?

The value hypothesis tests how much value the product brings to customers. For example, if the function of a product is antiquated, the value of that product is diminished. This test should be performed early in the stages of the development of your business model.

The growth hypothesis tests how your customers find your product. These are your distribution channels and in some cases your advertising channels. This test should be performed frequently. Be sure to perform this test only after your value hypothesis.

Most people think to pivot or iterate on the product, not the market. So they say, “This is the market. We’re going into this market. But the product’s just not right. Keep iterating and pivoting on the product, the product, the product.” He says, “That is wrong. Stick with the product, stick with the technology. Find a different market until you find a fit.”

Pivot On The Market: Make Your Big Bang

Now that I look back on that, one company that I did sell, when we started it, we only focused on the technology and we fell into the market. Which at that time were restaurants and bars that then expanded into salons. But when we were first developing it, we just focused on the technology. So we must’ve got that right by mistake.

He goes on to say that the number one question when you’re talking product market fit is this question. “What do you uniquely offer? What do you uniquely offer that people are desperate for? And if people are not desperate for it, it will not be or it will not have a big bang.”

I mainly wrote this post for myself so I can look back and stay focused on this and on some of the new projects we are working on. I will keep you guys posted on how it goes.

The Passionate Business Owner Vs. Cutting Corners

The Difference Between Cutting Corners & Streamlining Your Business

I have worked in the past with a lot of different business owners from the financial industry, to restaurants, and salons, to retail. You can really tell the difference between business owners that started because they’re passionate about the business. You can also spot business owners who go into it because they think that there’s money in it. I’ve met a lot of business owners that go into it because they think there’s money involved just to figure out how to cut corners and streamline their business.

There’s a huge difference between cutting corners and streamlining your business. I look at some of my current clients that I have and streamlining operations is critical to scaling and getting larger, but Passionate does not cut corners then I look at some of them that are all about cutting corners and they call it streamlining. I think the big difference between cutting corners and streamlining is your client’s best interest, your own laziness, and productivity.

Don’t Cut Corners Unless You Want To Cut Passionate Customers

Let’s take each of those. If you look at laziness, there are people that say I just want to be as hands-off as much as possible. They’re even willing to cut corners to put less work on themselves, which does not get the end result for their client or customer. If we look at productivity, it is okay to dissect your operations to make them streamlined and more productive for yourself and also for your customer base.

Whether that’s your marketing, or that’s your ordering, or that’s your workflow for each individual client, that is a win-win for both sides. But you should do it without focusing so much on yourself and instead using the lens of investing more time in an effort to perfect the end product or service. You should make it with the lens that your customers will get a better outcome because of the changes that you can make. Don’t cut corners unless you want to cut customers.

Innovating A Non-Tech Industry: Brainstorming Business Ideas

The Right Idea For The Right Industry

I’ve been looking for my next business move and/or companies to start. I’ve brainstormed a few ideas about the industry. In fact, I was sitting down with a co-worker a few months ago and he asked why I had not made a move yet. He said, “Is it time? Is it money?” I said, “Nope. It’s the idea. I have not found the right idea. I’m much more cautious now after failing and having picked the wrong partners in the past.”

Innovating An Age Old Industry

I listen to a lot of podcasts and I read a lot of books through Audible. You know this from reading my blog. Finding a need has become more and more apparent in the success of innovating a market and revolutionizing an arena to which we are already accustomed. that I have or finding an industry that is old that has not had a lot of technology. I heard a podcast by Tim Ferriss. He spoke with a guest named Adam Robinson about the ball bearings industry. That got me thinking about other very old industries.

Take a look at Uber and Lyft. The taxi industry hasn’t changed in 50 or 60 years. Then Uber and Lyft came in and just flipped them upside down. Even in the music industry, you used to have to buy physical CDs or go to concerts to hear the music. Now you have Pandora and you have YouTube. What industry is like that? I think about making pencils or making sewing machines or what other very industrial non-competitive markets are still open.

Fulfilling A Need Is Key

To summarize, it comes down to those two needs. Either the needs that I have or what is very old school and in a non-tech industry and could be advanced by technology.

Going back to my co-worker, I just haven’t found the right idea and I’m much more cautious with the partners that I choose. That’s why I have not yet started a new company.