In this episode of Selling on Giants: The eCommerce Marketplace Show, the guest speaker is Nathan Hirsch, Nathan Hirsch is a lifelong entrepreneur and focuses on the unsexy or boring parts of entrepreneurship (bookkeeping and hiring). He is currently the owner of EcomBalance/AccountsBalance and Outsource School. Nathan is best known for co-founding FreeUp.net in 2015 with an initial $5,000 investment, scaling it to $12 million in yearly revenue, and having it acquired in 2019. Today, he leads EcomBalance/ AccountsBalance, an online monthly bookkeeping service for eCommerce and digital businesses, and Outsource School, a membership teaching business owners how to hire effectively online. Nathan has appeared on 700+ podcasts, and you can follow him on LinkedIn. On today’s episode, he will talk about “Common eCom Bookkeeping Mistakes” to watch out for and avoid if you plan on taking your eCommerce business to unprecedented heights.
Throughout the episode, Nathan talks about how keeping good records is super important. He suggests using tools like QuickBooks and A2X to make it easier. He also mentions that having neat and organized finances is a big deal when you’re selling a business. It helps you make smarter choices and makes tax season less of a headache. He also give a thumbs-up to business owners to start small by making a basic version of their product and getting some sales before going all-in with time and money. Don’t miss out on “Common eCom Bookkeeping Mistakes”.
Key takeaways: / Short Summary:
Nathan Hirsch’s Journey as an Entrepreneur and Expert in E-Commerce
- Nathan started his entrepreneurial journey in college, selling textbooks and creating a referral program that attracted many sellers.
- His first experience with Amazon was selling books, but he soon discovered the potential of baby products due to their high profit margins and ease of shipping.
- However, Nathan and his partner faced challenges with hiring, realizing the importance of hiring full-time, reliable employees.
- Over time, the popularity of Amazon grew, leading to the emergence of e-commerce courses, conferences, and agencies that specialize in the field.
Entrepreneurial Journey and Business Ventures
- Nathan started offering different Virtual Assistants (VAs), freelancers, and agencies on a platform called free up in back2015.
- Free up was scaled for four years and eventually exited in 2019.
- Nathan has been busy building other businesses since then, including Outsourced School, a platform that teaches people their hiring process and provides SOPs for other entrepreneurs.
- Recently, Nathan launched two bookkeeping businesses, EcomBalance for eCommerce businesses and AccountsBalance for agencies, software companies, and online businesses.
- Nathan became an entrepreneur because he disliked working for others and wanted to have more flexibility and control over his time.
- He gained experience and skills in customer service, sales, and managing people through various jobs and an internship with Dave Edwards at errands.
- Nathan was inspired by Dave’s ability to run his business remotely and decided to pursue entrepreneurship.
- In college, Nathan joined an entrepreneur program at Quinnipiac University and explored different business fields through the pitches of various deans.
The Journey to Financial Freedom and the Importance of Bookkeeping for Entrepreneurs
- Bookkeeping, though often overlooked, plays a critical role in making informed business decisions.
- Poor hiring decisions and lack of proper bookkeeping hindered progress in the speaker’s Amazon business.
- Hiring a bookkeeper from the start proved to be a significant business decision, providing accurate financial data and aiding scalability.
- Immaculate books from day one helped the Nathan’s company pass due diligence and achieve a successful exit.
- Despite initial plans to travel, the COVID-19 pandemic prompted brainstorming and the launch of Outsource School.
Tips for Organizing Your Business Finances
- It is important for businesses, especially as they grow, to stay in their lane and have specific professionals for each financial task.
- Have a dedicated bookkeeper who provides monthly financial reports in an easy-to-understand format.
- Consult with a CPA or tax person for tax strategy, advice, and filing taxes.
- Ensure communication and collaboration between the CPA and bookkeeper.
- Consider hiring a CFO to make informed decisions based on financial data and assist with forecasting.
- Avoid overpaying or asking the wrong professionals for advice by understanding their respective roles.
- Utilize reliable accounting tools like QuickBooks online or Xero.
- Maintain separate business checking accounts and credit cards for easier bookkeeping.
- Keep the number of bank accounts to a minimum and avoid unnecessary complexity.
- Use a connecting tool like A2X to integrate marketplace sales data into QuickBooks.
- Maintain ownership of your QuickBooks or Xero accounts.
- Divide accounting tasks into three sections: monthly bookkeeping, a CPA or tax person, and possibly a CFO or outsourced CFO.
The Importance of a Reliable Bookkeeping System for Amazon Sellers
- It is crucial not to make your accountant the owner of your books as horror stories have emerged about bookkeepers disappearing and taking possession of all financial records.
- The right setup for bookkeeping is just as vital as knowing the differences between CPAs and bookkeepers.
- For Amazon sellers, a recommended tech stack for accounting includes QuickBooks Online and A2X.
- QuickBooks Online is preferred over QuickBooks Desktop
- A2X is a highly regarded tool for Amazon sellers’ accounting needs.
- Other tools, such as Hubdoc, can be added for additional support in invoice management.
- The minimum requirements for Amazon sellers’ accounting are QuickBooks Online and A2X.
- Hiring a full-time bookkeeper may not be affordable for all sellers, but bookkeeping services like EcomBalance start at $3.99 per month, which is considered fair pricing in the industry.
Importance of an eCommerce Bookkeeping Service and Financial Knowledge for Business Owners
- It is essential to find an affordable bookkeeping service that understands eCommerce and uses the right tools and setup.
- A bookkeeper’s role includes reconciling accounts, matching bank transactions with payments received, ensuring the inclusion of fees, and identifying any discrepancies.
- Bookkeepers also handle the cost of goods and segment data from different platforms to provide clean and comprehensive reports for business analysis.
- Business owners must learn to read and interpret income statements, balance sheets, and cash flow reports to make informed financial decisions.
- Focusing solely on the profit and loss statement (PNL) is not enough; understanding the balance sheet is equally important.
Importance of Financials and Hidden Fees in Selling a Business
- Nathan emphasizes the importance of mastering the three reports: load, learn, and cash flow statement.
- Clean financials are essential for selling a business, as it builds trust and helps in passing due diligence.
- Knowing your numbers and having monthly finance meetings is crucial for answering buyers’ questions and matching the information in the books.
- The bare minimum requirement for selling a business is to have clean finances.
- Nathan mentions tools like A2X that help in mapping and labeling fees correctly in the books.
- Having books in order allows entrepreneurs to make informed decisions and identify wasteful expenses.
The Importance of Clean Books and Decision-Making for Entrepreneurs
- Entrepreneurs benefit from having clean books for various reasons, including selling the company or obtaining funding and investments.
- Clean books make tax season less stressful as they are updated every month, ensuring that entrepreneurs are never behind and can easily file their taxes.
- The main reason to have clean books is for decision-making, as good monthly bookkeeping allows entrepreneurs to make informed decisions based on the numbers.
- It is recommended to have a good monthly bookkeeping process for better decision-making, even if selling or getting funding is not a goal.
- Other valuable tips for entrepreneurs in accounting and bookkeeping include avoiding quarterly bookkeeping and instead doing it monthly and ensuring communication between the CPA and bookkeeper.
Tune in on August 22, 2023, at 12:00 pm EDT to listen to the whole conversation. Tune on some of BellaVix’s social media:
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Links:
- LinkedIn – Personal: https://www.linkedin.com/in/nathanhirsch/
- Branded – https://ecombalance.com/ and
- Branded – https://accountsbalance.com/