Money talks: The non-boring guide to business finances
Today we're doing something new and having a dude into our podcast - but trust us, David Rosenthal from Retinue Accounting is not a boring accountant. We're diving into the money chat that usually makes entrepreneurs want to hide under their desk, but David somehow takes the ick out of talking about cash flow and balance sheets. We have plenty of "holy shit, I didn't know that" moments and real talk about not letting your business finances turn into a total dumpster fire. David brings the knowledge without the put-you-to-sleep accounting mumbo jumbo, and we're here for every minute of it.
Sidenote: Soz about Rah's sound, the microphone at the studio is stuffed. Fingers crossed it's fixed soon.
Number of fucks given in this episode: 12
Mentioned in this episode:
Transcript
Emily: Welcome to the fuck around and find out podcast, a podcast for finding your way through owning your own business. I'm Emily. I'm Chris. And we are here in the Bella Vista Hotel and my little script says insert banter. Ooh, Bella! Insert some banter. Um, I'm fucking hot in here today. Yeah. It is very warm in this lovely studio.
I think
Christine: air conditioning is non existent today.
Emily: It's a B O I O. fan. Um, yeah, we're changing up our introduction. We don't want to continually introduce ourselves because I think everyone already knows who we are. If you're listening this far in, and if you don't go back to an earlier episode and you can learn all about us.
Yes. And welcome. Welcome to the club. Um, we're going to go through random fun fact or just a random piece of information about, about ourselves. So I'm going to throw it to Chris. Pick me. You're both looking at me blank face. Like, Oh God,
Christine: Chris, go for it. You know what? I'm going to talk about coffee. And I like my coffee incredibly strong and incredibly bitter, but I like it made for me.
So, yeah, I've got a machine at home. No, no, make it for me. I don't have anyone at home to make it for me, so I buy coffee. Yes, that's my thing.
Emily: Ra, what is yours? My,
Rah: um, well, I've spoken about coffee before, but I am a V girl. Energy drink. Have been drinking it since 1999. 2000 when it first came out. Used to drink 3 bottles a day.
Oof,
Emily: damn.
Rah: And since being diagnosed and being treated for sleep apnea, I have stopped drinking it. And it's very confusing because now when I drink it, I feel ill. It's funny how it rewrites, like, your programming. But yeah, love it. Blue V in a bottle.
Christine: Only way to go. I have never, ever,
Rah: tasted V.
Christine: Oh, we can talk about that.
I
Emily: won't lie, that's also me. Yeah, we can
Christine: talk about that. That's also
Emily: me with drugs, I've never tried them before. I was more of a green V than a blue V. Talked about before I think we've they changed the flavor and I hated
Rah: it.
Emily: It's probably yeah, it's gross a bit gross I have no idea what to fucking say about why my fun fucked but um, I am a sucker I'm a sweet tooth.
So if we're gonna go along the lines of food and drink and whatever I that's why probably I haven't had coffee up until now because I am such a sweet tooth It's too bitter and it's taking I'm training myself on coffee at the moment. I need like a caramel latte or a Or mocha or something and I feel like I'm getting better at it because it's less, it's becoming less disgusting to me, so, small steps.
Well
Rah: if you want to get away drunk, I'm drinking one right now. Yeah, yeah. I had one, I had a
Emily: really good, um, mocha, white chocolate mocha or something from Max, no, Oliver Brown, but it was an iced one. I think. And I was like, no, no, it was an actual one. Sorry. It was a hot one. And I was like, this is fucking amazing.
Christine: It's because, um, you know, Oliver Brown, Max Brenner use liquid, liquid chocolate when they do their drinks. And that makes the big difference. Yes. It does.
Emily: Anyway, there are fun facts. We're going to divert and trying to keep on task today. There's no fluffy burnt out. We have a wonderful guest star with us today.
May I say the first male we have ever had on this podcast. For anyone who has been to our conference last September, welcome Mr. David Rosenthal.
David: Greetings and salutations everyone. It's good to be here.
Christine: Oh, David's It's awesome to have you here today. I
David: love it. I'm feeling the energy.
Christine: That's right. As we all melt in the lack of energy.
I'm really, really loving it. Just
Emily: embracing it. You're very much the perfect person to do a
Rah: podcast. Before I met you, I was like, are you sure this is the right guy for us? Yeah. By the end
David: of it, we're all going to be
Emily: sinking together. Um, welcome Dave. Um, Look, introduce yourself. Tell us a bit about yourself.
Give us your, like, pain of clatters and walks on the beach.
David: Yes, yes, I'm a Capricorn, um, six foot, he's like, I'm looking
Emily: for a man in finance, blue eyes, six foot, what was it? I'm
Rah: looking for a
Emily: man in finance. Yeah, he's that guy. Because he has blue eyes.
Rah: Oh my god, and you, you're part of the 666 club, probably. Six figures.
David: Aw, look, I'll leave that alone. He's like dot dot dot dot
Emily: dot. No comment. That means yes.
David: A little bit about me, I, uh, I've been an accountant for 20 years. He's only 21 years old. Yeah, well done
Christine: there.
David: Um, I, I currently work in a national practice retinue, which is sort of a bit of a disruptor to the accounting industry.
It's an all in one service spread out across Australia. My current role is what we call practice lead. And people go, what does that mean? What's that?
Emily: What's that mean, Dave? Insert typical response.
David: Essentially, what we're kind of boils down to is sort of, um, Process improvement, process, uh, you know, solidifying processes, singular, making sure everyone's doing the same thing, implementing training, being an expert subject matter for tax and accounting, and quality assurance.
Cool. So basically making sure the ship is running great, and everywhere, no matter whether your client is in Perth, Queensland, or Tasmania, your books are done the same, your tax is done the same, and it's at a high level quality. Yep. A little bit about myself as a accountant, I would always describe myself in two words and that would be passionate and proactive.
Mm, yep. So, you know, proactive I appreciate is always bandied about, everyone's proactive. You don't really hear passionate in accounting now, do you? Mm. There's not, there's not a, there's not a trashy love story about, you know, sexy accountants riding on a steed, holding their calculators, you know, no.
Holding their calculators, , I'm, I'm, I'm visualizing those calculators. Just a print
Emily: out what you were punching in. Yeah. Yeah. The adding machine.
David: The adding
Emily: machines. I know about those from the Simpsons. Yeah. But like so
David: old. I think where I come from passion is. It's figuring out a why, why you're doing what you're doing and understanding that numbers tell a story.
And the story is of the decisions you've made to get to that point, and it helps you understand where you want to get to. And that's what I really take a lot of passion and having that sort of discipline to go to work out where you want to go and helping you tell, helping you find the place with those numbers.
Christine: Cool, seriously. And um, you know, if we think back. to the conference last year. It, it, it was in the room. People were reading the room, they were reading the passion as you were speaking, um, the feedback we got was just absolutely epic because, I mean, you know, it's no surprises when people go, oh god, it's an accounting session or something like that.
I'm
Emily: actually going to pull up some feedback while we're talking just because I think, I gave you bits and pieces
Rah: of it.
Emily: I know, why not, just inflate it some more. It's fine, he loves it. And could
Rah: I just be clear in case I can't edit this out, I'm moving my foot and it sounds like I'm farting.
Christine: Can't. Oh yeah, no, I heard that.
Just right in thanks. Right. Sounds like a squeak, but it's, why don't you just leave it in row. Loves a good fart though. Yeah.
Rah: Yes. People know me for the fart jokes.
Emily: Yeah, that's right. I have like about quite a few photos of you now on video trying to fart in your armpits , so it's building.
Rah: Dave, you have not met my party trip.
Very, an epic party experienced the
Emily: straw bars. Yes, absolutely. It's kind of hilarious. Um, yeah, so we keep waiting for this, but
Christine: anyway, yeah, so it was really, you know, you were really well received.
David: I think a lot of it is, you know, I've spent the last sort of five years sort of, you spend more time trying to, trying to dumb things down and I mean like dumb down, but now it's hard to have clients come to me and it's like, Oh, I have had this done.
It's like, do you know what you signed up for? No. And it's like, for me, it's like, if my client walks away not, with no idea what the hell I said, I've done, I haven't done my job. No. And that's a real main thing is, you know, accounts are quite known to hide behind jargon and bullshit.
Emily: Here you go. Uh, one of the responses was, um, this is to the question, what was your favorite presentation and why?
Accounting. He was engaging and informative. Um, the one about numbers was very engaging. I don't usually like to think much about the financial aspects, but this was very engaging. Uh, we've got another one that says, you know, your name, and then, um, he had some great life finance tips and was my favorite.
Um, and then there's some more mixed into here, but then like not quite a few others were like everything, everything was great. So that counts as well.
Christine: Yeah.
Emily: Um, but there was one that did see one and I'm going to keep finding it. Yeah. You
Christine: keep finding it. But it's true. Like, um, you know, we, we, me, um, outsource.
Um, because I'm not, I mean, I want to know my numbers, but I don't want to do my numbers. That kind of thing. It's not, it's not my thing. Um, and, but sometimes you just don't know. It's like, yeah, what's my cost of this? What's my cost of my business or can I afford this or whatever? And you need to know these things.
David: Absolutely.
Christine: Yeah.
David: It's, it's, I said, whenever I start, there's probably four basic questions every business owner needs to answer. Oh yes. Four main questions. First one is how much money have I made? Where's the money gone? How do I set my prices? And do I have enough to live off?
Christine: Yep.
David: And then there, you know, if you don't even delve into each one, and it's amazing how many times I've said to clients, do you know how much money you made?
I have no idea. Yeah, right.
Emily: So they were like, Oh God, we don't know anything.
Rah: Starting off my buzz for the quarter. Yeah,
David: sure. And you do get like, you get these bad, and they just, and it's a sort of, A fear, a lot of account, a lot of business owners I know it's like accounting and numbers. They actively put their head in the sand and it's my job to sort of bring them out a bit and kind of, and you got to tie it to something and that's where you kind of got to work out there.
Why? You know, why are they doing this? Are they doing this? Because. Do they want financial freedom? Are they doing this because, you know, they want a second property? Do they want world domination? Maybe a first
Emily: property? Yeah, first property. But all,
David: but all these questions, once you sort of tie that goal to the numbers, then it really opens them up.
Because if you're just talking numbers for numbers sake, it dies on its ass. And I've been in enough, I've, I've learned enough times where I've just talked about nothingness without linking the emotion to it where It just, you can see the, the motions of just, okay, I need to get out of here. I'm done.
Christine: Yeah.
Yeah.
Emily: I think it's. You know, you've got a very good way of, like finance is, is confusing for people, especially if you've not got the head for it. And like, I'm a very big creative, I'm not really a numbers person, but I feel like I've understood it to bet David was our accountant for anyone that's interested.
He was. Before he left us, which is still a bit salty about, um, you know, we've, we have found someone else who is equally amazing. Shout out to Sanjay. Um, not that he'll ever listen to this, um, but. I think it's like, it's just understanding what actually you need to pay attention to and not getting so lost into the detail of it because it's so much on it.
But like you got, you also introduced us to Xero, which was great. And then like ran us through how to use that and you know, that, that kind of stuff. And I feel like my understanding is so much better having had that from you, um, on how to, you left us with the right stead when you left, we didn't die
David: completely.
But it's, it's instilling that. So it's sort of put it, you know, if I can put myself out of the job a bit or it's for me, it's getting client up to a point where I can actually talk about more fun stuff, like more analytics and things like that. You know, you got to start somewhere and you know, I always, you know, going back to the four questions and you sort of, the first one is how much, one of them was how much money do I need to make?
Do I have enough to live off? Yes. Yeah. I always kind of go back by this sort of concept. I
Rah: didn't know that for the first,
David: yeah,
Rah: like 14 months of working for myself. Cause it was just terrifying. Yeah. I think,
Christine: um, I think I knew what I needed to make. I just, I've
David: just never made it, you know. Many times I've sort of said, people have come to me and said, does this look good?
It's amazing how many people come to me as an accountant and go, does this look good? And I'm like, you tell me, I don't know. It's like, and this is where I kind of go with this concept of you got to know your magic number.
Christine: Yeah. Yep. And that's, and that's true. And you asked that and I know my minimum magic number.
Yeah. Well,
David: the magic number is just a number, which is the number you need to put food on the table. Yeah. Send the kid to school. Yeah. And it's your quality of life. Some people, you know, want to live in Bondi. Others want to live in Penrith. And that's completely fine if you make a number for how you see fit.
Yeah, absolutely. Um, it's once you have that number.
Emily: How do you get there? How do you get
David: there? Yeah. Because at the end of the day, if you need 10, but your business makes 9, guess what? You don't get that money. Yeah. But the problem is, is that is a slow death. Yeah. And that's people, people don't understand is people think, Oh, I'm drowning.
It's like, no, it doesn't happen. It's this. It's like death of the, I call it, like, it's like a death of a thousand debts and you just keep pulling debts and debts and debts because you don't understand what's happening. Um, and you know, when we're talking about my presentation, we'll talk about cashflow and I said, you know, and this is a, you know, it's a, it's a tough time of cost of living and all the other bits and pieces and one of the biggest issues, every business I know that fails, fails because of one thing, bad cashflow
Emily: and
David: 75 percent of them who fail, they only owe.
One creditor, and that's the ATO.
Christine: Ah, yes. Yeah, that's interesting. 75
David: percent of businesses that fail, they only owe the ATO.
Christine: Far out. That's frightening.
David: So the amount of debt with the ATO right now by small business is 50 billion. Yeah, that's, that's a bit. That's even more frightening than just the fact
Christine: that you owe the ATO.
Wow, 50 billion.
David: Because what, this is where, you know, what happens is the business run and run. And they don't, and they're barely making enough to get by, and they don't plan. What happens is they have a bad month. And what happens is when they have a bad month, they use the money set aside for tax to prop the business up.
And so then when you get tax time, I don't have that money to pay the tax man. But then you keep running anyway because they don't care and they're slow to react. So you keep trugging along, but you might have a 10, 000 debt. Guess what happens again, so it turns a 20 grand, but you've got to make more money just to pay off the original debt, but you're still just sort of,
Emily: it's just a never ending circle.
It's
David: a very slow debt. It's like, it's like the concept of payday lending. Like it's like, you know, people get stuck in that spiral payday lending because they have to use the money to pay back the old debt, but they're going to take a new debt again.
Emily: It's
David: the exact same concept. It's just in a larger form.
There's no light
Emily: at the end of the tunnel. There's no light at
David: the tunnel. And most people, what happens is the ATO comes knocking, and then when the ATO comes knocking, you generally have about three weeks to either pay up or go for liquidation. And that's the unfortunate thing. And a lot of them, they just, some people, you know, people get into it, but then it ends up just burning out of control so quickly to the point where a lot of them, I've I've Probably in the last few years, I've had a lot more conversations going, do you know what you're in for?
Do you know how much you owe? And do you actually have a legitimate, like a purpose where they're like, I don't know. And it's like, okay, well let's get, let's have a chat about that. It's getting in early.
Christine: Yeah. Yeah. Before you really have dug yourself such a huge, horrible hole. And I mean, none of us get, none of us do anything.
Because we don't want to be paid. I mean, I know we say I do it for the love of it But at the end of the day, no, I do it for the love of it But I need to pay them, you know, the utilities. I need to put food on the table and Yeah. I want to buy that coffee that no one at home makes for me. You know, I want my avocado on toast.
Yeah. I
David: do. Yeah. They're hard workers. I've never met a business owner who's not a hard worker. No,
Christine: I've never worked so bloody hard in my life.
Emily: You've got to be in it to work it though. Like that's the thing. If you're going to start your own business, you have to understand that it's so much work. You got to do the hard yards.
It's part of it.
David: But a lot of people, when they start off as. They don't know what they're supposed to do. Nothing. And this is where it's like if you have a magic number, it's like, cool, if I need five grand a month, cool. I need to get five grand.
Emily: Mm.
David: But then you need to go a bit further with it because it's okay.
That's five grand in the hand. I need tax to come off that as well. So five grand automatically turns into seven and a half grand. Yeah, that's, and then you go
Rah: bit as I watch the money I put in that tax savings account that I saved until the BA bill comes in.
David: Yeah, exactly. And then if you're paying yourself a salary, well then you add super on top of that.
So that seven and a half grand is now turned into about eight and a half grand. Yes. Plus workers comp on top of that. So that five grand you need, you need to make about eight and a half grand profit. I know. It's scary. No, yeah. But, and we'll try to, and I always try not to, you know,
Christine: Scare. No, not scare, but like.
David: Fear monger. Talk about it in a condescending, like in a simple, but it is simply you work backwards and I work backwards with, okay, five grand. What else do I need on top of that? Well, I'm going to pay tax on that five grand, so I'm going to add 30 percent tax and that kind of turns into that. And then once you get into, say, eight, eight and a half thousand.
Profit. Yep. Well then how much do I need to sell to make profit? Because obviously you don't just make eight grand of sales, you, you know, sell widgets or have staff. So to make eight grand, you might need to make 30, 000 of sales. That's true. Yes. So then, okay, that, then you work backwards so you can, that and see what we've just done there is once we've built up, you've just done a month budget.
Christine: Yeah.
David: And so then you can just repeat that process for 12 months.
Emily: Which is also the flip to this, why I get a bit, you know, anyone that listens to me now, I get a bit ranty, about people also need to understand what makes that stuff up for when they're hiring, when they're outsourcing. So, you know, the amount of, we have conversations regularly about, um, being paid what you're worth, and this is part of that.
And it's also, if you're employing someone, you need to understand that this is all Built into their fees
David: and you
Emily: can't be like, well, why can't I get that cheaper? It's like, well, then they're getting no fucking money.
David: Well, and let's take that a step further. And it kind of goes into, you know, I said, there's four golden questions.
How do I set my prices? And it's very easy when you set prices, when let's say I sell a phone or I sell bread because it's easy. I buy something, I put a margin on it and I sell it. How do you sell time? Do
Christine: you know what I mean? No, absolutely. And how you
David: sell time and how you measure the time. Because you get that, that's the real big problem about that.
Is people go, oh, okay, I'm going to budget 10 hours to do this job. But then they never check afterwards whether they did 10 hours or 20 hours.
Emily: Oh, but in our line of work, we definitely do. We don't, we time manage everything. We, we clock time for everything because it's so important for what we do.
David: Correct.
Look, I know everyone time manages. No, no, we time
Emily: track. Yeah, time track. We put timers on for everything that we do.
David: And then measure it. And that's great, Emma. Yeah. But I guess it's, a lot of businesses I know who time track don't just measure it on a macro level. They sort of time track, but they never just actually go.
Hey, that job I just did, I actually, I time tracked the living hell out of it, but I never actually measured it against my original budget. And that's where a big issue is. It's taking that time to actually go, okay, cool, did I price it correctly?
Christine: And we've, we've had that, um, in a website build, um, project where You know, we put the whole thing together, we felt quite comfortable in what we were proposing and the pricing and it all went head well, went successful and stuff like that.
But we had time tracked, of course, we knew exactly how much it went over. And at one point, pardon me, before, you know, Go Live was hit, we knew that we were working for free because of the overrun of stuff that we hadn't really built. in clear enough into the package or the agreement. And so that was a big, big learning curve for the next time we're doing something.
Exactly.
David: Look, a lot of knowledge based industry service creep. And it seems like out in the counter, I'll price on X and then it just. It creeps in and
Emily: There's stuff that comes out of scope too, and things you can't predict. People, you know, websites for us is one of those, you know, Oh yeah, I'd like 3 pages to today, this, next minute, it's 17 pages.
That's the stuff where we burn time and we do have to put caveats into what we do now, being like, anything additional to what we've quoted is X, Y, Z, we've gotten much better at it, but also I won't look, I argue the time point. I don't time track. I'm terrible at it. I'm definitely one of those, but I also have a business partner who literally times tracks every second of her life.
Yep. So we balance out.
David: Balance out. But in, in, when you try and people get scared to ask for more, it gets to a problem is if you don't value your time, they're not going to value your time.
Christine: Yeah. That's right. Yeah.
David: Very, very simply put. And the amount of times I've seen clients, it's like, cool. . Oh yeah, I made this money.
But they're like, I work 120 hours a week. I am absolutely destroyed. And I was like, okay, cool. Well, you need to price yourself better.
Emily: Mm-hmm .
David: Because it's a, and it's a good rule of thumb. I've, and I always say this, I said this in the presentation, if you are winning every single job you are underquoting yourself.
Yeah. True. By default. Like it's, you are clearly undercutting yourself. Yep,
Emily: yep. Without a doubt. Yeah. Yeah. And it's just important for people to understand that, you know. And also to understand what they need to factor in, like you said, Roz over here going, Oh fuck. Like, I'm going to look at some stuff later and work that out.
David: So we've talked, we've talked about that magic number. You know, how much do I need to live off? Do I have enough to live off? The next part is, oh, you know, we sort of talked a bit of a budget of what, how much have I made? So obviously that's, you know, doing your financials and you get your income and you get your expenses.
Hopefully that turns into your magic number. But then we have the next problem is so many people I've had in my career go, you're telling me I made a hundred grand. Why don't I have a hundred grand in the bank? The next thing is where's the money gone? This is probably the, this is the, the accountant secret.
This is the one of the most important things no one ever does. It's probably no bookkeepers, no anyone is the accountants always look at it. It's what's called a balance sheet.
Christine: Yep.
David: The balance sheet tells you where the money's gone. The balance sheet is a listing at one point in time. What assets you have, you know, cash in the bank, debtors, the car.
Yes. Your liabilities being, you know, what you owe to the ATO, what you got on the credit card. Maybe you have a car finance. That's the difference between, and those two are sort of your position, your, what you're worth. And one of the most common things is where people go, Hey, Oh, you said I made a hundred grand.
Where's the money? And it's like, well, if you made 100, 000 sale just before year end and you're still waiting to collect that money, well, that's where the money is. It's locked up in a debtor. Or if you had, if you owed a hundred K to the ATO, well, that's where the money's gone. And people don't realize that.
And that's where one of the things, you know, I talk about cash flow. There's a, another accounting extension on that called working capital. Yep. Working capital is really your cash. Plus. What we call short term assets like debtors stock less short term liabilities Like ATO debt, super debt, things like that.
That's the first thing I look at anytime when someone says That
Rah: sounds so much fun, until you realize what it actually is Yeah, but it's
David: the first thing whenever someone's has an expansion plan. That's the first number I look at Okay, because that tells me whether you're ripping money out or you're leaving money in the business Because if you go, yeah, say you make money for your magic number you got that Let's say you make more than the magic number, what do you do with it?
Do you, do you leave it in to expand or do you leave it in or do you take it out to live out? Because so many times I've seen people take enough to live off and they make enough to live off, but then they go, I want to hire five more people. It's like, cool. How are you going to pay for that? Because your, your position is poor and you're going to have to pay these five dudes straight away.
Like there's money, you need money. And that's the biggest, where a lot of businesses fail is in expansion. People expand too quickly and you actually need a shitload of money to expand, unfortunately. Like you might need wages for three months for three guys because they're not going to get up to scratch for three months.
Yeah, true. Yeah. And then, and the problem is, is you have to pay them straight away. They're not going to wait till they get clients in. So you've got to sort of work on that.
Rah: And you're paying them before they hit their full working capacity as well. Exactly.
David: You've got to, you've got to pay for that.
You've got to pay for that training. It's the, it's an investment. It is an investment, but also like investments. They could piss off after three months as well, and then you've got to make sure you're back on it. So it does, a lot of people, they kind of borrow ahead to expand, but then it becomes this real dangerous game where, you know, we were talking offhand before about, you know, you guys quoting for clients, they go for a bigger client, but they underquote themselves to try and compete with the bigger players.
So then they're making less money, but then they've got to pay more money for the staff. And then they get into this dangerous trap of servicing a client which they're not making money on. Yep. And then, lo and behold, comes a tax, comes a tax time, they don't have money. You can see the pattern of what, how, how it just builds on one another.
Christine: Just spiral out of control, really. Yeah.
David: And it, it boils down to, and the problem is, is by the time it gets to an accountant, it's a bit too late, unfortunately. Like, most times when they finally reach out, like, I've I, I'm like, this is beyond me now, you need a liquidator or you need to be working out what, what, what the next steps are.
Christine: That's been horrible news to deliver to a small business owner, I could only imagine. We've gotten a little
David: morose here, haven't we?
Christine: No, we'll, we'll pick our socks up there. Yeah, absolutely. All right.
David: No, but I guess where I'm coming, where we build on is. Understanding those numbers, it's really about educating those decisions.
So, you know, with that example, it's like, if you want to expand, great. Let's see what your numbers are saying to see if you can expand or not. Because I can look at the numbers and the first thing I can say is, how do you plan to pay for that? And they're like, Oh, I'll just trade. And it's like, well, you don't have enough money in the bank to pay for your suppliers right now.
How do you expect to hire people?
Christine: And
David: especially with a small business, the biggest stage, you kind of get into these different stages. Like you get into that. Your infancy stage where, you know, you, you're working from home, you've got a bit of a soul trader part and you do bits and pieces. The biggest part where I find a lot of people get scared or like really, I tell them to be careful of as soon as they get a, get a, as soon as they get a, uh, a business presence.
So paying rent.
Christine: Yes. That's us. That's us. Oh yeah. And the reason
David: I say that is purely because it's the first major commitment you have. Like most small business owners, especially in the knowledge industry, it costs a pretty little, like it's what, like basically your subscriptions and And your trips to Kmart, which are business related, right?
Yep. I could see that jump.
Christine: Jesus.
Emily: He's, you know, having a go at me there.
Christine: Quiet. Quiet. Um, yes. No. The whole rental thing, because that's something that changed for us this year. And we It's a tricky one. Well, it is. It was, it was necessary. But, oh my God, it's been a An expensive learning curve that we've still got 12 months to go on.
And I think it's, you know, it's also
Emily: the contracts. We've had some issues with, um, you know, the place that we've got. And not flexible at all. Not even open to negotiation of any kind. God
David: no. Landlords are the least negotiable. Apparently we signed
Emily: in blood and didn't realise it. They literally have it so you have to become completely insolvent and shut your business down in order to get out of the league.
That's the
David: only way. I, most leases and landlords and this is where it gets really tough and people go, cool. And this is where people, this is, and I'm not saying you are, I'm just saying people chase the shiny. It's like, Hey, I want the premise. I want the shiny Merc. You don't need the shiny Merc. You just need to make money.
I
Emily: think the premise part has been a very interesting learning, as you said, learning curve for us too. It's even that exactly right. The shiny objects and dream of, Oh my God, we'll be big girls with our big girl pants on. I've got a rent
Christine: to pay. It's
Emily: been a different, the reality of actually going and using it.
It's been definitely a different thing too. I think. Um. I know, especially for me. I don't think I've done it as much as I ever thought I would.
Christine: I don't, but also, we couldn't have known When we signed it was the, you know, it was the right thing to do and a lot of good positive stuff has come from it from being in the same space.
But the reality, for example, of being in a space with our children in school holidays and it's not really big enough for little kids to come and do creche at. Um, and, um, yeah, it's just, we've, we wouldn't have known those limitations until that reality had hit us.
Rah: Yes. Exactly. Yeah.
Christine: Yeah. Well, we do. We do.
And we, we do magically think December 2025 when the leases are, we'll be gone for sure.
David: Like I think you, some people like that challenge. Some people, I know some owners who are like, you know, I, they want their back against the wall because that's just, that's the fire up their arse. Like some people, and I have to deal with that.
Yeah. Look, my job is not to say, no, don't do that. My job is to go, Hey. Cool. That's great. But this is what you need to make to pay for that. Yes. All right. If you're okay with that, if you don't go, go help for lever. I don't care. Like I'm not, I'm trying to, I'm not someone's parent, but I'm just trying to help them educate them, making an informed decision.
A lot of people it's like, Oh cool. I'm going to get this new thing, making paying five grand rent a month. And it's like, do you realize you need to probably make an extra 25 grand a month to pay for the rent on that? Do you have that in the pipeline? Yeah. Why are you doing it? Yeah.
Emily: Yeah. Yes. It's those little things that I think, and I know with us.
You know, those of us like, um, Rah who doesn't have a place and just does your day leases, which is quite a smart thing.
Rah: Yeah, well it's worked out quite well because I experimented with co working spaces, which I've had lots of experience with, with old full time jobs where we would, that's where we would work from.
Um, but now a local business a couple of suburbs away from me has a spare desk that they rent out. That works. So yeah, it's, they're not a co working space. My industry actually doesn't have a co working space. However, it's very fucking pretty. So it fits my aesthetic. , um, and has a great cafe and, you know, so it's, I I get that office benefit, but I just have my little desk and I take all my gear and I leave at the end of the day.
But it's just
Christine: for, you know, it's controllable to, you know, like, yes, it takes,
Rah: I can, it's less than a hundred dollars a week for me to have. That's really true. Exactly. For three days a week is all I need to make sure that I'm not. Yeah,
David: I appreciate the need to get out to have focus and do that, like, and
Rah: that's what these guys have.
I suspect I need to build it in the inner west because it's not really,
Emily: there's no real options out there. Um, 2026 January. We'll be free. We're going to be doing a co working space. We're going to do one together. We've kind of already, we've already made, we've had some decisions on that. Yeah, we'll inform you.
We'll tell you about it.
Christine: Closer to you, darl. Closer. For a matter. Yeah. Yeah.
Emily: Wasn't in the room. Please note, I made a Hamilton reference. Dave has seen Hamilton. He saw it before we went. Um, but also, you know, we've got like operational costs for us can be quite a bit because of the programs and the software that we need to, we look at as well.
David: Xstack is dangerous. Yeah. That is probably the latest phenomenon I would say in the last five years, five to 10 years.
He's tech sack and it's dangerous in accounting because it's like, Oh cool. One thing does this, one thing does this, one thing does this. Next thing you know, you're paying for like, exactly right.
Emily: Right. And I was literally talking about this this week about like a program that, you know, costs X amount of money per month, but it's like, how do you justify.
The cost of it. Cause it's so much and there's not a lot of in between from like big kind of enterprise style versus that for the young ones, the little businesses that need it. And Chris and I have even had that conversation about like, well, this, what have we got and what are we committing to? Let's fuck off the rest of it.
Yeah,
David: you got to either. And you know, you either have to pass those costs on, which is always great. Isn't it just, or you got to eat it because the problem is as a business owner, you're the last person to get paid. Yeah. So, you know, Everyone else gets paid before you do.
Christine: Yes, yes.
David: Workers get paid, software gets paid, rent gets paid.
Everyone, ATO gets paid. Sometimes. No, everyone gets paid before us. Everyone gets paid before you. And then you're the one sitting there with beans on toast.
Emily: Yes.
Christine: And no coffee. And no avocado on top. You're sitting
David: there drinking your Nescafe number 43.
Christine: I do. I seriously, I do have Mocona
David: in the cupboard if I'm desperate.
I won't hesitate. When I was a bit of a younger accountant, I was scrounging. I was definitely on a lot of international roasts. Oh, I bought
Christine: up on international roast all those years ago. The big tin of international roast. Yep. Yep.
David: Yep. Yep. You'd rather just inject it into your veins than try and drink it in an easier way?
Yeah,
Christine: absolutely. So yeah, it's, it's really important. I mean, sometimes something's in our communal diary and I'll go, how much are we paying for so and so? I haven't done anything with that one. Oh yeah, we've really got to re look at that. And that's, we have those conversations a lot of the time. Yeah, not
Emily: just software, but like the, the membership subscriptions Um, networking or for, um, education or, Oh, we might get a
Christine: grant.
So let's pay X amount of dollars a month for
Emily: the potential to go into some job searching and stuff to find job leads and that kind of stuff.
David: Look, yeah. The, the SME marketing, all that, like those sort of things, it's a big cost and it's really, you've got to be strong enough to sort of call it and move on or go.
And like with anything like. Yeah. Spending money on that marketing is how much do I want to invest or when you invest, it's like how much am I comfortable losing? Yep. Yeah. I think you've got to think of it that way. Yeah. It's like, Hey, cool. Yeah. Especially with marketing. Yeah. It kind of boils down to, you know, okay, is this an emotional decision?
So I do this to help me feel better.
Christine: Yeah.
David: Connect. Yeah. Appreciate, you know, business owners. It's a lonely existence. Sometimes. Yeah. Sometimes I appreciate that, but then also it's like, okay, what do we have to make money? Okay. Well, what am I actually getting out of this? Am I, you know, I've done enough networking groups where it's like, this is making me money and this is just a bunch of old, old hacks just sitting around having coffee.
Yeah.
Emily: Remember your B& I days? Oh yeah.
Say no more. We've had many conversations about that one. Look. Yeah. Yeah. Yeah.
David: Uh, look, every, each, you go to such other group and work out what is the, you've got to go with a plan of attack. Or just, or just have an acceptance. It's like, you agree on the expectations. If I agree with this group is hippy dippy and it's just about making me feel good, cool, but I've either got to pay for that or accept that.
Yep, yep. He does know
Emily: what you're thinking of right now, Ralph. I think
David: I saw a thing on LinkedIn, it was like a business retreat and they were running bowls and there was some dude with like, a shirt off and long hair and like, I said, there's some weird hippy dippy stuff out there and it's like, But then they had laptops out, so I guess they probably charged 10 grand for it.
Absolutely. God, that's all we need to do. To do some bowls and a coffee enema, and then they sort of, you
Christine: know
David: Yep. They go from there.
Christine: Oh my God, we need to put that in our conference. A coffee enema.
David: Coffee enemas for everyone. That would be the weirdest opening presentation ever.
Emily: So we can confirm
Rah: we'll
Emily: lock you in.
Yeah. Melbourne, 2035. Made. There'll be high quality
David: coffee. I'm expecting Christiane to provide the coffee. We'll be in Melbourne. Do you really think we'll have anything
Christine: not great? Yeah, no, actually I'm negotiating the barista for all day. Seriously, I am. It's like priority number one. Yep. As I said, I like my coffee made for me.
David: Going back in, as we were talking about that sort of purpose. Um, where I find engaging clients the most is what's your why? And sitting down with a client, a lot of times it's amazing how many accounts don't ask them why they're doing this. And then they give bad advice about it because it's like a very common example is buying the home.
So again, the family home and you end up going and getting people like, Oh, I want my income as low as possible. So I don't want to pay tax. Oh, yeahinteresting. But hey, I wanna go for a home loan in six weeks. And it's But have no income. Yeah, no. Cool. Though you provided it to the, to the mortgage broker, but you earn three fives of stuff off.
Do you that? Yeah. Do you know what I mean? Where Oh yeah. Where you, you gotta, there has to be some strategy there. Yes. And I go, because it's like, do you want the house or do you want to try and minimize attacks? Yeah. You know, you can't have both. Yeah. No, you just can't. And a lot of things. And then you kind of gotta work on the next stage, which is.
Most advice I would give business owners is a dance between asset protection and tax minimization. Yes. Because you can protect your assets, but it costs money. I can minimize tax, but you might not be as protected as you feel, as you feel like. Because here's the thing, it's the price of taking money is tax.
Christine: Yes, that's right. It's the price of money. Yep. Tax. Yep.
David: So where we sort of need to get to, and this is where it's engaging with clients the most, is Going, what do you want to do? How can we do it better? And it's beating one of the hardest things for me is what I call barbecue talk.
Christine: Oh yeah?
David: The amount of times it's like, I go, I've had people who have tax returns, Oh, my dad at the barbecue said I can claim, Oh, I can claim my plasma TV, I can claim, uh, my, my, my Xbox because, you know, I need to
Rah: relax.
Oh, I used to have a strong talk, talk about getting my hair coloured. Covered as a business expense. Yeah. And it, it's part of your
Emily: branding, but I, we, we used to work, we did some work for I day space listeners. Yeah. It's not,
David: all the comments on the show are purely for entertainment purpose, professional advice.
You know,
Emily: this is not advice, this is not now are you? Exactly. We used to, um, we were, I used to work for someone who every now and then would be like. Um, Oh, thank, you know, can you just send me an email thanking me for this gym bar or like something stupid or for the hot tub and I was like, what? She's like, yeah, just so I can claim it on my tax.
My accountant says I need it. I was like, Oh my God. I don't know how you're claiming a hot tub, but whatever. I mean, I'm trying
Christine: to think of a couple of industries, I'm sure that a hot tub would be very handy as well. I think I would
David: not be doing my duties as a tax agent to really, let's bring this bed home.
Rah: Thinking of Sam from episode 4, should he include a hot tub in his episode? Sam
Emily: could include a few things with their school work and uh, sexology.
David: I guess, it's like, I guess that classic scene from Schitt's Creek. See Dave, you
Rah: come up with something, we're going to kick you out.
David: Fuckin love
Emily: Schitt's Creek.
So you know,
David: it's a write off. That's a write off.
Emily: Who writes what? But his dad's reaction was just like, where do you think the money comes from? Oh, so good. And the ignorance. Oh, it was so good. And so where,
David: where we go from that? There's two parts to it. I want to explain. The first one, in order to get a deduction, you have to have.
I'll keep it very general. Has to have a direct link to earning your income.
Emily: So funny.
David: I'll say that. A direct link.
Emily: Your hair is a direct link to earning your income.
David: What?
Emily: People hire you for the purple hair.
David: I need to spend this to make Y. You can make Y with your hair's pink, purple, orange, whatever it is.
You'd be surprised
Emily: the power of the purple.
David: I'm
Emily: pitching for you, man. I'm going to get this across the line.
David: He's
Emily: not going to endorse it. But
David: the next part I'll say, and I stress this enough as people forget about people confuse saving tax with saving cash. Yes. Yeah. Because in order to save tax, you've got to spend money.
People go like, because it reduces your income. Yes, it does. I've got to buy something in order to save tax. So why
Rah: Hamilton tickets as a business
Emily: Well, quite technically you've, there's, we, there's a conversation around that one. You have some stuff that you've legitimized with your obsession that could potentially turn into it.
David: But then again, people go, Oh, I'm going to spend this to save tax. And it's like, why spending? I don't know. Just save taxes. But why? Just keep the money. Why spend 10 to save 3? Yeah. You're 7 worse off. You're still short. Yeah,
Emily: but that's the whole concept of people design. You know, buy two, get it for this much.
And it's like, but you're still spending like 15 more. I do that at the
Rah: circle all the time. They're like, do you want to buy two chocolate bars? I'm like, no. I
Emily: remember the last time I went in, which I don't do a lot, because I can, I just do the app thing. But I went in, I was watching this guy in front of me.
He did exactly that. And he was like, yeah, right. I'm like, bro, you just spent an extra 10 you didn't need to spend.
Christine: We have a, um, ninja brand. Slushie machine on the way from somewhere. The fact that it's
David: a slushie machine. This is enough. This
Christine: is enough. But not just one, we have two on the way. Oh sweet
Emily: god.
Cause I said
Christine: to the husband What's this US dollar charge on the communal visa card? We've got two fucking bloody slushy machines. You just
David: start singing that song, you go, Give me one margarita, do do do do do do. Two margaritas, do do do do do do. Start blending at the same time. Yeah. Yeah,
Christine: I'm so
Emily: thrilled.
Yeah. Yeah. Thank you. You make our content job a lot easier. Yeah, yeah, yeah, exactly.
David: But so yeah, there's a lot of things to sort of digest. I appreciate you get scary as all hell when you're diving in. I think as I said, I'll go back to the start of those four questions. Every business owner should be able to answer those four questions.
Yes. How much money have I made? Well, you know, you go to your profit and loss. Where's the money gone? Well, that's where your balance sheet is. How do I set my prices? Well, we'll sit there, we do time tracking, we manage, we go. And that's a really unique one because it's. A lot of business owners, they go, Oh, I'm going to work 2000 hours a year at a hundred dollars or a thousand dollars.
That's 200 grand. But then you forget, well, hang on, you know, I'm probably going to have to spend half that time doing admin because I've got to do all my billing, got to do all my invoicing, all that. So that cuts out half that. So that's a hundred grand now. And it's like, well, I'm probably out of a hundred hours.
I'm probably going to lose 20 percent of that to just write off for overtime or being in, that just turns into 80 grand now. And then, so you actually got to charge, increase your hourly rate to make up, people forget they always are so optimistic in their forecasts and they never go, what happens if this goes wrong?
Yeah. Yeah. That's where you've got to really, you should be forecasting and budgeting on the worst case scenario. Yes. Yes. Because that way, at least if things are better, great, I've got more money. But if not, then you know what to do.
Emily: That's what they're currently doing for, uh, for inventory. It's currently that you're listening to, um, my
Rah: GST and my PAYG, I put an extra percentage on top.
Yeah. You just need the buffer. Just, just. Extra covers the next Canva price increase. Well, exactly. Yeah, and that happens quite
Emily: a lot. Yeah. And that is one of,
David: one of the best, and I remember when we presented, one of the best tips where I've seen businesses who succeed always have a separate account for tax.
Yes, yeah, yeah, yeah. Separate account for super and tax. They put it aside and they know that it's I have separate accounts for everything. I have
Rah: an extra account for my super savings, which I've never done before. So, like, I'm never, I'm two years I've, I've, you know, but now
Christine: you're getting yourself organized.
David: It's her own super,
Emily: that's right, it's not the papers, you know, it's your own. Yes. And it's one of those future you problems. Yeah.
Rah: I've been telling myself that me missing a few payments is just my bad leave. For the cat. Yeah, I love
Emily: it. I'm so good.
Rah: Just close your ears
Emily: Dave. That's right. Nothing he says here is being endorsed though.
We're not endorsing any comments made in this webinar. It's just a conversation. You're like reading
David: one of those political ads. Yeah. This is where
Emily: he's going to be giving constant webinars for our lovely community group. It's in the public recording to teach people how to do better. Just be better people.
David: Be better. It's amazing how many times my wife tells me that. Just to be better. They all can benefit from it.
Emily: Yes, yes. Excellent. Look, I feel like we've probably been yammering on for quite a while and it's been quite an interesting conversation. We probably, yes, should look at wrapping this bad boy up for anyone that's getting tired of our yammering.
Chris, you want to throw your question at him? You ready for it, Dave? I was born ready. I made a bet what the answer was going to be. I want to see
Christine: if I'm right. So it's, it's Sunday, you've got no responsibilities, you've got nowhere to be, you know, it's a magical day. There's no children. No, no, as I said, there are no responsibilities, how are you going to spend, what would be your ideal day?
David: It'd have to be Lego.
There's a mixture between probably some gaming, but like a brand new Lego set, like at seven in the morning and you just have the whole day, that sounds like an absolute dream.
Emily: He'll actually sit there the entire fucking day and do it.
Rah: What's the latest Lego set you've built? Um,
David: a museum. Natural History Museum.
Oh my god! Which
Rah: museum? Is it based on
David: a real one? No, it's not based on a real one, it's just a LEGO architecture thing. So I've got like three full shelves of LEGO. Like in a pool room kind
Emily: of thing. But it's a LEGO room. You're going to have to pull out some photos later. They're all going to
David: have to see the nerd in you.
Nice! So it didn't have to be a brand
Christine: fresh new LEGO set. Just uninterrupted. Nice, nice. Plus some gaming.
David: Yeah, a bit of gaming on the side it up. Yeah, yeah.
Rah: And then when you built in the Lego sets, are you sitting there going, Everything is awesome!
Emily: I feel like it's a pretty necessary thing, you gotta do it.
It ain't doing Lego if you ain't singing it.
Especially if you can get it in the Chris Pratt voice.
Alright,
Christine: well, thank you very much. so much for joining us and being our very first male guest on this podcast. Yeah, well, no, it was great. So thank you very much, David Risenthal from Retinue Accounting. I need to have a part two for more information. Yeah, look,
Emily: life coaching by David. Just give him a goal.
That's right. Uh, yes, I forgot how we wrap this up. So I'm just going to wing this shit. Um, thank you Bella Vista for hosting us in the podcast studio today. Even if it is a tad warm. Tune in. Like, as my beautiful daughter likes to say when she films herself on her iPad, um, like and subscribe. Bum, bum, bum.
Yeah, literally every time. Super funny. Um, yes, but actually where can we find you? And if people want to like hire you for stuff, I know you're probably off limits, but No,
David: no, no. Look, if you want to Yeah, have a chat. Come to our website, uh, www.readynew.com au. You can get in contact with us. Uh, we have one of our, uh, one of our BDMs business development managers.
Reach out and see how we can service you. Uh, you'll find me on LinkedIn, Facebook, all the standard stuff. Yeah, so, and feel free to reach out to us.
Christine: All right, lovely. And we'll put that in the, it's a show notes for today, all the
Emily: notes. And so thank you for listening. Thank you. Thank you. Thanks Dave. Insert song.
