Episode Transcript
[00:00:00] Speaker A: Welcome to Guilty of Savings. I am Divya Gill, cpa. And today we are going to break down simple ways to save money and make smarter financial decisions. You are watching now Media Television.
Welcome to Guilty of Savings. I am Divya Gill, cpa. And today I want to talk about something every business owner needs. But not every business owner has a real financial strategy. A lot of entrepreneurs work incredibly hard. They sell, hire, serve clients, build teams, and chase growth. But when it comes to the numbers, many are still operating reactively. They look at taxes when tax time arrives. They look at accounting when something feels off. They look at cash flow when the pressure is already there.
Today, I want to shift that conversation. My guest is Kelly Coughlin, a CPA business strategist, entrepreneur and CEO of Everyday cpa, Inc. He has spent decades helping households and businesses navigate taxes, accounting, finance and strategy. What makes his perspective especially interesting is that he does not just look at numbers as records of the past, but he looks at them as tools for decision making, positioning, and long term success.
Kelly, welcome to Guilty of Savings.
[00:01:24] Speaker B: Thank you, Divya. I'm happy to be here. Although you really didn't have to say. I have decades of experience.
[00:01:33] Speaker A: Okay.
[00:01:35] Speaker B: You could just say many years. Decades. Makes me feel like, you know, I'm a great, great grandfather.
[00:01:42] Speaker A: Well, it also gives you a lot of credibility. Right. So. But okay, I see you.
[00:01:48] Speaker B: Okay. All right, I'll take it. Thank you. It's great to be here. Nice to meet you.
[00:01:52] Speaker A: Nice to meet you as well. So I would like to open the episode by positioning financial strategy as more than tax preparation. 1 To establish that business owners need to understand the numbers before the pressure hits and not after. This segment will introduce Kelly as a CPA who thinks strategically and helps entrepreneurs move from reactive financial management to international decision making.
With that said, Kelly, when a small business owner first comes to you, what usually tells you they're operating without a real financial strategy?
[00:02:26] Speaker B: It's a good, good, fair question.
And I think the answer honestly is when embedded in your question is when people come to you. And when people come to you, come to me, probably to you too, is either when they have a problem or they have a tax situation, they got to file a tax return or they've got some issue.
And so they don't always come willingly and welcomely, but they come.
I don't know. Divya, do you think kind of begrudgingly sometimes.
[00:03:07] Speaker A: I would say so. When they see that wonderful IRS letter or some kind of communication saying, we are looking further into your details and the returns. That's when usually people go, oh, I need my cpa.
[00:03:20] Speaker B: Yeah.
[00:03:21] Speaker A: That has been experience.
[00:03:22] Speaker B: Or they. Or they need a bank loan. Right. And they've been operating for years and without financials. And of course you wonder how have you been running your business without some financials? But they do, and I understand why. And they know their business way better than we ever will.
[00:03:43] Speaker A: Right, Right.
[00:03:44] Speaker B: They're at the heartbeat of it. But those are the times they come, Right. When. When there's something going on. It very seldom is it proactive.
I want to have a better strategy.
[00:03:57] Speaker A: Right. I feel like I have a pool of clients. Right. And the pool is very diversified. I have some dedicated clients who will always show up in that first four months when it's time for all the deadlines. Estimated tax plan, planning last year, planning last year, tax filing. And then they'll come in.
And then there's this other pool who likes to file their extensions and not deal with it till they absolutely have to.
And then there's the third pool that will come to me every two years because they have an SBA loan they want to apply for or a lender compliance, to your point, they want to fulfill. So I totally agree that it just depends on the situation, you know, where they are.
So with that said, why do so many entrepreneurs treat accounting as something so reactive instead of using it as a leadership tool? With your many years of experience, I won't say decades here, based on your experience and everything, what do you think is the reason they're so emotional about it?
[00:05:00] Speaker B: Well, the nature of accounting is looking backwards.
Right. That's what we're doing. We're. We're recording. We're memorializing what has happened in the past.
And so, you know, why do people read history books? A lot of people don't. Right. I do, but.
But, you know, the idea is that you read history, you look at your own history, not because you're so fascinated by, you know, your own history, but so that you. It'll guide you in the future.
But I think that that many business owners are. So. And I. I'm sure you're the same way. You seem like a very kind, nice person. You're not into shaming people or making them feel bad for not not having financial statements. I mean, life happens, and it's hard for these people to absolutely make it. And so I, I try not to get into, you know, you and I can talk here, and maybe you're. Hopefully your audience won't listen to us. And we're not shaming anybody here? No, just it is what it is and we totally understand why they don't. And I just think they're, they're too busy with what they've got to do and they don't see that the heart of your question or the answer to your, the heart of your question is they don't see the real benefit, the forward looking benefit of looking back and understanding how we got to where we are.
[00:06:36] Speaker A: Right.
[00:06:36] Speaker B: And it's not until you, we start saying, well, John, how did your debt get so bad here? How did you get behind on this? How did you, I mean, how did you lose your bank financing? How did this happen?
And we, we have to do it respectfully and all that. But I think that's kind of why they're busy and they don't see how important it is to look at your past because you can change that and modify your business strategy based on the past.
[00:07:04] Speaker A: I totally agree. I totally so agree. And I see that pattern with our clients too. It's a human thing, right?
Everything when it comes to finances is a very touchy topic. A person who is a businessman is responsible for not just his family, but also for that of his employees and everybody surrounding him and for the other people and other vendors and all of that. So there is that burden of doing your day job and then everything gets keep buried under the rug when it comes to accounting, taxes and financing. Oh, I'll get to it next month, I'll get to it next month. Next month turns into six months and then a year and then it takes time. So I totally, totally can appreciate that sentiment.
So with that said tax time, preparing tax returns versus doing actual planning all year round, what do you see as the difference? I'm sure your firm offers that similar to our firm as well because we are a full blown all season long firm and we are there because businesses don't stop working off season. Everybody's working around the clock for all 12 months of the year.
[00:08:07] Speaker B: Yeah, well, you know, certainly in many businesses, tax planning simply means, hey, can you guys make some estimated taxes? So you're not, you're not shocked, you know, at the end of the tax time. That's kind of the level one tax planning, making estimated payments. And you know, half those people say I'll just put it off and deal with it. And they don't care about penalties and all that and that's fine.
[00:08:32] Speaker A: I've heard that before.
[00:08:34] Speaker B: Yeah. And I don't think it's such a bad strategy sometimes if they're tight on working Capital if they need their funds, then hang on to it. Right.
[00:08:43] Speaker A: If cash flow is an issue, absolutely.
[00:08:45] Speaker B: Yeah, hang on to that. And if you can't make your tax payments at that time, hang on to it. It's the cheapest loan you'll ever get. I know that sounds anathema for some of us in this business. Don't pay your taxes. I'm not suggesting that, but if you can't work on. Don't. Don't just not pay and leave it alone because they will send some mean, nasty letters. But you know what? It's a pretty cheap loan. And if you got to do a payment plan, you got to do a payment plan. If you got to redo it after two or three years, do it. Manage it like you would any other creditor.
[00:09:21] Speaker A: I tell people the same exact thing. It's a credit card bill. And when you are borrowing from estimated tax thing, it is cheaper money. But when you are looking at it after the fact with the payments and penalties and interest, it can add up. So it's up to you how you want to deal with it. You know of the facts, do your numbers. That's where it comes down to the planning piece. You know, it's not just about doing the stuff.
[00:09:42] Speaker B: To borrow money off a credit card to pay taxes is total madness. Pay 18% when you can borrow at the government for what, 7%, whatever it is now.
[00:09:52] Speaker A: Right, right. No, I totally get it. Unless you could find like a 0% these days. They have that right for 18 months. Then I advise people, if you can get like a small, small interest, almost no interest. People are still seeing a lot more of those invitations then I encourage them. Absolutely.
[00:10:07] Speaker B: Yeah, that's. I agree. Yeah. Great.
[00:10:09] Speaker A: Where do you see business owners most often lose clarity in their numbers? That's a very interesting one for me too. And I want to hear your perspective. As a fellow cpa, I love your term clarity.
[00:10:20] Speaker B: And I've seen that on some of your content out there. I've used that term before, more privately with business, but now I'm going to, with your permission, since you seem to be using it more, I am going to embrace that concept of clarity.
[00:10:36] Speaker A: All yours.
[00:10:37] Speaker B: Thank you.
Financial clarity is kind of a fancy term for.
It's stated it in the terms of a benefit to the recipient. And that's probably why you use it.
When we say we'll issue you financial statements, that doesn't mean anything to them. But when you say we'll bring you financial clarity, I think many people know the term clarity. Right. I Don't know what it would be in Spanish. Right.
[00:11:08] Speaker A: Something.
[00:11:09] Speaker B: What would it be? What would it be in Spanish?
[00:11:11] Speaker A: My Spanish is little rusty, so I'm not the right person for that.
[00:11:15] Speaker B: Okay. Someone will wait.
[00:11:18] Speaker A: But I see you. Clarity.
[00:11:19] Speaker B: Clarity is a great term.
And so that's the key part of this, is making sure that we can deliver to them financial clarity so that they know what happened, where they are.
And to me, that's kind of the key thing. Clarity means not just here's a report that gives you your balance sheet. Right. They don't know what that stuff means. Right. They don't know what our terms mean. And I think, you know, off the, off the record, I suppose would be, I don't think our industry has done a very good job of bringing financial clarity to small, medium sized business owners. There's some that are very smart, some are smarter than you and I. Great. Okay. I'm not talking about those.
But I don't think we've done a real good job as an industry in helping people recognize what this means, why this is important.
[00:12:16] Speaker A: Yeah, yeah. And I often find our clients being in that particular scenario, the exact scenario you're talking about, because I feel like our language and the lingo is so complicated for some of the people to understand, and you just sit there and help them understand the difference between what's a profit and loss and what's a balance sheet and how income is different from your cash flow. Simple, simple language. To us, it sounds simple, but to people who are actually out there running businesses, they're like, I don't know what that means. Just do it for me. You know, that's the answer we get. With that said, what's one financial habit that can immediately make an entrepreneur feel more in control, in your opinion?
[00:13:00] Speaker B: I guess the, you know, it depends on, you know, what the status of the company is.
But I would say that since most businesses, cash is, is always a, a thing, right?
[00:13:16] Speaker A: Yes.
[00:13:19] Speaker B: Yeah.
[00:13:19] Speaker A: Yeah.
[00:13:20] Speaker B: That's the lifeblood of it. And so I, I think what I, what I see is a, is a denial, you know, ostrich thing where they, they don't always want to see what they may not like. And so, you know, I guess, you know, in the IRS world it's, they get a, they get a letter and they know the logo on the envelope and they, I mean, I'm sure you've had this too. And I don't blame them. I mean, I get IRS letters for, you know, they, for whatever they're saying sometimes. And I, I kind of cringe. Like, I know, I know I pay my taxes and all that, but I don't like it.
[00:14:00] Speaker A: Right, right, right.
[00:14:02] Speaker B: And so sometimes they just don't open it up. Right. They don't want to open up.
[00:14:05] Speaker A: I have clients sending me pictures of the envelope with a letter inside. I'm like, it would help if you open up the letter and send me a picture of the letter. So I completely get. Right.
[00:14:16] Speaker B: Yeah. So the, the. The. I guess the lesson for me, the most important however you phrase that message tip is face these things, you know, kind of head on. You know, there's so much on. On like, Caesar and these guys that, you know, that's why I like military strategy, which we'll probably get into later on. But it's like, don't be afraid of your enemy.
[00:14:43] Speaker A: Right.
[00:14:43] Speaker B: Don't be afraid of this. Embrace it. Right. And, and, and win that. Right. You can't win it if you hide from it.
[00:14:53] Speaker A: Yeah.
[00:14:53] Speaker B: It will beat you. It may be a long, drawn out, you know, defeat.
It might even be an instant one, but you might as well kind of get on it. And whether it be with creditors or whomever, I've just found that if, you know, well, morph into creditors because that can be an issue.
It's so much better to deal with those things head on and appeal to the kind of human instinct with creditors if, like, you know, if things have gone on in your life, you can't pay your bills, Ask for some, you know, understanding. And I don't think that's Pollyanna. I don't think it's naivete. I mean, nobody's ever accused me of being my age, of being naive. Right. But, you know, you can. You can work through those things. I kind of believe that there's a human compassion element buried even in the most challenged, you know, aggressive person that try to confront those things head on. I think that's good in relationships, too. You know, just business relationship, personal relationships. Get on it, face it, and do your best to try to win.
[00:16:02] Speaker A: Yeah. No, the message I hear is face your fear. You know, get ahead of the problem before the problem gets ahead of you. Something I have always learned, seeing how clients end up in situations that are tougher. And we go, we wish we had started sooner, but you know what? It's never too late. So go ask for the help from the right people.
So this is such an important distinction. And numbers should tell us what happened. They should tell that story. And, you know, I always tell clients that your books are your path, and it's a story that they are going to lead you onto and they should help you decide as to what's next for you. After the break, I want to go deeper into accounting as a leadership tool and why understanding your financial reports can change the way you run your business.
We'll be right back with more tips to help you save money, reduce taxes and make your finances work for you. Stay tuned. And we are back. I am Divya Gill, CPA and your host of Guilty of Savings on NOW Media Television. Let's keep saving. Welcome back to Guilty of Savings. I am Divya Gill, cpa. Stay connected to the show and NOW Media tv live or on demand anytime you like. Download the free NOW Media TV app on Roku or Apple and unlock non stop bilingual programming in English and Spanish on the move. Catch the podcast version at NowMedia TV. I'm here with Kelly Kaufman, CPA, business strategist, entrepreneur and CEO of Everyday CPA Inc. Before the break, we talked about why business owners need financial strategy before tax season and not just during the tax season.
Now I want to get into one of the most practical ideas for any entrepreneur watching the show. Accounting is not just about compliance, it's about leadership. The goal here is to make accounting feel approachable and useful, not intimidating.
We hope our viewers see financial reports as tools for visibility, discipline, pricing, hiring, planning, growth and my favorite word, clarity.
Kelly, why do you believe accounting should be treated as part of leadership and not just bookkeeping?
[00:18:16] Speaker B: Great question. Again, if you it's a great I wish I could have answered it better for my daughters who wondered who I tried to get to get go into accounting when they went to college.
Nobody, nobody did four generations of accountants and they didn't do one of it. And, and part of it's because most of it's frankly because we don't they it's not recognized how how important and critical.
Utterly critical Accounting history of the business, right? It's another, it's another term for as we talked in the previous episode episode accounting is simply a compilation of the history of your enterprise.
And in order to understand where the enterprise needs to go, you kind of need to know where it's been, right. What battles have to use a military thing, right. What battles have you lost? What battles have you won?
And especially those that you've won and maybe those that you've lost too. You stay away from that. You go to those.
[00:19:23] Speaker A: Right.
[00:19:23] Speaker B: The only way you can really do that is if you look at the numbers and see what did we do? And the better those numbers are the better the, you know, the ratios and margins and all that cool stuff we can do in accounting with the numbers it needs to be critical to the leadership of the company. If it's not, you have a bunch of, you know, creative people making decisions about where to spend the firm's capital and resources and assets and making decisions not based on real solid numbers. Right. That say, yes, do this, no, don't do that.
[00:20:07] Speaker A: Right.
[00:20:08] Speaker B: I hope that got the answer that you wanted.
[00:20:10] Speaker A: No, it did. The point here is, you know, you got to look back at the past to be able to look forward towards the future. And I will add to that, the history definitely repeats itself too, you know, so if you did not look back and see what could have been done differently, you will at some point repeat those patterns yet again. And then it might be too late or you might have to restart or you might regret that, you know.
[00:20:33] Speaker B: And accounting helps tell you. Yes, good accounting, good management accounting, for instance, helps tell you what, what battles to avoid what, what competitors to avoid.
[00:20:48] Speaker A: Right, right, right.
[00:20:50] Speaker B: Which products to avoid.
[00:20:51] Speaker A: Which products to avoid. Yeah, yeah.
[00:20:53] Speaker B: It all comes from the numbers, so to speak. Right.
[00:20:56] Speaker A: Yep. Like we said, talked about it earlier, they all will tell your story one way or the other. With that said, what numbers do you think every small business owner should take initiative to personally understand? It doesn't have to be the entire financial statement per se. Right. But what do you think is important?
Even if they have a CPA like you and I, what should they be looking at?
[00:21:21] Speaker B: Well, I'm not going to answer that question the way you might want.
[00:21:24] Speaker A: Okay.
[00:21:25] Speaker B: I am going to say this though. I'm going to say there's probably one to two to three metrics, three metrics that are critical to every business.
I don't know what those are because I don't know what the business is. But if it's a growth, if it's a capture market share business, the roi, how much are we spending on outreach and how much are we getting back? So there's a metric there. If we're a, if we're a capital rich real estate business, we're not trying to, we're not worried about, you know, advertising, spend and ROI that way. Worried about that. So every CEO, every board member, every and everyone on the management team needs to embrace the what is the critical metric? And I'm not just talking about customer satisfaction, warm and fuzzy stuff. Yeah, everybody. Yeah, that's important.
[00:22:22] Speaker A: Yeah, we all aim for that.
[00:22:24] Speaker B: We're on for me for that.
But a metric that is important for the enterprise. And then, and then the CEO or the chief executive needs to connect it to every, each and every leader within the enterprise.
This is your metric. Or you tell me what is your metric that you need to. That we need to. Well, that's the first thing I do is have them produce it. And if they can't, you need a new executive there. Right. They need to know what that is. And it's probably one. It can't be 10, right? No, it's gotta be.
[00:23:01] Speaker A: It has to be achievable. It has to be something that you could put together as a goal for you for the year.
[00:23:06] Speaker B: Yes. Right.
[00:23:07] Speaker A: Yeah.
[00:23:08] Speaker B: And that's lifeblood. That's the thing that they have to monitor all the time. And everything needs to be focused on winning that battle, that one metric battle.
[00:23:19] Speaker A: Right? No, I absolutely can't emphasize that enough. I think that's a great point.
You know, pick your goals. I tell people, pick the goal that's the most important to you. Say you are a startup or say you are a seasoned professional, but now you want to expand, expand it to the next level.
What is your goal? What is important for you to get there? And you're referring to the metrics that will get you there. You know, which takes us into the next thing that we could possibly ask saying, when you're looking at these financials, what can these numbers reveal about how the business is being managed?
[00:23:54] Speaker B: Well, certainly, Divya, it's profit margin as roi.
How efficiently? How well are you using capital?
[00:24:03] Speaker A: Right, right.
[00:24:03] Speaker B: And, and every dollar in revenue that comes in, how much free cash flow is that generating?
And, and I really try to push people into. I personally, I love cost accounting, management accounting. Some people hated it, you know, and studying for a CPA exam, I love,
[00:24:24] Speaker A: I used to really enjoy it because it tells you all the metrics and everything in a very different way.
Looking at numbers.
[00:24:30] Speaker B: So yeah, looking at numbers and allocating costs and overhead, it's just so fully burdening. I think that was the term we used to use in County. You fully burden the cost so that revenue gets all these costs get attached to it. And looking at the, at the return on those, I think is in any business that has to generate revenue, that's the number that I think is probably the most important.
How much did it cost us to get that revenue?
[00:25:07] Speaker A: Right, because you could bring in all the revenues, but if your cost piece is not managed, that revenue is essentially not going to do you much good down the road.
And how can clean accounting help an entrepreneur make faster and More confident decisions.
[00:25:24] Speaker B: How can. How can. Did you say clean accounting?
[00:25:26] Speaker A: Yes, clean accounting.
[00:25:27] Speaker B: Good accounting.
[00:25:28] Speaker A: Clean accounting. Because there's accounting. Right. But then there is accounting that is not very clear.
Okay. But then there is accounting that will give you clean set of books.
[00:25:38] Speaker B: Yeah, yeah, that's good. I've used the term messy accounting. I've never used the term clean accounting.
[00:25:43] Speaker A: It's the opposite of that.
[00:25:46] Speaker B: That's good. I know what it is when I see it, or I know what it is when I don't see it.
[00:25:52] Speaker A: Right, right.
[00:25:54] Speaker B: Well, clean accounting gives you good, valid numbers.
It tells you it's the getting good information.
It's kind of what used to be one of our talking points. Our mantras here is helping business owners make timely, better decisions. And clean accounting will help you.
It won't make better decisions for you, but it will help you make decisions.
[00:26:21] Speaker A: Right? Right.
[00:26:23] Speaker B: If you don't have clean accounting, if you don't have good record to base your decisions upon, then it's just luck, I think. If you happen to make a good decision, then, then great. And maybe you've got this phenomenal intuition. And I think a lot of small business people do. Right. They. They know their product, they know their market, they know what people want. And I think that's great. I think that's more powerful than any McKinsey study. Right, right. Somebody that's in the field that works it. So I totally respect that. I also think it needs to be checked and, and kind of disciplined. The. The bigger it. It goes and more people rely. You got to make sure that the CEOs or whoever's doing that leadership thing, that they got their finger on the pulse now, or there's not other. All of us have our own myopias, biases.
My career has been riddled with things that have been staring me right in the face, and I just missed it. Right. I just thought, dang, how did I miss that thing?
[00:27:25] Speaker A: Right.
[00:27:26] Speaker B: And so that happens. So it's great to have a team that checks that and feels there's a management team that helps check the validity of leadership to make sure it's on track.
That's a good thing.
[00:27:38] Speaker A: Right. It's like checking the pulse of the business, making sure it's running right. Not too high, not too low. So, yeah. And then what would you say to a business owner who feels intimidated by the profit and loss statements? And I'm sure we see it plenty. You have seen it more than me, where people are just scared of balance sheets and cash flows, and they're like, don't even show me those. I don't care what they are.
[00:28:00] Speaker B: Yeah, well, I think in part that's our fault for not, not, not communicating.
Why it's important.
So here's the numbers, here's the report. Do what you want with it. I think it's, it's. We are all better served if we do a better job of communicating why that's why that's important and what this balance sheet is really saying.
[00:28:30] Speaker A: Right.
[00:28:30] Speaker B: And put it in language.
I'm a firm believer, as I'm sure you are too, because you wouldn't be as successful as you are if you're this way. I, I believe you have to communicate in a language that is understandable to, with your audience. If they're, if they're B school, you know, scientists, you can communicate a certain way. If they're Wall street guides, you communicate a certain way. You can't talk too slowly if you're talking to those guys. You gotta know, you gotta, you can't be wasting your time. Similarly, and it's no judgment on anybody here if you're talking to the, the long haul trucker. Right?
[00:29:13] Speaker A: Oh, absolutely.
[00:29:14] Speaker B: I call them. I say we have white collar, we have gray collar, which is kind of semi professional. We have blue collar, and we have no call.
[00:29:25] Speaker A: Yeah.
[00:29:26] Speaker B: We have to communicate. Yeah. Our language, our stuff in a language that is understandable. And I just think our profession has just done, you know, on average, a pretty bad job of saying, well, here's what this means. You don't understand it. Oh, I'll take care of it for you. Right.
[00:29:52] Speaker A: Yeah.
[00:29:52] Speaker B: Instead of really telling people, this is why this is important for you, often
[00:29:57] Speaker A: we get told a story that when people come from a different place going.
My old CPN never took the time to explain to me what to do with this. So I see a lot of value in making sure they understand that this is your profit and loss. I often tell them, don't worry about your balance sheet yet. Talk to me about that. Once you master your P and L and how to manage your costs as indicators of your revenue and components of that and get that clarity you're looking for, get the understanding so that you know where your business is going and how far you want to take it.
And it's important because not everybody's an accountant to your point. And we need to translate it to the normal language is what I'm getting out of it.
[00:30:40] Speaker B: Yeah, yeah, that's right. I'm writing a book and I'll give you an advanced copy when it's ready.
[00:30:46] Speaker A: I would love to read it.
[00:30:48] Speaker B: Stop doing accounting.
[00:30:50] Speaker A: Okay, interesting.
Written by a cpa.
[00:30:54] Speaker B: Yeah, written by a cpa. And it's, it's getting at the heart of focus on your business. Stop doing your own journal entries and trying to do accounting because they don't do a very good job of it. Right. And so I think it's important for them to recognize that and don't go down that path because if they can't do their accounting right, they get bad information. They get, you know, they get balances on their report that don't match the bank balance. They said, well, my, my quickbook said I had 100,000 in the, in the bank. But my, but I'm overdrawn by 5,000.
[00:31:40] Speaker A: Yep. Hear that all the time.
[00:31:43] Speaker B: Yeah.
[00:31:43] Speaker A: So, no, look forward to you printing that. Like, well, look forward to you publishing the book. And, you know, I will definitely be looking forward to my copy.
Well, coming up next, I want to explore something that makes Kelly's perspective especially unique. The connection between business strategy, competition, and lessons from history.
We'll be right back with more tips to help you save money, reduce taxes, and make your finances work for you. Stay tuned. And we are back. I am Divya Gill, cpa and your host of Guilty of Savings on NOW Media Television. Let's keep.
Welcome back to Guilty of Savings. I am Divya Gill, cpa, and today I'm speaking with Kelly Coughlin, CEO of Everyday CPA, Inc. And a fellow CPA about how business owners can use accounting, tax planning and strategy to make stronger decisions.
One thing I find fascinating about Kelly is that his business thinking is not only shaped by accounting and finance. He is also in the process of authoring his book, and it's also shaped by history, classic leadership and competitive strategy. The goal is to bring out Kelly Coughlin's distinct personality and intellectual angle. The conversation should connect historical thinkers and frameworkers like Sun Tzu, Aristotle, Julius Caesar, Luca Pisioli, and Michael Porter to practical business decisions. The key is to keep it grounded. Competition, positioning, discipline, timing systems, and survival.
Kelly, you mentioned a lot about history and historical leaders and thinkers as influences. What do they teach us about business strategy today? Now, that's an interesting one.
[00:33:22] Speaker B: Well, Divya, you, you said something like intellectual, okay, I'm not an intellectual. Okay.
[00:33:30] Speaker A: I had a feeling you would say something that effect, but I would disagree.
[00:33:34] Speaker B: I'm not an intellectual, okay? I'm just a, a guy that, that, you know, it could be military, it can be sports, whatever metaphor I tell people I'm I'm not a. I used to be a better athlete than I. Than I am now. I still like to run and try to box and that kind of stuff. But I love competition, and the only sport I can. I can compete in is business.
Yeah. And.
And it's very much like. And I. I'm careful when I say this. It's a. It's similar to war, except we don't get our head shot off.
[00:34:14] Speaker A: Oh, thank God for that.
[00:34:16] Speaker B: Thank God for that. But many of the. Of the lessons that we learn, I mean, the corporate structure that we have now is kind of a structure of the Roman army. Right. So it's very. It's very similar. And I know for you may not resonate to it because, you know, maybe women don't like that, but I like it. I. I like the military stuff and the, The Sun Tzu. I mean, Caesar, for instance, one of his. One of his great ones is, like, just taking advantage of decisive action and momentum. And he says things like, you know, invest in talent and people. He was. He was very much into getting the right people in that, managing his own circle. There's a great one for Caesar.
[00:35:04] Speaker A: Right, Right.
[00:35:05] Speaker B: He obviously didn't do a very good job of it because his. If his inner circle was the Roman Senate, who ended up killing him. Right. But it's a good.
It's a good, you know, lesson. Sun Tzu. God, there's so many great lessons in Sun Tzu. Win. Win the battle. Win the battle before it begins. Right.
Positioning versus fighting. Get yourself positioned right before you start fighting.
Those are. Maybe they're common sense for, you know, the other. Avoiding strengths. Avoid your competition strengths. Exploit their weakness in our space, for instance, the tax and accounting space.
I don't know. I think it's probably smart to avoid the areas that our biggest competitor, the fintech company, Intuit. Right. Who's that? You have. You avoid their strengths and you exploit their weaknesses.
[00:36:06] Speaker A: I think that's a great strategy, and
[00:36:08] Speaker B: I think for us, that's what we have to do. I would not want to be, you know, H and R Block competing against Intuit.
[00:36:17] Speaker A: Right, right.
[00:36:21] Speaker B: Their strength is their strength, and now they have to pay. So we stay out of that space. Right. I think. All right. That. I think you're staying out of that space. I don't know enough about your strategy, but.
But those are all kind of stuff that we pick up from people that were in serious competition. Right, right. Taking over countries and empires. Right.
They really had to fight for things like that.
[00:36:49] Speaker A: Right. I feel that Similarity here where we are talking about something that I think we both practice in our CPA firms idea to stand out and be unique from the competition and not just follow where the crowd is leading you to. And that would be the intuits of the world. We do not want to be one of them. We want to definitely steer towards offering a unique solution to our clients and positioning ourselves like we do at Gilt Hacks Group. We offer red carpet service. We treat clients with respect and a lot of care. But at the same time it's a mutual way of doing things. So totally see that as how it can help you grow in today's dynamic competitive environment.
Which takes me to the next question. How does strategic thinking from history apply to a small business owner dealing with real life competition here?
[00:37:43] Speaker B: Well, the, the key word in your, in your question was competition.
And I'm going to, I, I think what I want to do and answer that is try to pivot to one of the best analysis that I've ever seen in an analyzing competition.
I recommend this to pretty much anybody that, that is, will read and is interested in reading. And that's Michael Porter's Five Force Analysis.
[00:38:20] Speaker A: It's a pretty interesting one.
[00:38:22] Speaker B: Yes, it's just an amazing piece. I have, I have recommended that to people that have been, you know, running multi, multi million dollar companies and it's kind of changed. You know, a couple of them, I recall, pulled their executive team together and said if you guys, you know, a couple of them already know it. Yeah, we've seen that. Right. But he hadn't. And it's just a great way to help I figure out your, the, the competitive landscape that you're in and, and you know, I know you've heard this before and people, they come up with a new idea, new, new concept and who's your competition? Oh, we don't have any competitors. Right. And that it just totally dismembers that kind of argument and gets people thinking about competition. Because competition is the thing that in Porter's perspective of competition, that includes rivals, substitute new entrants, people that are there now, or products that kind of compete with market share or attention or wallet. Right. When you fully burden competition is that then that really is what stands in between a business making a million dollars a year and $100 million a year. Right. Is dealing with competition.
[00:39:50] Speaker A: Yeah, it's about positioning yourself in a certain way is the message I'm getting.
So if we were to talk about these entrepreneurs and I know you have talked about strategy with military as well as Sun Tzu. So if we were to link all of this, what can entrepreneurs learn from these strategies without becoming too aggressive or short term thinkers? You know, what can they get or take away from this?
[00:40:18] Speaker B: Well, what you first do is whether it be Porter's analysis or whatever you do, or talk to smart person like you and say, what do you think?
Help me understand my competitor set and you could get them down that path.
Whatever it is they do, they can do to identify their competitive landscape. And then the next step is you identify who your true competitors are. And then in Porter's world, he would say rivals, right? People that are dead on in your space.
And if you and I were in our same geographic markets, you and I would be rivals, Right?
[00:41:00] Speaker A: Right, right.
[00:41:01] Speaker B: We have a similar value proposition. We want to take care of customers. We're in geographic market. Thank God, because you'd probably crush me if I were in your market.
[00:41:09] Speaker A: Or it could be the other way around.
[00:41:11] Speaker B: No, but we would be rivals. And, and so you look at who are your rivals that are right in your space and then understand what, what can you do? Is there anything you can do to either avoid them, avoid their strengths or exploit their target, their weaknesses.
[00:41:33] Speaker A: Right.
[00:41:33] Speaker B: Without having to get into bad mouthing and throwing people under the bus and trashing your opponent, that kind of thing. That's a tactic, right? Of course, if you want to do the tactic. Okay, right.
[00:41:45] Speaker A: Yeah, but you don't want to get to that. You want the work to prove for yourself. And those not the top tactics I think our firms would engage into.
[00:41:53] Speaker B: No, not at all.
[00:41:54] Speaker A: Yeah.
[00:41:55] Speaker B: And if you find out through that analysis, that man, let's say it's you and me and, and, and I see, dang, she's good, she's smart, she's more attractive than I am, I can't compete with that. Right.
Then you either have to pivot and to avoid that partner, which is probably what I do, I'd say, hey, I got 40 market share, you got 60. Let's quit beating each other up on price or whatever it is. Maybe we figure out a way to work together. And, and I say I take Hollywood and West la, and you take east la, right. You take the or. I think that's the, that's not the high quality area, is it? I don't know, I don't know la, but I give you the low rent market and I get that. But you know, you come up with something, right?
If you have a rival that you can't, you're fearful of. And so you either Avoid them or you figure out a way to partner with them or you exploit their weakness.
[00:43:01] Speaker A: Right, right. This almost takes us into that game changing framework. Right. As indicated by Michael Porter's Five Forces.
How do you think a small business can use that without making it overly academic, so to speak?
[00:43:17] Speaker B: I don't think it's academic at all, frankly. If you do that analysis, well, you put names, let's just stick with you and me. For instance, we would put, if you did a five force analysis and I did it, I would have you written your company written down right in there as a rival. I would have Intuit written as a, as a, not a direct rival, but a competitor. Right. TurboTax or QuickBooks kind of thing. But I'd also have them as a, as a compliment or too. That's the other thing we all intuit And I use QuickBooks for my own business. I use it and I use TurboTax a little bit. I use ProConnect for tax software.
[00:44:02] Speaker A: We all use softwares anyways. We use Pro Series and we use ProConnect and we use QuickBooks. So there's no escaping into it on that end.
[00:44:09] Speaker B: No, there isn't. And so you could be rivals, you can be competitors and you can be complimenters. That's the nature of this ecosystem and that's fine. And I think because of that it's an ecosystem. That's why I think people better treat each other with respect and not throw people under the bus. And so, you know, it's, you know, I wouldn't do that and you wouldn't do that. But it's not academic in that what you're doing is really putting names, companies in these boxes, if you will. Rivals, competitors, substitutes.
You know, a substitute in our business is people want to do their own tax return. They want to. They don't want to do accounting. Right. They, they don't. They want to use Excel or probably
[00:44:54] Speaker A: the biggest substitute or Chat GPT these days.
[00:44:58] Speaker B: Or Chat GPT.
[00:45:00] Speaker A: Exactly what historical strategic lesson do you wish more business owners would apply before making big financial decisions? And that's a good one in my opinion and want to know your take on it
[00:45:12] Speaker B: before they make big decisions.
[00:45:14] Speaker A: You said yes, the big financial decisions
[00:45:17] Speaker B: to be specific big questions that need to be asked and answered.
And I guess I think the answer is for big decisions.
Make sure you get. Yeah, this is this probably my answer on this.
All decisions require thought and thinking to go into making a good as an executive.
The bigger the decision, the lest we should rely upon our own instinct and our own skills.
And so I'm a big fan of collaborative thinking. And the bigger that decision is, the more important it is to get insight from other people and have a team of trusted people and colleagues, your competitors. Right. I'm thinking about, you know, I'm thinking about hiring some people from overseas. You know, I might, it's a big decision. I might call you now that I know you, I might call you and say, hey, you have any experience doing that? Right. Have you ever dealt with Philippines before? India? I've dealt with Philippines, not India. What do you, you know, that kind of thing, the bigger that decision, the bigger that sphere of, of influence that you can, that you should expand to get help making that decision. And I think that would be my answer on that.
[00:46:53] Speaker A: Okay, so what I'm getting out of it is do not be operating in solo. Reach out to your company, your network out there and be able to talk to people with like minded thinking.
And you know, that is a very powerful way to look at business too because strategy is not just a corporate word and it also is how owners decide where to compete, how to price things, when to grow, what risks to avoid.
And when we come back, I want to bring this all together and talk about what the modern CPA relationship should look like for entrepreneurs who want more than just tax filing. They want clarity, guidance and smarter growth. We'll be right back with more tips to help you save money, reduce taxes and make your finances work for you. Stay tuned. And we are back. I am Divya Gill, CPA and your host of Guilty of Savings on NOW Media Television. Let's keep saving. Welcome back to Guilty of Savings. Stay connected to the show and every NOW Media TV favorite live or on demand anytime you like. Download the free NOW Media TV app on Roku or Apple and unlock non stop bilingual programming in English and Spanish on the move. Catch the podcast version at NowMedia TV.
I am back with Kelly Coughlin, CPA business strategist, entrepreneur and CEO of Everyday CPA Inc.
We have talked about strategy before tax season, accounting as a leadership tool and what history can teach us about competition and decision making.
Now I would like to focus on the relationship business owners should be building with their CPAs and financial advisors. And this is very near and dear to me.
It's a near and dear to me question, Kelly. Because it's important that the viewers evaluate whether they have the right financial support system and the right person engaged for the project or for a lifetime. Right? All of us have relationship with our clients. Many of US do for many, many years to come. The conversation should define what a modern CPA can provide beyond compliance planning systems, cash flow visibility, tax strategy and strategic thinking.
So what do you think, Kelly, in your opinion, how has this role of a CPA changed, or I would say evolved for small and medium sized businesses?
[00:49:16] Speaker B: Well, this is near and dear to me, too, Divya, and it's near and dear to me because I, I don't want to sound like I've been throwing our industry under the bus, but I'm kind of. Again, okay, Because I think our industry has been riddled with technicians, with.
Dr. No. Right.
No, you can't take that deduction.
Here's how you do this. This is a, it's just there's tons of CPAs that I would not want to take any business advice from. Right. I just, all they've done is accounting their whole life. They've whatever software they used to do it by paper, now they're doing with software or whatever. Right. They're just, I don't know, that's, they're technicians and that's great. They fill a purpose, but I guess they squander. The thing that I love about tax and accounting, other than hating it. Right. Is I love that we get to see the guts of companies. We get to see what made it work and what made it not work.
And we get to get into that. That's our segue. Right?
[00:50:40] Speaker A: Right.
[00:50:41] Speaker B: Tax returns, let's face it. I mean, if I didn't do another tax return for the rest of my life, I'd be a happy, nearly happy man. Okay?
But it's the way we get in and look at things and, and give them answers and solutions. It's a great way.
I know, I know investment people that would love to get the data for that we get as tax people.
You, you ask your client, hey, send me your, your, your Merrill statement, your bank of Mary, your Goldman statement. Sure. Right, right. They do that.
An investment guy asked that. They go, well, wait a minute, what are you going to do with it? Right. You know, are you going to now start trying to sell me something? And that's why I've stayed out of that business, for that reason. I don't want to be in that, in that, in that circle. I've been encouraged, I'm sure. You have to get into the supervisory or wealth room. Maybe you did. I, I didn't. I just didn't want to get into that, that stuff. But what we can do is the, the, the, the profession has always been there it's always been this way, but it's. We've, we've created this world of technicians that don't see.
And, and frankly, you know, they're probably not skilled enough. You know, there's a lot of people that do tax returns that aren't CPAs or even EAs, and.
[00:52:10] Speaker A: Yeah.
[00:52:11] Speaker B: You know, that probably shouldn't be giving advice. Okay.
[00:52:14] Speaker A: Oh, absolutely. I agree. They don't have the experience or the knowledge that qualifies them to do those returns. And I honestly feel those people jeopardize the future of some of those clients, in my opinion, and get them stuck in horrible situations. I'm sure you can vouch to that as well. Yeah, yeah.
[00:52:33] Speaker B: And they sure as heck shouldn't be doing business advisory and strategy stuff.
[00:52:38] Speaker A: And I don't even think they are capable of doing that. I'm not putting anybody down. But that's the trend we see us CPAs have the advisory piece buckled down. The newer, modern CPAs, all of us who are trying to give this profession a different approach and way of thinking, I would say so.
But then why do entrepreneurs need more than someone who just files the returns or reconcile the books? And I get that a lot. You know, why do you need. Why do you think I need you to do more for me?
All I need you to do is file the tax returns or reconcile my books and just help me file the return at the end.
[00:53:20] Speaker B: Fine. And if that's all they really want, fine. That's fine. That's fine.
We can certainly do that. Right. That's no problem. And not everybody needs a business strategy. If it's a, you know, family business and it's, you know, they started it from ground up and their, their intuition is right, and if they can get their records on time, I, I don't think everybody should have to have a 300, $500 a month accountant. If they can, if they can get their stuff and if they can run their business, it's all about can they run their business successfully, profitably.
But when you start looking at margins, you start saying, yeah, Joe, yeah, you probably don't need us. But I just notice here, your profit margin went down by 25% this year.
Do you know what's going on there? Any, any issue with that?
You know, there are ways that we can ask questions about that that open the door for them, but certainly some of them don't want help, and that's totally fine, too.
[00:54:26] Speaker A: I agree with that. Not everybody needs a cpa. But then if you can add value for the Client, that's where I would advocate it. There are times I tell people that's fine. If you want to go to TurboTax and file your return, I'm totally fine with that. You probably don't even need any hand holding as long as you just have a W2 and simple forms to crunch.
[00:54:44] Speaker B: Yes.
[00:54:45] Speaker A: Which leads me into the next question of advisory.
So what does a strong advisory relationship between a CPA and the business owner actually look like to you?
[00:54:55] Speaker B: I think it looks like we're, we're showing good.
We're giving financial clarity. Right. And we're giving clarity in areas that they don't even need.
They didn't even know that they could get clarity on. And we can't wait for them to, to ask for that. It's like, you know, who was it Ford that said, you know, we'll give you. If. If I waited for people to ask me for an automobile, they wouldn't have. They just wanted a faster horse. Right.
They didn't know they needed an automobile.
We did. And so we have to lead them that way. And what I found is by delivering.
If we understand their metrics, their business and we understand their metrics, especially those key metrics that one, two or three critical metrics and give that to them. Right. And show that to them, say hey, this is a good thing that you should know. That's what I like to tease them with, with something like that. I mean that sounds, you know, that's a nerd accountant. But say we tease and excite somebody with a metric. But, but it does, I mean it can, it's, it's about their lifeblood, it's about paying for their kids school and they're supporting their family and all that.
[00:56:15] Speaker A: Yeah, it's a very personal decision. Totally get it. Yeah.
And then how do you help owners connect these dots between the financial data and the business strategy to build a little more on this?
[00:56:30] Speaker B: Well, what I try to do is get them to understand that, understand what it is that metric means, that number means and, and then ask them to come to the realization and discover themselves or with their team.
Why is this important or is it not? I kind of believe this stuff has to come.
We can trigger it, we can identify it as a potential. I'm, I'm always hesitant. When I was early in my career at PwC, I was out in New York at a big engagement and I was young, I was, I don't know, 28 or something like that. I was with a partner and this partner, we were with a financial services company and this, this partner was kind of coming in there, but we really determined that this is going on your company, that's going on that kind of thing at this branch, at this broker firm. And this branch manager handed that partner his, you know what said, you've never worked a day in a, in a brokerage branch and you have the nerve to come in here and tell me what I'm doing wrong on this. You haven't worked a single day in here. And he totally undressed him. And it was kind of true.
It would have been better to say things like, here's what we think. What do you think? Right. What are your thoughts on this? It's just a much better way to do that than some, you know, Bob and Bob from, from the office space coming in and telling people how to run their business. We gotta be real careful of that.
[00:58:08] Speaker A: Yeah. It's about communication, communicating it the right way. I always tell people, you know, there's a level of empathy involved because it's not just business. It becomes very personal for them when you're talking about finances and taxes and people's money. It's their job, it's their livelihood. You said kids, tuition, kids, you know, future, their own future at stake.
And so for business owners who are watching a show right now, what should they look for when choosing a CPA who can really support their growth for long term and short term success?
[00:58:44] Speaker B: Well, I divide the world up into kind of three things in a. Selecting any advisor.
There's got to be a culture thing here that's got to be a kind of a.
You have to find a good person. Right. And unless you want a sleaze bag, Right. If you're, you know, if you want that, then okay, then find that. Right.
But you got to find somebody that's honest, direct, clear that, that has the right.
I'm not saying everybody has to be good moral citizens, but I kind of think they got to be good people, Good, fundamentally good good people so that they don't lead you down the wrong path intentionally or unintentionally. A good North Star good, you know, that kind of thing.
Then they have to have what I, what is called, you know, kind of soft skills. Right. They not have to know how to communicate and read people and, and you know, sit on the side of the table of the desk with you, with you and not across from you.
[00:59:51] Speaker A: Yeah, right. Yeah. Be your partner. Be partner. Partner with you to help you build to get to where you want to go. Yeah, yeah.
[01:00:00] Speaker B: And then the last, oddly enough, is the technical part, yeah. They have to be technically skilled and sound and understand.
But I think it's, it's more.
And maybe this is because this is my strong suit. It's probably your strong suit, too. We understand business. Right.
We don't just understand tax and accounting, but we understand business and we understand what's been on.
On their side of it. Because you're running a business. Right? You understand that. And I've done, you know, I've worked with many different people and I, I, you know, I learned, I learned more by working with people and helping truckers and helping painters and helping blue collar people than I did at business school, I guarantee you. Right. It's.
And that just makes you more valuable to them that you can get. You can be someone that you can, that is, that will communicate with them that they can understand and is not trying to be the smartest guy in the room. I'll say. I'll finish with this.
I always, I like to say that I try not to be the smartest guy. I try not to act like I'm the smartest guy in the room. As a practical matter, I might be the second smartest person in the room. Okay. But I never want to act like I'm the smartest guy in the room because that just totally offends nearly everybody. Right. If you do that.
[01:01:26] Speaker A: Right. And something, you know, I feel we share in common is the fact that what we are, we could sum it down to one word, value system and connection.
Okay.
I honestly tell people you have to have shared values. You need to have the right person on your side. Like you said, on your side of the table, as your partner in your business setup, as your CPA who is happy to have difficult conversations, but in an empathetic manner, because that is important.
And as we wrap this up, Kelly, it has been said, such a practical and thoughtful conversation.
And I truly hope our business owners take away that financial clarity is not just about avoiding mistakes, but is also about thinking about strategic thinking. It's also about building a stronger company.
And when we understand our numbers, we make much better decisions. When we plan before tax season, and not just during the tax season, we reduce the stress. And when we treat accounting as part of leadership, we give ourselves a clear path towards growth. And if viewers wanted to reach out to you, Kelly, what's the best way, you know, would you like to share contact information?
[01:02:46] Speaker B: Oh, I'm everydaycpa.com, but I'd rather have them come through you. Okay. I want them to contact you.
[01:02:53] Speaker A: Sounds good.
[01:02:53] Speaker B: And if you want my help, feel free to outreach to me, okay?
[01:02:57] Speaker A: Absolutely. And I appreciate the sentence. I appreciate the help. Thank you so much. Thank you for joining me on Guilty of Savings. And to everyone watching, keep asking better questions about your money, your business, and your strategy. I'm Divya Gill, cpa, and I'll see you next time on Guilty of Savings.
[01:03:26] Speaker B: Sam.
