Episode Transcript
[00:00:00] Speaker A: Welcome to Founders Forum News. I'm Kirk Jaffe and today we're diving into strategies to help you grow your business. You're watching now Media Television.
[00:00:10] Speaker B: Welcome to Founders Forum News where we go beyond headlines and get into the decisions that protect margin, reduce risk, and build durable value. I'm Kirk Jaffe. Today's episode is a Founders reality check. You can be busy and and still be broke, or you can be governed by numbers that actually steer the business.
Joining me are two partners from my profit gurus, Harsh Jahav, CPA and former IRS auditor and big four veteran who now teaches accounting and tax. And Matt Jahav of customer success and operations leader who's helped scale teams inside major tech organizations. Gentlemen, let's set the foundation which should a founder measure weekly if they want the business to be scalable and bankable.
Harsh, why don't we take you for that one first?
[00:01:04] Speaker C: Very good. Well, I think, you know, first of all, thank you for having us on the show. We really appreciate that. I think one of the common profit illusions that we see is in small business, what we call phantom profits. On paper, the business looks fantastic, sales are growing, income statement shows profit, and the owner feels like things are moving in the right direction. But when you actually look at the cash flow, the business is pretty fragile. Let me give you an example. A company might show like maybe $2 million in annual revenues, maybe $200,000 in profit on the income statement.
It sounds pretty healthy. But when you analyze the cash position, we find that the owner's constantly worried about making payroll or or even covering vendor bills. That disconnect happens because profit and cash are not the same thing.
And few of these things that cause this illusion. First of all, accounts receivable. Many service based business and contractors recognize revenue when the work is done. But the customers may not actually pay for 30, 60 or even 90 days. So the income statement shows a profit, but the cash hasn't actually arrived at the bank.
Second is underpriced growth, where that makes
[00:02:14] Speaker B: a lot of second March. That makes a lot of sense. And we're going to get to the other pieces of it.
One of the things I'm curious about is what's the relationship between you two?
[00:02:24] Speaker C: Ah, okay. Matt, why don't you take that?
[00:02:27] Speaker D: Yeah, that's a great question. So I'm fortunate enough to have known this gentleman for my.
He's my brother and, and in many respects my mentor as well.
He's always had a business mind and has kind of groomed me into learning about business and More importantly, beyond business is the humanization of business. How do people interact and how people play a part in that. And so just lucky to have him as a brother and as a partner.
[00:02:55] Speaker B: You know, Matt, that was kind of what I expected you to say something around that. And the reason I cut you off harsh is it's easy to go down the rabbit hole into the technical details of what's going on and reading a balance sheet and, and reading a cash flow statement. But a lot of businesses are family owned businesses. And you know, one of the mandates of this show is how to do business in the digital marketplace. And that's what was so interesting about it. So you're talking about the CPA side of it. But even before we get to that, I want to hear what you have to think about. You know, what was it like building a business with your brother?
And now because it changes the dynamic, right? When you're in a family business, you and you're trying to talk about cash flow, you're trying to look at the income statements, you're trying to look at the profitability and manage the debt management, if you will, the vendor management, things like that.
How do you guys manage those conversations?
[00:03:48] Speaker C: That's a great question. And I'll tell you, we're pretty good partners because we handle different pieces of the business. I'm more of the financial guy. Like with the CPA background, I'm primarily looking at the financial statements, looking at profitability, helping companies figure out a kind of a growth plan. From a financial perspective. Matt is more on the sales side, so he helps with the operational side of it, helping look at roas and things like that to help us understand whether they have the right metrics in place to actually grow their business. I think what happens is our clients find that sort of this collaboration between the two of us bringing these different levels of expertise. That's what really ends up being a very good solution for most of them.
[00:04:26] Speaker B: Them. I love it.
So now let's get into this governance piece that we started with as we establish governance and this founder's discipline, the cash flow management, visibility and tax posturing and pricing discipline. Operational. So growth doesn't outpace control. Right.
How important is it and where do you see the strengths and weakness of this profit illusion? You mentioned it already.
Harsh.
But in reality, how much of it is a mental experience for a founder and how much of it is really the cash flow reports?
[00:05:05] Speaker C: I think it's a great point you're raising because I think what it is, it's more about the understanding of what those reports actually provide. Right. So we as financial folks, I think it's like our second nature to understand the data coming out of it, how we can actually use it for business intelligence to make it better. But for founders, they're basically really deep in the operations, so when they get to the financial side of it, it's more of an afterthought, maybe looking at a monthly report or a quarterly report, but using it strategically to make better decisions for the future.
That's what I feel is sometimes not really their skill set. And that's where we would come in play to help them understand, make the connection of how the financial statements can actually improve operations. That's where I think we. We bring a lot of value.
[00:05:52] Speaker B: And how's it come out on your side, Matt? Because you're. Matt, you're dealing more with the emotional aspect of the client before they come in, I think.
[00:05:59] Speaker D: Right, and that's exactly what I'm going to talk about. Kirk, a great point. So I. I think a lot of it is tempering expectations. I think when businesses start, they start off with a lot of expenses, and they're in a big hurry to recoup those expenses. So what we try to do is make sure that we have a deliberate plan.
[00:06:16] Speaker B: Right.
[00:06:17] Speaker D: And the deliberate plan really includes iterations. So as you progress your business, how are we quickly iterating on that business to meet people, set milestones, and then try to reach it? But there's a very emotional aspect of it that we try to mitigate and bring that into reality.
[00:06:33] Speaker B: Do they fight you on it?
[00:06:34] Speaker D: Yes, it's kind of 50.
[00:06:36] Speaker C: 50.
[00:06:36] Speaker D: There is a lot of contention around that because they're hungry and rightfully so. They're very eager to make money. But like Harsh said, we have to look at the numbers. We have to plot this carefully and give them a plan. They could meet their expectations.
[00:06:52] Speaker B: So if you could force every founder to adopt a single dashboard weekly, what would that dashboard look like? Harsh?
[00:07:01] Speaker C: Good question. So once again, I'm going to be talking for the financial hat here.
And first of all, you know, like, what we always tell our clients is that if they don't have a dashboard, they're basically running their business with a blindfold on. They're not seeing all the data that's necessary. Now, probably contrary to popular belief, we believe in simplicity. We don't think you need 30 metrics or measures to actually figure out if your business is doing well. Simple weekly dashboards and actual reviewing makes more of a difference from my perspective. As cpa, I always look at cash flow as primary, as my primary driver, even more than profits. So cash on hand helps us understand how much Runway the business has. If they have enough money in the bank to cover expenses over maybe 60 days, 90 days, that's an important measure. Also when it comes to weekly revenue. I think like I mentioned before, when it comes to many founders we work with, they start off looking at financial statements almost as a monthly or quarterly exercise. We actually force them into doing a weekly exercise of their review so they can actually figure out, you know, is there, is the, is there any momentum shifts happening in the business that they need to be aware of right away. That's what you're going to catch weekly, you're going to miss it on a monthly basis. So I think that's what really helps. Not to mention if marketing is converting, pricing is wrong, all of those decisions get caught when you're doing sort of weekly analysis.
[00:08:25] Speaker B: And there's a lot of blind spots in there too. Right. So you guys are hoping to shed a light on it. I wonder, what types of businesses do you primarily work with?
[00:08:36] Speaker C: We do primarily. We mainly work with medical professionals. So it'll be like doctors and nurses and chiropractors and acupuncturists. We mainly work with them. But we also have a fair share of technology founders and folks who work in high tech since we're based here, close to Silicon Valley. So we have a lot of high income earners in those areas that just gravitate towards us mainly for our tax strategies. That's where that comes into play. So but yeah, it's many medical professionals for the most part.
[00:09:05] Speaker B: How did you get to medical professionals? Why did you choose, why did you choose that genre of business owner? It's an interesting business. My father, I grew up in the dental practice, spending time in the dental practice, running around as a kid, talking to the insurance billing department, you know, who I became friends with and really seeing how things run.
And now as an adult and I build family offices for high net worth families, but I stand them up. So I'm not taking over someone that has $500 million. I'm looking at someone that's making $10 million a year and doesn't really know what to do with it, or they're so busy focusing on their clients they're not taking care of themselves. It's a little bit different, I mentioned that because it's a whole different kind of personality than a dentist or a doctor or chiropractor.
How did you end up aligning with that type of business. Matt, why don't you take this one?
[00:09:54] Speaker D: Yeah, sure. Well, we've got a lot of friends and family in the industry and we started to listen through conversations, we started to see those pain points and then also there's a propensity for those professionals to seek our help as well.
A lot of our lead gen came through and we started to build our expertise in this field and we just saw opportunity, we saw people that were earnestly looking to expand their business and I would almost say like it came to us, we didn't go to that. So it was kind of a good intersection.
[00:10:24] Speaker B: That's great. That's great. We've got just a couple of minutes in this first section.
So let me ask you a question. When you guys hear cash flow problems, how often is it actually an operational problem versus a sales motivation or onboarding or retention or delivery problem?
When you think about that, Matt.
[00:10:44] Speaker D: Yeah. So operations is so critical, right? So critical. And we always advise, you know, to start with the most leanest process of operations. Don't try to build a robust process and don't try to over expect that your operations is going to completely drive your business. Start, lean, iterate off that sometimes you're going to have people wear multiple hats and that's actually a good thing because you're cross training your employees.
[00:11:10] Speaker C: Right.
[00:11:11] Speaker D: So I think operation key to Harsh's point too. You know, we have to keep a close eye on revenue leak or is our marketing campaigns working? Are we investing too much money in one campaign that's not as effective as another?
Are we, are we getting our customers to activate the service fast? Is there's too many. If it's over processed, you're not going to reach that goal. What you want to do is get
[00:11:35] Speaker B: them using your product and to that point. Coming up, our next segment, let's talk execution. How to operationalize the profit goals and the systems, not slogans. We'll be right back.
[00:11:46] Speaker A: We'll be right back with more insights, tools and real world lessons for founders everywhere. This is Founders Forum News on NOW Media Television.
[00:11:55] Speaker B: And we are back.
[00:11:56] Speaker A: I'm Kirk Jaffe and you're watching Founders Forum News on NOW Media Television. Let's get back into growing growing your business.
[00:12:04] Speaker B: Welcome back to the Founders Forum News.
Want more of what you're watching? Download the free Now Media TV app on Roku or iOS and stream live or on demand anytime. Prefer audio? Catch the podcast version at NowMedia TV.
We're back with Harsh and Matt Jahav.
Am I saying that right, Jahab?
[00:12:26] Speaker C: Yes, you got it.
[00:12:27] Speaker B: Okay. Important to me, names are important. Especially when we're working in the service business. We should be able to get that right first. Right.
Let's get into the mechanics. Because strategy without systems is just expensive motivation.
So we turn cash flow into repeatable operating system and forecasting receivables, discipline, pricing, hygiene, which I love that term. We'll have to talk a little bit about that. I want to hear your opinion on pricing hygiene and founder proofing the business with process and accountability.
[00:13:00] Speaker C: Harsh.
[00:13:00] Speaker B: What's your simplest cash flow forecast model a founder can implement in one afternoon and start trusting within 30 days. And let's talk about that hygiene thing and let's talk about that founder proofing thing too.
[00:13:14] Speaker C: Sounds like a good deal. So that's actually a really good question. I'll tell you what we do in our practice is we believe in cash flow forecasting and we believe in something called a 13 week cash forecast. It's the same thing that many venture capitalists use and people who build businesses. And what it is, it basically allows us to kind of track like actual cash flow moving in and out of the bank, which we think is the most important. It goes way beyond profit. So first you start with the beginning cash balance for the month. Then that's simply what's in the bank today. And then you start to add in what we call cash inflow. So this will be maybe your customer payments coming in, recurring revenue from subscriptions, bank financing, all the sources, revenue coming through. Then you'll actually go ahead and look at your cash outflows. This could be payroll, rent, maybe some vendor payments going out, maybe a loan payment that you make, subtract that out and we get to what we call as an ending cash balance. Now we do this over 13 weeks because it gives us a kind of a look into the future to see if we are going to be hitting any spots where we might have a cash deficit. Just not enough money to cover the bills. 13 weeks gives us enough time to kind of roll forward with that. So that's one of the really good implementations that we find our clients enjoy because they move away from being reactive into being very, very proactive. And they start to see sort of the benefits of looking at and being ahead of the maybe some of the issues that are coming down the pipe.
[00:14:45] Speaker B: Now you guys are big proponents of AI preparedness. I think I read that somewhere. Right. So are you using AI around this concept where information is being fed to the founders without them having to go Search for it or how are you using AI? Matt?
[00:15:02] Speaker D: So I'll tell you, from a revenue generation perspective, AI is primarily a productivity tool.
It's going to help your sales agents drive deals better, give you better insights on your customer.
It can also help you. There's a lot of packages out there that can help you forecast. There's conversational intelligence, which when you have a conversation with a customer, it gives you a sentiment score and propensity to renew. So we, we love AI, but we're very delicate on how we implement it. Depending on the maturity of the business, depending on the resources they have, there's a lot of solutions out there. But for, for at this stage, using it as a productivity tool is a big win. As for customer research and so forth,
[00:15:43] Speaker B: do you find the personality profile of a doctor is aligned with AI?
[00:15:47] Speaker D: They are, they are not traditionally, but they have the propensity to be. They want to, they want to learn, they want to be ahead, they want to be the differentiator. So we do have a lot of appetite out there.
[00:15:59] Speaker B: Is there an AI tool that you like better than another for this type of purpose in a small business?
[00:16:05] Speaker D: You know, there's, I would say outreach, Sales outreach, reaching out to your customers. AI can be a, a strong position in that, in terms of understanding that your, your, your customer and what their profile is and then creating campaigns to outreach.
[00:16:24] Speaker B: Got it. What do you think? Harsh.
[00:16:27] Speaker C: And if you can add to that. Yeah. So some of the tools that we use, we use tools like N8N and Base44 to actually create process flows, to help us understand a workflow, build it better than what it's been before. We also will look like simple tools like Gamma, for example, that can create really great PowerPoint presentations. We'll look to perplexity for some of our research. So it really depends on the appetite and the type of need that they have. We actually offer an AI readiness assessment to actually understand if the business is even ready to take on AI. Surprisingly, you'll find that it's maybe the culture within the organization where maybe the people are really resistant to change and AI is not going to work really quickly or very effectively. So we take that into consideration, not to mention the infrastructure that's currently in place to make sure that AI is not going to break anything. So we take a lot of that into account at the readiness assessment that we do.
[00:17:20] Speaker B: You spent some time inside the IRS as an auditor, right?
[00:17:23] Speaker C: I did, I did.
[00:17:25] Speaker B: How is that experience? Well, that was probably a couple years ago, I imagine, right?
[00:17:30] Speaker C: A couple hundred years ago.
[00:17:33] Speaker B: But the question is really with all this technology, with all this AI, AI creates potential liability. Because now your information may or may not be secure.
You're using off the shelf AI products. You're not suggesting that they build their own internal private AI at this point for these types of businesses. How has it shifted from your experience in the IRS years ago to today?
Does the audit trail, is it supported by using these types of tools that are based in AI, or is there a second layer of security that you have to create in case of an audit or in case of a filing or inconsistent filing or whatever might happen?
[00:18:15] Speaker C: You know, I'm a little bit hesitant personally about using AI when it comes to tax information because I'm always concerned about the privacy of the clients and I'm not sure that that's completely secure at this point in time. Now, when it comes to like, you know, doing like some of the basic administration, whether it's like, you know, coming up with like responses to IRS letters, AI can be actually pretty helpful in that regard. But the AI, but the IRS itself is making a lot of changes in AI themselves. I mean, they have a significant reduction in the workforce. They're trying to figure out a way to do their business as effectively as before.
So they rely on AI scoring. I mean, back in the day when I was an agent, we had something called diff scorings that allowed us to actually calculate diff scores compared to other people in your industry. That's how we would actually go ahead and do scoring. It's all, you know, basically by a large mainframe computer. Now with AI, they can get into so many more details, so much more specific at the line item level, where they can figure out if you are out of line in terms of the deduction you're taking compared to the averages, even in your, probably your jurisdiction, your geography. So they have really, really good tools. I think for us personally, we use a lot of the AI piece of it more on the accounting bookkeeping side, but we don't really use it so much on the tax side. We're just not completely sure about privacy at this point.
[00:19:36] Speaker B: There's a lot of laws coming down through just about every jurisdiction in the United States.
And those jurisdictions are being conflicted with the federal government who wants their own single AI legal platform. Right.
With the, with the intent, I think, of simplifying things. So if it's a federal level law, everybody knows how to act the same way. But that's not really how America has worked historically. So everyone's going to have their own opinions. I think it's smart to take that kind of tempered approach to AI and business right now, especially describing it.
Matt, what so around this, what operational habits do you see consistently destroy cash flow, create late delivery or scope creep, work, renewal, weak renewal motion or poor handoffs? And how can you tell if a business is in real trouble in the next 30 to 90 days?
What are the warning signs?
[00:20:30] Speaker D: Yeah, I think that's a, that's a really good question. And I would focus on two areas. One is revenue leak, is your processes over processed and are you not efficiently driving customer value?
And the other part of it is calibrating your retention scores, renewing your customers and expanding your business.
So regarding the first one, I think it's very important to understand what we call in the industry is a CAC score, is a customer acquisition score, and understand how much money are you investing to secure one customer.
So you're really taking a deep dive into your campaigns, your conversion rates and then your close rates as well for those customers. And then constantly examining that will give you an idea of where to invest your money and where not to invest your money. In terms of marketing and sales.
I'll tell you another kind of inside scoop here, Kirk, is that your sales enablement is very, very important. I think so many times people hire great salespeople and then they forget about them and they just hope that they'll do a great job and based on their caliber. But constantly looking at your product, getting feedback from sales on what's working, what's not working, and then devising methodologies to penetrate your marketplace, that's often forgotten, but it's one of the most important things. And then lastly, in terms of post sales, customer retention, like Harsh said, you're using a system of record. What are the data points that you're gathering within that system of records? How fast are they using a product?
[00:21:59] Speaker C: Are they happy?
[00:22:00] Speaker D: Are you surveying them? Or as founders, are you talking to your customers? I think that's often like something we put at the end of our to do list, getting that real feedback and then again forecasting what those renewals will be. If you have an unhappy customer, how much energy now do you put towards that customer to renew them? So that's my perspective on that.
[00:22:20] Speaker B: I like it. You know, Dan Kennedy, famous copywriter and marketing expert, says on every one of his emails he signs off the the founder who can spend the most money to acquire a client wins.
And it's interesting to think about that. We'll talk about the next segment too.
What is the cost to acquire a client? And you mentioned something about hiring salespeople, which I want to explore in the next segment. But I wasn't aware that these types of practices have outbound salespeople. So that's something I think we can explore a little bit. And maybe there's some doctors out there listening to this show that never really understood that that's an option for them. Right. Maybe a very profitable one because might be cheaper than just spending money to acquire a client through Facebook ads or mailings or other traditional type of sales solutions.
So if someone is watching wants to pressure test their business cash flows and their operating rhythm, where should they start with the my profit gurus?
[00:23:24] Speaker C: I think the best place to start is just with our website. You know, we're at www.myprofitgurus.com. on there you will find different options to book meetings with us as well as some resources. So I think that would be a really great start.
[00:23:39] Speaker B: Great.
Up next, we go into tax compliance and risk and some sales too. How to stop leaving money on the table and avoid avoidable trouble.
[00:23:49] Speaker A: We'll be right back with more insights, tools and real world lessons for founders everywhere. This is Founders Forum News on NOW Media Television.
[00:23:58] Speaker B: And we are back.
[00:23:59] Speaker A: I'm Kirk Jaffe and you're watching Founders Forum News on NOW Media Television. Let's get back into growing growing your business.
[00:24:08] Speaker B: Welcome back. Let's talk about the stuff that founders tend to ignore until it's painful.
Taxes, compliance and risk.
But handled correctly, this is also where you can unlock margin.
So harsh brings the insider discipline lens from the irs. We talked a little bit about your background there, Harsh and about some corporate roles positioning tax strategy as a growth tool, not a paperwork chore.
So harsh as a former IRS auditor, from that perspective, what behaviors trigger unnecessary scrutiny that founders don't realize they're doing?
[00:24:48] Speaker C: Great question and I'll tell you from my perspective, like you said, Kurt, from being on the other side of the table working for the irs, I think one thing founders should understand is that most audits are don't start because someone at the IRS randomly decides to investigate a business. In many case, the scrutiny is triggered by patterns or even behaviors on the tax return that don't align with typical expectations for that industry or income level.
One of the most common triggers is consistently reporting losses year after year and still operating your business.
The IRS understands that startups and new ventures can lose money early on. But when a business reports losses for several consecutive years while the owner still appears to be living comfortably. That raises questions. At that point, the IRS may be wondering whether the activity is truly a business or whether it's drifting what the tax law calls a hobby loss situation.
That doesn't mean the business is doing something wrong. It just means the pattern invites some questions.
Another behavior that creates some unnecessary attention is unusually high deductions relative to revenue.
Every industry has typical expense ratios. If A company reports $200,000 in revenue, but they have $190,000 in deductions, especially those deductions are related to travel and meals and vehicles and home office.
That might also be another indicator for the irs. Look into a little bit more closely now. I'll tell you the third issue is probably the most important, and that is that we find business owners and founders not really successfully differentiating their personal expenses from their business expenses. They'll use the same bank account for both.
There's no separation. There's no way of really understanding if the IRS agent was to look at the documentation to figure out if it was a business expense or a personal expense. I think those messy records become a real problem when you're trying to substantiate from the irs. I mean, the, the.
[00:26:48] Speaker B: How harsh. Let me ask you, how fine of a line is it, you know, between the difference between tax preparation and. I have this conversation with clients all the time. It's not always a pleasant conversation. Right. But there's the difference between tax preparation, tax strategy, tax mitigation, tax avoidance, and tax evasion. Those are all very, very thin line areas. Total talk a little bit about, especially in today's day and age, we're talking about doing business in the digital marketplace. I imagine the IRS has got some pretty good tools to create that differentiation very quickly.
[00:27:27] Speaker C: Great question. And when it comes to that last piece, tax evasion, that's the one we're most worried about. That means you're sort of doing some fraud or something of that nature, not something that any practitioner's ever going to, you know, want to have you doing. But you've brought up a good question, because I think like most taxpayers out there, business owners and founders, they're used to preparing their tax return. That's the exposure they get. It looks like they go to their preparer once a year. Preparer completes their tax return. Everything is good to go on April 15, and that's about the only time they see them during the whole year. But come April 15, you have probably done the least amount of tax planning because all the planning should have happened the year prior. That's where you have the most opportunity.
That's where tax strategy comes into play. Because tax strategy is much more forward looking. It's about making decisions throughout the year that legally shape your outcome. And some might be involving, like setting up different types of entity structures like S corporations and things of that nature, which can help you manage your tax taxability in terms of how you're bringing income into your life. So that becomes a great opportunity to really engineer an outcome that's going to be favorable to you.
Now, something we do personally is we focus a lot on tax strategy, but we have, we take it one level further. We put life tax strategy on steroids because we actually incorporate things, certain structures like oil and gas, as well as maybe equipment leasing. These are strategies that are really specific to high income net worth individuals to bring their taxes down. And as a matter of fact, you know, you can save between 50 to 70% on your tax bill. And we're talking about folks who make, you know, maybe 300, $400,000 a year if structured correctly. And also we've brought down the tax completely to zero. So these are like really significant ways to do planning that you will not be able to do if you're just doing regular tax preparation.
[00:29:33] Speaker B: So, Matt, because my perception of your business, and tell me if I'm wrong, is you deal with the emotional aspects of these clients and harsh deals with the technical aspects of making sure it's done correctly. Is that kind of correct? Nailed it.
Okay, so I mean, because I know the personality of a doctor, right?
I can imagine this is a little overwhelming for them, like all this legal stuff and, and forward planning and all they really want to do is help people, right? They got into their doctor profession because they want to keep people healthy and, and help them feel better.
How do you manage that emotional aspect when you know you're looking for one tax season move that feels responsible, or you're creating governance, or you're creating strategy, or you're trying to plan a full year ahead. And the doctor is probably in their mind thinking, I don't know how many patients going to come in this year? Like, how would I know, right? What do you do about that?
[00:30:35] Speaker D: So one simple question we start off with is what's important?
And a lot of times in this field, Kirk, we get the patient. The patient is important to me. So what we try to do then is look at our processes and recommendations through the lens of the patient. So if the, if we wouldn't recommend a highly automated process if the patient doesn't feel like It's a personal experience.
It was all really predicated on what that doctor wants to accomplish.
There's instances where they're like, I don't care if I lose money, but I want to build a brand and a base of customers.
So we have to centralize our theories and our strategies around that. And every time there's a point of contention or a point of happiness, we have to revert back to what the doctor wanted so we stay consistently focused on his goal and then tie back our recommendations based on that goal so he knows that we continue to be focused on what he wants or she.
[00:31:34] Speaker B: And let's go further with that. Matt.
In this world where, you know, Dennis are doing Botox and chiropractors are doing podiatry, who knows what, right?
It's, there's a scope creep of practice and deliverables. How is that impacting not only the bottom line, but how is that impacting the functionality of a doctor's office?
[00:31:58] Speaker D: Yeah, it all goes back to functionality, right? Like at the end of the day, if the goal is to create a seamless, executable process that's pleasurable to the customer, we have to, we have to, we have to look at scope creep and create kind of contingencies. So if the doctor says, hey, I want this, what do we lose as a result of that? And if they're willing to lose that, then we continue to go down that, that path. So there's always a trade off because if something is going to jeopardize the goal, we have to make that clear.
[00:32:28] Speaker B: Yeah, I think that's really important in every business, right. Not just for doctors, but I see a lot of small businesses that aren't willing to make the trade off. Or, you know, I keep a book here on my desk called Principles, which was written by Ray Dalio and he's got some great principles. But the reason I keep the book on my desk is to remind myself of what are my principles. And it's principles of cash flow, principles of reporting, principles of governance, principles of. There's all these different areas that we have to have decision making tools.
So how do you help these founders create their principles? And how do you help them create the tools so that they know when they're making decisions, they're going through a decision making apparatus, if you will. It's not random by any means and sometimes they may not get the outcome they want, but that might be the better outcome. Right. What do you think? Harsh.
[00:33:18] Speaker C: You know, I'm going to actually pass this on to Matt because He actually deals with this pretty much on a daily basis. He, he's our emotional guy. He's the guy that deals in helping them understand principles, stick to them. So I'll let Matt take this one here more than me, if you don't mind.
[00:33:34] Speaker D: I think that's a wonderful question and I think it's great because, Kirk, a lot of times owners don't know what those principles are and they look to us to say, help us define that. And they may think something which is not very operational. So that's a conversation. And I think what we try to do is we try to guide the conversation into what's achievable and what's realistic. Because a lot of times there's these lofty goals out there. And my principles are either to drive business or to make customer, my customers happy.
And oftentimes they don't know. They could do both.
[00:34:11] Speaker B: Right.
[00:34:11] Speaker D: They can do both and they're just kind of focused on it. So that I think, I love that question because that is probably the most paramount discussion you need to have in a business before you start doing any work.
[00:34:22] Speaker B: And how many times do you see business owners that have more than one owner?
[00:34:29] Speaker D: I'd say that's pretty common. I think a lot of people go in with a partnership, but there's always, you know, to harshest point earlier. I think one of the reasons to our success is we have a very good division of work. And I see that in practice. And when it's not in practice, then we have to reset that to say, okay, going to make the decision on this part and who's going to make the decision. If, if they're both making decisions, that the decision going to take a lot longer than it should. So we try to kind of like create that, that matrix.
[00:34:58] Speaker B: Now do you help your, your clients and these businesses through that entire process or are you really only focused on the, you know, tax and cash flow management, reporting structures?
[00:35:10] Speaker D: It's, it's, I'm sorry, harsh. You want to take that?
[00:35:12] Speaker C: No, go ahead, go ahead, go ahead.
[00:35:13] Speaker D: It's, it's a, it's an end to end process. I mean, I don't think you can look at any business in its singularity. You have to look at it holistically. And that's what we try to do. There's so many components that marry into one decision or action. So we look at it end to end and.
But I just. Going back to your point, Kirk, I just love that you brought up the principles. I think all of that has to tie into to some sort of of principles that they have.
[00:35:40] Speaker B: I love it. Well, we're going to take these principles into our fourth segment and we're going to talk about how AI is changing how businesses operate.
And Matt, when we get to that, we'll talk about is AI breaking trust, culture and execution. We'll get into that in our next segment.
Be right back.
[00:35:59] Speaker A: We'll be right back with more insights, tools and real world lessons for founders everywhere. This is Founders Forum News on NOW Media Television.
[00:36:08] Speaker B: And we are back.
[00:36:09] Speaker A: I'm Kirk Jaffe and you're watching Founders Forum News on NOW Media Television. Let's get back into growing your business.
[00:36:17] Speaker B: Welcome back to the Founders Forum News.
Don't miss a second stream live and on demand with the free Now Media TV app on Roku or iOS. And for the podcast version, head over to Now Media TV.
We're back with Matt and Harshabad, CPAs at my profit gurus and probably a little bit of a psychological support system over there on that side.
Let's close. What the founders are wrestling with right now, is it better to use AI? Are we moving faster? Are we moving slower? What's the risk? And how do we do it without losing control?
So Matt, you tie operational excellent excellence to modern tooling, right? That's part of what you guys do. And you're showing founders how to introduce AI responsibly. We talked about this on the break. How do we integrate AI responsibly so that we're getting better customer success cases that we're forecasting and making better decision making apparatus and that our operating cadence and our decision making execution cadence is smoother. What do you think? How do you guys like you? What do you like about AI?
[00:37:25] Speaker D: So I'm going to start with a word, Kirk. It's called trust.
And go with verify. Yeah, let's go verify.
I don't know. So if you look at traditional AI models, if you look at large, larger enterprises, they're fully embracing it. They're practically in a race.
I think as we scale down from that, AI is primarily going to help us be productive. It's not going to replace jobs.
That human element will not be in the, in the foreseeable future. But in terms of productivity, it's an amazing tool. It's a tool that can really help propel your business, give you insights and most of all, save you time.
Now does A.I. you know, how it fits into a business is very customized. So certain businesses, like Harsh mentioned earlier, there's a cultural aspect to that. Are you ready or is your team ready to embrace AI and make decisions or make proposals to you?
I don't know if we're there yet, but we have to be somewhat ready for that. So a lot of companies are saying in a discovery phase, saying, how do we prepare for this? What's our first iteration of AI that we should do? What's our next iteration?
So I think when you have a plan and when you have the right systems and data and clean data that can help you use it, you will start to see some success.
And, you know, like, that's part of what we do is saying, what is your plan? You know, is, is it now? Like, sometimes there's a lot of human, human readiness that you don't need AI. There's just people who understand business and, and it could start to replace that skill set too early is also a jeopardy. So I think there should be a plan, but it should not be avoided.
[00:39:18] Speaker B: So, Howard, I'm bringing this back to your core business of dentists and chiropractors and local community support professionals is really what that is. Right?
Dentists aren't pulling patients from a different state. Generally they come from the community.
So how are these dentists actually implementing AI solutions? And what's one or two that either one of you can speak to? That really changed the game in a way that was almost shocking in a positive way or a negative way.
[00:39:56] Speaker C: I could talk about one example and maybe Matt can pick up another. But one thing that we've seen very successful is we have several practitioners that are solo practitioners. They run their business by themselves. They probably have somebody come in part time to help them answering calls and things like that.
But we see that they're actually implementing bots, you know, on their website to do some of the customer service. And they're also using like, phone answering services that are answered by AI. Those AI tools for the phone servicing are really pretty incredible. They're getting a lot better than we used to see in the past where it sounded very robotic. I mean, these, these, these phone systems are actually very adaptable. They learn as they start to pick up more information, they deal with more customers, they adapt and they get better. And I'm seeing that they're using very successful because in the past we had some dental clients, for example, that couldn't answer the phone when they were busy doing their surgery or doing their dental cleaning. So then they lose a customer because nobody's going to wait for them to get back to them. So I think that there is certain technology with these bots and with these answering systems that are done by AI that are really frontline, very, very helpful. And I don't know, Matt, if you wanted to add to that.
[00:41:07] Speaker D: Well, yeah, I think from a sales perspective, right. I think one of the most powerful things that we do, we can do with AI is really understand who our customers are. I mean, barring PII and HIP and all, like not putting in a lot of personalized information.
But you really need to understand the question of why are they coming into your office? So to understand that, you have to understand who they are, where they are, what was the reason that they came in, how many of certain procedures are you doing and start to build recommendation tools to say, okay, well, you know, this is the type of customer that you need to go after. This is the type of customer that you may not need to go after. So pull your energies and your calories into something that's going to work for you. So creating these kind of simulations or scenarios will help you really fine tune your marketing fine tune. How do you approach getting new customers?
[00:42:02] Speaker B: I love it. And let's talk about the other side of that coin. That was all really positive stuff. Where does it go wrong? What's the first thing that goes wrong? Is it bad data? Is it unclear ownership? Is it four principles or no principles in decision making?
Or is it leaders just choosing to skip the whole process design altogether?
[00:42:23] Speaker C: So I can speak from my side. I actually serve on the cybersecurity task force for the state of California. I work at the governor's office on that. And now they're introducing sort of the AI aspect of it.
Primarily. The problem that we're seeing sort of kind of globally, at least within the state, is there's not enough practitioners to support it. So there's a lot of new technology coming out, but we don't know if it's any good or any. If it's like it's going to be helpful, if it's going to be safe. We just don't know that we don't have enough practitioners that are vetting these tools, that are actually proficient in using these tools. So that becomes a real problem. And just like you said, Kirk, I think when it comes to privacy especially, it's very easy to put information into an AI, into an LLM and think that it's going to be safe even with the settings that they offer. We don't know for sure. We just really don't know at this stage. So I think that that is something that's of primary concern to me, myself
[00:43:14] Speaker B: as a cpa, Are there solutions out there to address this?
[00:43:20] Speaker C: I think they're getting better. I mean, we're seeing more agentic type of solutions come into play which really are going to be more helpful and more authentic in the way they serve the public. But I'm not, I'm not convinced at this point in time that we have that at this point. But I do think it'll come in due time.
[00:43:36] Speaker B: Now, you say practitioners, you're thinking in your mind, you're thinking of doctors. Are you thinking about small businesses across the board, that the task force is kind of looking and going, we wish we had more data, we wish we had more people signed up to help feed us information. We need to know whether or not this thing is working.
Which way was that?
[00:43:56] Speaker C: And it's actually across the board. It's not only small business or practitioners, but also large business, medium sized business, non profits. It really is the entire scale of operations that are out there. We are all facing the same thing with cybersecurity, cybersecurity threats.
We worry about that. I mean, I teach my students to be very careful about how they manage AI and especially when they're doing papers and using research and things like that. So think in all aspects.
[00:44:21] Speaker B: We see it very interesting. You know, Chase Bank, I'm sure you've seen Jamie Dimon on the, on the newscast saying they put billions of dollars into AI and they're replacing humans with the AI and, and they're saving a billion dollars. They're spending $1 billion and saving $1 billion. Now to me that looks like a wash in the business. Right, from our cash flow statement, right? Investable assets and actual income. So those are, it's a wash. But what do you think the timeline is? So I think JP Morgan is probably looking at a, maybe a 10 year timeline, you know, so they're putting billions of dollars in because they figure 10 years from now their operational costs will drop and that will go flat.
Right. But what do you see going forward? What kind of Runway? And then I'll add to that. If you're trying to put in AI driven decision making, what are the KPIs, what's the hygiene?
What JP Morgan really, what are they doing there? Harsh. What do you think?
[00:45:25] Speaker C: I agree with you. I think I trust J.P. morgan. I think Jamie Dimon probably knows a lot more than I do. And if he thinks 10 years, I think that that's probably a good view.
I'm a little bit more hesitant about the adoption for smaller businesses and founders though. I don't think we have all the resources and tools of a big business, so it may take us longer. I think we do our adoption, implementation and baby steps, like you mentioned, we have some issues to resolve even at the small business level.
One thing is that when it comes to the data security and mapping out our business processes, I don't think a lot of small business owners, whether they're in healthcare professionals or not, have really mapped out all the different functional business processes within their operation. You know, how do they acquire customers, how do they, you know, fulfill the products, you know, how are they managing their bookkeeping and accounting? A lot of those processes we trust maybe QuickBooks or Xero to do the work, but do we really understand what the process is? If somebody was to leave or get hurt, is there somebody that can replace it? Then you add AI on top of it. Now it adds more complexity to it. So I think, you know, the fact that, you know, processes need to be more defined before we can really adopt AI. I think the other issue is we probably don't have the best and most cleanest data. AI is really reiterative. As Matt was saying, it builds on itself. You know, as long as the data is clean and can be used, and can be used efficiently. But that information, cleaning up the data to make it useful, that's another thing I think that small business owners really will need to struggle with and make it effective before AI can really work for them.
[00:47:06] Speaker B: And this is something that my profit gurus can help with because they don't teach this in medical school and they don't teach this in college really either. I don't even think they teach it in business school.
[00:47:19] Speaker C: Not yet. Not yet.
[00:47:21] Speaker B: We have about a minute before we get cut off here. What's the 90 day playbook?
[00:47:27] Speaker C: Ah, good question. Okay, Matt, you want to take that or you want me to take that?
[00:47:31] Speaker D: Yeah, the 90 day playbook. I'll give you. I know we got a minute, but first of all is really kind of the first thing is really to understand customers, their business, their goals, the principles. Kirk, like you said, build an understanding and start to build out what operations look like. It's not only about building out new operations, but it's about minimizing operative costs and finally focusing, making sure our customers are seeing value. I think in the 60, 90 day plan, you gotta measure value, you gotta get feedback, you gotta see utilization. And and then lastly, I think for the retention part of it, do you have the right data to make sure you're focusing on the right customers to renew and do you know why they're not renewing those?
[00:48:13] Speaker B: Well, again, if there's a doctor listening here that would like to see their business take on its own life instead of them grinding it out, they might want to talk to my profit gurus. How do they find you?
[00:48:25] Speaker C: Best place is probably to our website. It's a www.myprofitgurus.com. you could also reach out to us on LinkedIn. We both have a presence there as well.
[00:48:35] Speaker B: Great. Yeah. Myparfectgurus.com, these two guys know what they're doing. You got top to bottom experience and they're brothers.
So that's helpful. You know, you guys, you guys laugh about that, but I know a lot of families that can't pull it together and make a successful business, let alone teach somebody else how to do it. So today was truly a masterclass. Thank you, Matt. Thank you, Harsh. It was great having you on and talking with you. And this is a masterclass. And what actually need, profit governance, cash flow control, tax strategy, AI ready operations so growth becomes sustainable instead of stressful.
My guests here, Harsh and Matt Jahad, partners at my profit gurus. If you want to connect, reach them through myprofitgurus.com and keep building the clarity. I'm Kirk Jaffe. This is the Founders Forum News. Thanks for watching.
[00:49:29] Speaker A: We'll be right back with more insights, tools and real world lessons for founders everywhere. This is Founders Forum News on Now Media Television.