[INTRODUCTION]

[00:00:00] Andrew Rafal: Financial literacy, I don’t care if you’re a business owner, a retiree, or a young professional. It can be daunting. Why? Because they don’t teach it to you in school. So, that’s why I’m pleased to bring on to the podcast today Tracey Bissett. She has spent her career helping individuals and business owners become financially fit so that they can be successful in all areas of their life. Whether it’s understanding a profit and loss of your business, how does a balance sheet work, or digging into cash flow, these are things you need, especially business owners to thrive and succeed. So, today, we’re going to break down some of the mistakes she sees entrepreneurs make, some of the things that you can do and take away today to get on your financial game, and then some of the things you should continue to do as you exercise and maintain that financial fitness.

So, we got some great stuff today. Without further ado, my episode with Tracey Bissett on the Your Wealth & Beyond Podcast.

[INTERVIEW]

[00:01:12] Andrew Rafal: Welcome back to another episode of Your Wealth & Beyond. Tracey, welcome to the podcast. We’re very excited to have you on. How are you today?

[00:01:23] Tracey Bissett: Great. Thanks so much for having me, Andrew.

[00:01:26] Andrew Rafal: I know we were just chatting as Thanksgiving holiday is upon us and what a tumultuous year 2020 has been. I think a lot of us are just ready to turn the page, huh?

[00:01:36] Tracey Bissett: I think so. Yes.

[00:01:39] Andrew Rafal: But it’s in these times of chaos that business owners and those that help business owners, which you do especially on the financial side can kind of look at a year like this and say, “Okay. What can we do to better our business, get things in order, and focus when things get back to normalcy, focus on having a thriving business?” So, that’s I think what we’ve got to hope for, right?

[00:02:03] Tracey Bissett: Absolutely. I would say that depending on what industry you’re in, some businesses have fared very well in 2020 and some have been able to pivot, bring new offerings to the market. And so, while it has been very bad for some, it has been a very strong year for others.

[00:02:20] Andrew Rafal: So, let’s talk to the audience today about I love the terminology the role of as you founded your firm but I love the Chief Financial Fitness Trainer. So, those that are business owners that have worked with financial advisors, what’s the main difference between an advisor and what you do and how you built your company, and what your passion is as a financial trainer?

[00:02:45] Tracey Bissett: Absolutely. So, my mission is really to increase financial acumen and knowledge around the world. I predominantly work with young adults and I work with entrepreneurs, and sometimes they’re young entrepreneurs. I like to come at it from this place of positivity. And so, I talk about financial fitness because I think wherever we are starting is the place we are and we can move forward and increase our knowledge and take control of our financial situations, whether it’s in our personal lives or our business. I’m really about the education. So, I do a lot of coaching to help entrepreneurs understand how to read their financial statements, how to make sense of their cash flow cycles in their business, how can they proactively plan to deal with gaps in that cash flow. And so, I would say I’m a complementary service provider to an advisor. I’m not going to create that financial plan for you and do any investments but we’re going to get a strategy together and talk about the goals you have to the business, what we should measure from a financial perspective, and then on the other side, bringing the advisor to help you with say tax planning and all the other stuff that goes along with that.

[00:03:50] Andrew Rafal: So, how did you get into the side of it? I know, at least here in the States and I’m sure Canada’s probably a little similar in that context. In school, they don’t teach any of us really the financial end, like you said, how to read financial statements, cash flow, balancing checkbooks, things like that. Is that the same over in Canada?

[00:04:10] Tracey Bissett: Absolutely. We do a terrible job of teaching our young people and all the way through high school about money, the practical things they should need to know. A lot of times the schools kind of point the fingers at the parents and I don’t think it’s fair to do that because the parents weren’t equipped. Nobody taught them. So, we get kind of in this vicious cycle where everybody’s kind of blaming each other. I’d love to see it in every grade in school where we start teaching things about entrepreneurship, and we teach them about personal finance, but we are where we are, so we can only control the things we can influence. So, that’s where I come in and I like to take that, as I said, that negativity out of it. I don’t want people thinking they’re illiterate financially when they’re starting. Let’s build on what you know and let’s move on from there and so that we can get you handling the things that you have in your business and get you to where you want to go because everybody’s goals are different.

[00:05:04] Andrew Rafal: Yeah. A lot of entrepreneurs versus those that are maybe set on the path of working for companies, working for a blue-chip, go into a consulting, those individuals spend the time and they go to the four-year college at least in the United States, then a lot of them get their MBAs so they’re learning the financial literacy side. But entrepreneurs, many of them, as you know, and you working with dozens and dozens of them, a lot of them don’t even go to college. So, it’s like they’ve got the vision, they’ve got the passion, they know how to build something but they never really spent the time learning. And now all of a sudden, as we’ll talk about today, if you don’t know your numbers, I don’t care how good your business is, I don’t care how good your idea is or your salesmanship, you’re not going to make it if you don’t know your numbers.

[00:05:48] Tracey Bissett: No. Unfortunately, not. I mean, even my example, so I was a banker for many, many years. I was an executive for eight years at TD Bank, which is one of Canada’s Big Five banks in the areas of commercial lending and risk management. So, I either helped companies get access to the money or I was approving those deals all across the country, all different industries. And so, when I started my own business doing the financial coaching and education mandates, really I was an expert at three things at the bank and now all of a sudden, I’m creating this business and I’ve got to wear 50 hats and I don’t know how to do marketing, I don’t know anything about websites or social media. And so, just recognizing as an entrepreneur that there’s going to be things that you need to do that you don’t know and you didn’t have training for and that’s perfectly normal, and for the majority that’s on the financial side. So, I had that piece down but I had to learn all the rest. Entrepreneurs are kind of coming at it usually from the other angle because they’re super skilled at whatever their business is in, and they’ve got to learn the other skills.

[00:06:48] Andrew Rafal: So, let’s take it from kind of that one-on-one basics on entrepreneur that’s just getting their concept and their company going on the financial side, as we have this business in its infancy and it’s just maybe they may be even at this point the only employee, what should they do, you listeners out there that want to start a business, what are some of those things that they can do to get started and to focus on the numbers from the get-go?

[00:07:14] Tracey Bissett: So, first off, I think it’s a highly good use of time to create a business plan. The majority of entrepreneurs that I talked to, they like to just jump right in and get started but when you do a business plan, you actually validate your idea for your product or your service and you test it out with the market not only, one, for a fit that somebody wants to buy it but, number two, that they want to buy it at a price point that you can actually make money. That’s really important because I work with a lot of entrepreneurs, the sales range from anywhere from $100,000 to $2 million, and the common denominator with most of these companies that I work with is that they’re losing money and they’re not getting steady paychecks. So, you’ve got to validate that someone will buy it, and then you can actually sell it at a price you can make some profit. Once you’ve done that, you want to map through how long is it going to take to get this business off the ground, and by no means do you have to do it yourself. You can certainly work with an accountant. You can work with a financial coach. There are lots of templates online to do that if you need some support.

So, by no means do you have to do it alone but if you think it’s going to take you three months to maybe hit that sales, let’s maybe double it because things take longer than we think. If you think your expenses are going to be 100, probably going to be 200, just as an example. So, we’ve got to plan for taking longer and costing more than we think. And so, having that in your mind before maybe you leave a job in corporate, before you take those savings in it and put it into the business, knowing all those possible risks and understanding the likelihoods is really important before you get going. So, that’s what the first couple of steps are.

[00:08:50] Andrew Rafal: As you’re starting a business, that entrepreneur may not have the ability or the money to hire a bookkeeper or a CPA. Should they look at that as part of when they’re building a business plan as part of an investment in the business is to within a year or two, try to find somebody that they can trust that can take some of the work away from them and also help guide them, somebody not so much like, well, you’re a trainer versus a CPA but somebody like you or somebody who understands the tax side of things?

[00:09:24] Tracey Bissett: For sure. And so, a couple of mistakes I see kind of right at the outset either, one, entrepreneurs completely delegate the accountability for the whole financial side of the numbers piece of the business to a bookkeeper or an accountant. I think definitely you should make use of them as you can afford it and your cash flow allows or, two, you just kind of think if I sell stuff, I’m going to be profitable and it will just work itself out, so kind of the denial route. No matter what you’re doing in your business, you’ve got to be accountable for the numbers. So, I think that it’s just as important like you’re going to use funds and make an investment in marketing. You’ve got to make an investment to have those numbers at your fingertips because what gets measured, gets monitored, it drives you towards your goals and if you don’t know where you’re going from a financial standpoint, it’s pretty hard to get there. So, I do view it to be a key piece of the business and certainly something you want to put in an investment in.

[00:10:20] Andrew Rafal: Then when we look at cash flow, which is the lifeline of a company, especially a company that’s just getting off the ground, what are some of the mistakes that you see young entrepreneurs make with regards to cash flow, and with cash flow then understanding what they can afford as they start growing the company?

[00:10:39] Tracey Bissett: So, one of the big ones is thinking that cash flow is the same as kind of your income statement and your profit. So, when we think about a P&L or profit and loss income statement, all the different names mean the same thing. We’re really measuring our sales and all of our expenses, and that’s according to accounting rules. But when it comes to cash flow, we’re measuring all the money that comes into your bank account and all the money that goes out, and the difference at any given time is what you’ve got to deal with. If you have a type of business where you get paid after you deliver a product or a service, you’re going to have this time delay between when you recognize your sale and when you actually get the cash. It’s really critical in those early days especially, but even through times of growth, that you have enough cash to keep the business going. Certainly, at my time at TD, I’ve seen businesses go under and as quick as 90 days because they didn’t have the cash flow to get them through to pay those bills while they were waiting to get paid from their customers. So, every industry is a little bit different.

If we thought about event planning, we’re going to have a wedding, pretty standard. If we were booking our wedding, we’re going to pay that person a deposit upfront. They’re going to get paid the rest on the day of the wedding so they’ve got cash upfront. Other services, you may get the service first and then you pay later. So, think about how your customers are going to pay you is a really good practice and if that’s going to work for you. Then if they’re going to pay you, they say in 30 days, count on it being 60 or 90 so that you can bridge that difference.

[00:12:09] Andrew Rafal: Yeah. Especially if you’re a small business and one of your vendors where you have accounts payable is a larger business, they’ve got the power, they’ve got the control, and sometimes we’ve seen it where it’s 90 days that they paid and you really have no leg to stand on and they, of course, can use their power of just their scale to kind of just push around the small business owner. So, in the case of if we are cashflow sensitive, there’s that catch-22 of, well, I can’t get money from the bank as you were on the TD side because I don’t have the time, I don’t have the wherewithal to show that this business has been in business and has the ability to pay back that loan. So, I’m in this catch-22.

[00:12:57] Tracey Bissett: So, certainly, at the beginning, it’s going to be based on your personal credit history. So, you should be able to access some amounts of money, whether it’s going to be enough. In Canada, we’ve got the Business Development Bank of Canada. They have more flexible lending criteria and I know you have your small business centers where maybe some grants and other types of loans for starting organizations and then see who you can access kind of on the other side that supplier credit from. Maybe you can get things from your supplier and you can actually sell them and turn around to get the cash to pay them before that invoices do. So, it’s a function of being creative, knowing what those numbers look like so then you can actually brainstorm all the possible ways to solve that gap.

[00:13:40] Andrew Rafal: Right. And then you always hear the stories where they bootstrapped it and they use credit cards and that can work if the business works and thrives but there’s also danger there, right, Tracey, in regards to just the high-interest rates that these credit cards charge, and then all of a sudden, you’re underwater and then you’re getting a 21% APR, and you just never come out of it. So, what are some of the advice you give if somebody comes to you and says, “You know what, I’m just going to max out my credit cards as I get this business up to speed.”

[00:14:08] Tracey Bissett: So, I’ll start again with, did you do a business plan? Do you have a cash flow forecast? Do you actually have an income statement forecast? Is this going to make money? Because certainly when you’re maxing out your credit cards, the credit scores don’t like that in particular. They like to see a kind of at the middle of the limit when you’re using it so it can negatively impact your credit score which could affect things down the road. But if you’ve really done the numbers and you see that it’s going to be profitable, sure, full steam ahead, you’re going to be able to pay that off, and then I would encourage you to get access to financing that’s at a lower rate. But if you haven’t done the math and then when we do it, we see that there’s a high risk, it’s not going to work, will really depend on your risk tolerance, what your backup plans are, if you’re willing to take that risk. Sometimes when you do the business plan and do those cash flow projections, income statement projections, an outcome that people don’t like but it is a good outcome is if you see that the business doesn’t work.

That’s good before you invest your time, before you take either savings, or you rack up those credit cards to know that in advance because then it gives you the option of, “Okay. Maybe I didn’t choose the right client. Maybe when I try this client group, they are willing to pay the amount of money that I need. Maybe I need to alter my offering.” And so, it gives you that flexibility upfront before you’ve sunk your time and your money or incur debt to do that.

[00:15:32] Andrew Rafal: So, when somebody’s hired you, as they’re starting their business or having struggled with the business, have you looked at them and did you come in and you’re trying to poke holes and just say, “Hey, look, what you’re doing isn’t working and you need to pivot,” or, “You may need to look in the mirror and say this business isn’t viable?”

[00:15:50] Tracey Bissett: Yeah, unfortunately. And so, over the years, I’ve ripped apart thousands of income statement and cash flow projections and it’s really just getting a sense of what’s the actual cycle for the business, what’s going on, and then do the numbers really reflect that, and then having some hard conversations sometimes. But sometimes it is as simple as, “Okay. Well, maybe in your business, it’s not uncommon in your industry, maybe you need to start taking a deposit upfront.” So, maybe you’re changing the way that payments get made and there’s always many options to solve a problem when you’re not overextended or it’s not kind of everything’s kind of maxed out. So, knowing upfront what are my possible options, these all things can be helpful because then you can deal with things more in advance of a problem. Certainly, cash flow forecasting allows you to see where potential issues are going to surface so that you can start brainstorming what are going to be the ways I deal with this if it comes to fruition, and dealing with something the day it happens or one week or one month in advance is a lot easier than that day of.

[00:16:51] Andrew Rafal: And so, you talked a little of the financial statements. You threw out the cash flow, the P&L, the balance sheet. So, again, let’s put our hat on that we’re an entrepreneur and we don’t really understand any of this stuff. Where can we start? Like the balance sheet as we work with a lot of business owners and entrepreneurs, it’s just something that a lot of even successful businesses, they struggle with really understanding the balance sheet, and what’s the assets, liabilities, shareholder equity. So, what do you do to help guide them and to get them on this track to understand those three core parameters of the business acumen in regards to the viability of them being successful on the financial side?

[00:17:34] Tracey Bissett: So, what I like to do is I get them to fill out a questionnaire kind of how their business runs from their perspective. Then I do an independent analysis, kind of using industry benchmarks and standard financial ratios, and then we sit down and we go through it. As we’re talking through it, I show them how the things that they’ve articulated to me in words, how they actually show up on these different statements. So, if you’ve made a sale, show them where it shows up on the income statement as the sales if they’re going to get paid after the fact, how then on the balance sheet it showing up as an accounts receivable. And we talk about the different things they’ve described to me but show them exactly where on those statements, how it kind of all fits together, and how one’s statement is connected to the other. So, it’s really hands-on. It’s very customized for the most part and it’s their questions, their understanding, their business in that moment so that there’s no silly questions.

Usually, once that discussion starts, where perhaps there were no questions at the beginning because they weren’t sure what to ask, all of a sudden, kind of the floodgates open and they’re like, “Okay. Well, I’ve heard this term but I don’t know what that is. Can we talk about this next?” And so, it’s really just having a chat with looking at the numbers based on how they’ve described things verbally to me.

[00:18:51] Andrew Rafal: When it comes to getting paid themselves like where do you see that business owners are struggling? Or a lot of times we’ll see business owners only taking distributions and not paying themselves a salary. So, there are many red flags with that as is but how do you try to get a business owner to pay themselves first for the work that they’re doing and then from whatever profits at the end of the day will be distributed down to them?

[00:19:20] Tracey Bissett: Yeah. Certainly, there’s three ways you can get paid in your business. You can take salary, as you mentioned, dividends, and then if there are shareholder loans you’ve put in as your investment into the business or money you haven’t taken out, repay those. And so, typically, when I’m working with people, they’re at that point where they’re so frustrated. They got into business for freedom, flexibility. They’ve made commitments generally to their family or others and they haven’t been able to live up to them because they’re not making enough money. So, it starts back to that pricing angle. Then if we can sort that through and we can see that, “Yeah, there is room to move here. Let’s make some changes and modifications,” then we start taking a look at, “Okay. How much can you start paying yourself consistently on a salary basis?” and we use the cash flow forecast to kind of play with different numbers to see what’s going to be feasible over the months because we don’t want to put it too high one month, take it down to the next. We want to start getting into that regular cadence like you talked about.

Certainly, in Canada, we’ve seen and I’ve never seen it so critical that during COVID, a lot of the metrics around support from the government were fixated around that level of compensation that business owners were getting. And so, a lot of business owners were out of luck who were only taking dividends and not taking that consistent salary. So, I think for all kinds of reasons, it’s really important. The other is on the personal side. If you’re going to apply for a mortgage, for your home, personally, you need to be able to demonstrate that stable, steady income over the years so that that banker can rely on the fact that you’re going to be able to make your mortgage payments and they have less confidence in when it’s a dividends-only kind of strategy.

[00:20:58] Andrew Rafal: Yeah. Then here in the States, if we’re planning correctly as the business gets a little bit more on track and mature, then there’s the type of planning we can do on the tax side where we can help them create retirement plans, whether it’s a SEP, whether it’s a solo 401(k) or a regular 401(k) with profit sharing, and in some cases, kind of the pinnacle, the cash balance plan but if you don’t show income, you can’t do any of those things.

[00:21:25] Tracey Bissett: That’s right. A lot of times people kind of challenged me on this but I think businesses should make as much money as they possibly can. A lot of times business owners, and particularly women, they want to have a business of a certain size. But when you can run a profitable business, then you can choose how much you work, when you work. If you want to give some of your services away for free to people who can afford it, you create jobs and the economy are able to give financial contributions to organizations that you think are in need. So, I always encourage everyone to make as much money as they can so they can have those problems and do the tax planning and figure out all that stuff later because those are all good problems to have.

[00:22:07] Andrew Rafal: Yeah. I think a lot of entrepreneurs, a lot of successful entrepreneurs, they wake up every day, and I’m in an Entrepreneur’s Organization, EO, and a lot of us are successful businesses but we wake up every day and thinking, “Do we belong here? When is it going to fail? When’s the shoe going to drop? Am I a fraud?” those types of things. I think that’s part of what helps a business owner take the leap and every day waking up saying, “I’ve got to prove it,” but it’s also one of the areas is we teach our clients. It’s like, “Listen, you’ve done the heavy lifting. You are a successful business. Take a step back, breathe, and look at everything you’ve done.” But that can be, I guess, easier said than done. That becomes more of a therapy session.

[00:22:49] Tracey Bissett: Yeah. I think it’s very intrinsically linked, though. If you think about it, your views around money form when you’re about five or six years old and so whatever was going on in your family at that time, it’s kind of sticking with you. So, if your family didn’t have very much money, if there were struggles, challenges, things you remember, if every time a bill came, there was maybe some yelling or crying, every time that happens in your life, you’re going to relive that. And so, sometimes it’s about reflecting on what are the kind of stories I tell myself about money and what are the things I believe to be true that maybe aren’t true and taking the time to change that narrative that plays along in your head. So, if you felt like there wasn’t enough money ever, you had that scarcity mindset, let’s change that. “No, I’ve got a thriving business. I’ve worked hard. I deserve it, and I can employ people, I can give money to charitable organizations,” whatever it is, or, “Take my family on those vacations, so that we can have some wonderful memories together.” Change the narrative that’s going on in your head and sometimes that kind of therapy portion is equally as important as what’s practically intangibly going on with the numbers.

[00:24:01] Andrew Rafal: Yeah. I mean, that’s so right. I’ve been working with clients for almost two decades. So, some of them who are older now, some of them grew up. They were kids in the Great Depression and years, and years, and years later, they’re still shaped. Even though it was 40, 50 years later, they’re still shaped by that experience that they had when they were six, seven, eight years old, where they may be sitting on millions of dollars, and they won’t spend anything. That comes down to just seeing mom and dad with the struggles that they had and it’s interesting. Then you think about the great recession we had in ‘08. ‘09, and ’10, and now COVID. It’ll be interesting to see the five, six, seven, eight-year-olds whose parents are struggling right now, business owners struggling right now. You know, hopefully, this will turn around with the vaccine and so forth but it’ll be interesting to see how this shapes this, I think it’s Gen-Z still, right?

[00:24:54] Tracey Bissett: I think so.

[00:24:56] Andrew Rafal: I was just reading the Gen Z has like the out-of-the-world population. It is the most populated generation out there right now, which is interesting.

[00:25:05] Tracey Bissett: Yeah. I didn’t realize that.

[00:25:07] Andrew Rafal: You take into account India and China and not so much China but India’s like combined more Gen-Zers there than the United States and China, which is kind of interesting how that will happen. But, yeah, my daughter’s a Gen-Zer and we’ve had some podcasts in the past. I actually had her on but trying to teach them about money is an interesting thing. As you stated earlier, they’re not teaching in school. There are certain programs like Junior Achievement here in the states that have been very helpful but we’re trying to employ everything we can to give her at least the understanding of what the dollar means and how to use it, how to save it, how to give it away. But it’s hard because no one’s given that path, even successful executives or business owners. So, what do you do to help? Do you help entrepreneurs, especially as they get more successful in their business, help them teach the value of money to their kids?

[00:26:00] Tracey Bissett: I do with my podcast. So, my podcast is Young Money, the advice show for young millionaires in the making, and it’s geared towards high school age up to about early 30s. So, just having those discussions, and I think it starts with taking any stigma away from the money conversation because it’s still one of the subjects people like to talk very little about. In Canada, we’re currently in our Financial Literacy Month and the research I was seeing is that people rather talk about politics, rather talk about sex than they would around money. And so, we better open up those dialogues, show people, show your kids. I think at every age there are money appropriate lessons that you can teach. I had a five-year-old tell me that money was evil, a little girl guide. So, imagine what went on in her house that would make her feel that way. She probably doesn’t really know what money is. She sees people use cards at the store and there’s probably kind of yelling or crying or something going on. So, there are always opportunities.

I like to showcase on the podcast the different paths to success and I usually line it up with kind of questions to ask yourself, “Oh, you wanted to get a credit card? Okay. Here are some questions maybe to evaluate. Are you ready? And what are the things you need to find out about it?” so that young people can do that thought process because we really want to teach them to do the critical thinking, not just tell them what to do or how to do it. Just get them thinking about when I need to make decisions independently, what might I ask myself?

[00:27:31] Andrew Rafal: Right. In this digital landscape where it’s almost like a cashless society and it’s just getting more cashless as the time goes on, that’s something that when I grew up, I had $20. I’d go to the store and I’d have $12.37 left and it was like real. It’s like something real about it versus swiping the card or going on Amazon and all of a sudden, you make the purchase for $15.37 but what does it mean? How real is it? Because you don’t actually see it or touch it and I know that the cash isn’t coming back into society. So, what do you say on that? And that’s not just for the young Gen-Zers. That’s for all of us. It’s trying to quantify what we’re spending both personally as well as in the business. But do you have any tips on that?

[00:28:20] Tracey Bissett: Yeah. Especially for everybody, knowing your income is very important. So, even those who have part-time jobs like actually sitting down to look at your paycheck, what taxes are you paying, how much is actually going into your pocket, and then thinking through, “Okay. I just worked for five hours. I only have this amount of money and thinking through, is this worth that much time of work to buy this thing?” And so, I like to frame it as, think about your goals. And so, everybody can have goals no matter what age you are. Some can be short, medium, long-term but every time you go to purchase something, is this bringing me closer to my goals or farther away? And so, if you can kind of put that pause in there I think is important. The other thing I see particularly with young people is not applying for scholarships and it was a little bit of a tangent but if you think about if to get $1,000 scholarship actually replaces like 70 or 80 hours of work, when you do the math that way and you can actually lay it out for people to see, people can start to see, okay, if I only have a finite amount of time and I have this much money is it worth spending X on whatever it is?

But opening the dialog, having those real conversations in families if you can share as much information as you’re comfortable with. Some people are going to be more comfortable than others, sharing salaries, and the level of bills in the family but the more you can kind of open the curtain and shed a light for them, it’s going to be easier to understand.

[00:29:51] Andrew Rafal: And as you call it financial fitness just like in any program, you exercise. It doesn’t happen overnight, right? You want to train for a marathon. You’re not going to or at least most people aren’t going to go and a week later, they’re running the 26.2 miles. With financial literacy and feeling that confidence, it’s training the muscle. It’s training repetitiveness. It’s training routine. And that’s the thing where I think so many people, they put their head in the sand because they don’t understand it. When you don’t understand it, it becomes a foreign language then it’s like, “You know what, I’m not going to do anything.” So, what do you, I mean, how do you get through to somebody? Because when they come to you, they’re coming to you because they know they need you.

[00:30:33] Tracey Bissett: Yeah. It’s usually from a place of, “Oh my gosh, it’s gotten so bad.” I’d like to say it’s because people proactively want to increase their financial acumen but that’s not usually where they are.

[00:30:44] Andrew Rafal: And so now, they’re like they’re in this crunch, “I need help. I need it now,” and sometimes, I mean, it’s tough because now you got to come in on almost like the ER doctor come in and try to perform emergency surgery. In some cases, it ain’t going to work, right? So, those are some of the – by doing the podcast and your speaking engagements and getting the word out there, what we’re trying to do there, Tracey, is what? Just proactively position how important this kind of stuff is?

[00:31:13] Tracey Bissett: Yeah. And to think about it as a financial fitness journey. We’re all starting somewhere just like you talked about. With the marathon, I do have the analogy to physical fitness. So, we could be at the far right of the spectrum. We’re training to do with this marathon. In financial fitness, we could be training to be really sophisticated investors. If we’re on the far left, we might be taking that first step off the couch. We’re going to walk around the block. We might be learning about different types of bank accounts or different savings vehicles. We might be learning about credit cards or even just the way our paycheck gets paid to us, all those kinds of things. But the fact is we’re on a lifelong journey. So, if we can take some forward action every single day, we don’t need to change the world every day and learn everything in one day but we should be moving forward on that journey. And the other thing that’s super important is to remember that don’t beat yourself up too much if you’d step off the path. Maybe you step back on your financial fitness journey. You make a mistake. That’s okay. Everybody’s human. Correct it. Keep moving forward on the journey.

It’s a lifelong thing where you’re going to build up your knowledge over time, and it would be unreasonable to expect for you to know everything the first time you try to learn it. The other thing that I think makes it more challenging is social media. Everybody looks like they’ve got these fantastic lives. They’re way better than ours because they’re posting there. One minute from the week, that is the highlight. Until you actually know someone’s financial position, you should really kind of stay out of their money business story or everything that goes with that because there’s a lot of people feeling like, “Oh, my gosh, my life is not as great as theirs. What can I do? Or there’s nothing I can do and it’s hopeless,” but they could be fully funding their life on debt. You don’t know the situation. So, don’t focus on them. Focus on you. Focus on your values, your goals, and figure out a plan, either by yourself or by tapping into resources, and work towards your goals because you need to be happy in your life.

[00:33:15] Andrew Rafal: Yeah. That’s so true. I mean, we even get that for somebody who’s getting closer to retirement and you get the question a lot is, how am I doing? Once we know their story and their financial assets, “How am I doing against your other clients?” And I tell them you can’t answer that because somebody who has maybe a lot more zeros than the next person in their net worth, they may have a much higher cost of living and three houses and traveling and a lot of people on the payroll versus a person who’s got a nice, well, maybe they have a pension, Social Security, they don’t have any debt, and they have a lot less money but they’re living more comfortably. So, everyone’s story is a little bit different and that’s the same thing on the business owner side.

[00:33:58] Tracey Bissett: Yeah, absolutely. So, my recommendation, and I talk about it a lot is not to be judgmental. Don’t judge others. Don’t judge yourself. Also, don’t be a financial bully. If you know your friends or family members have different goals than you, don’t kind of guilt them into trying to do things with you that they’ve got to spend money on. Everybody’s going to have different things they want to do and them saying no or not right now should be okay. So, leave it at that.

[00:34:27] Andrew Rafal: And so, through this last 9, 10 months, you’ve been working with a lot of your clients with COVID and the uncertainty of things. What are you seeing as trends? And what are you trying to help your business owner clients focus on in this time of such uncertainty of just the day-to-day of what’s going to happen next week, next month, next quarter?

[00:34:51] Tracey Bissett: Yeah. So, I was working at TD in 2008, 2009 so I saw certainly what happened at that time. We know companies that went through that period, the ones who did not only just survive but they thrived, they had lower debt levels and they had cash on reserve. So, a lot of the conversations that I’ve had with business owners were around not wanting to actually apply for some of the government supports, which I found fairly unusual. They wanted to leave the money for other companies. And so, encouraging them to apply for every single support that they can and if they didn’t have an immediate need for the money, build up those cash reserves. I’ve certainly seen a lot of creativity around, “This is my service offering. It’s still doing well. How can I double down on this?” So, some people took those government supports and actually invested more in a particular area of their business, and some completely pivoted. So, having again, though, as we discussed earlier, having that realistic, hard conversation with yourself if you need it.

So, if you weren’t doing well before March came and things were not going well when the economy was okay, should you continue to take on more debt is one of those conversations too because you might be just digging yourself a little bit bigger hole that you won’t be able to come out because maybe you hadn’t recognized earlier that your offering isn’t really what the market needs anymore. So, it’s about being honest and having the conversations you might not want to have.

[00:36:20] Andrew Rafal: What we’ve seen too during the pandemic is businesses that have relationships with the smaller local banks here in the States, they were able to get the help a lot faster than these businesses that were small businesses that had the big Bank of America, Wells Fargo, those kind of push them down. So, that’s one thing that we’re giving the advice to business owners is if you don’t have a relationship with your local bank and not take away from your old employer, TD, but tying in and having a relationship there so they have that personal touch, they can help you grow, you’re helping each other grow. Is that something that you also recommend both with your US and Canadian clients?

[00:37:03] Tracey Bissett: I do, and I certainly recommend, number one, have a relationship with a bank because a lot of small businesses don’t. So, number one, have at least one relationship but you should be keeping in touch with multiple lenders, not as your primary but so that if something happens and doesn’t go as you planned with your existing one, you already have somebody who knows your business and could step in to support. It’s really important to know how to conduct that relationship. So, that could be a whole another podcast but certainly, you want to be transparent with your banker, you want to be credible and knowledgeable about your numbers, you want to be honest. If you’ve had some challenges in the past when they look at your numbers, be able to explain what you’re going to do differently. But they’re not your best friend. So, you’re not going to go into their office and start crying on their shoulder but you’re going to be transparent. And the more credible you can sound and knowledgeable about your financial position is going to give them confidence so when they go to make those applications and recommendations that they can do so more confidently.

[00:38:04] Andrew Rafal: The other thing is as governments have tried to help sustain small businesses, it’s just really know what’s out there. There’s a lot of packages out there that weren’t even part of the CARES Act here in the States but SBA had some things and just make sure that you know if there’s a grant maybe in your area, how do you apply for it? If you could get 15,000 because you can prove that your revenue is down because of COVID, we actually had some business owners here in Arizona, that there was a grant where they got up to like $25,000, but if you don’t know, they’re not going to hand it out to you. So, you got to stay well-versed and stay connected to the people that are going to help you.

[00:38:47] Tracey Bissett: Absolutely. And so, making sure you’re on mailing lists for certain accounting firms, for business associations in the community and nationally as well is a great way to stay in touch because you don’t want to miss out on any of those opportunities. One of those might make the difference between your business just surviving versus thriving, as I mentioned before, because if you are in an industry that’s growing, growth is hungry too and it needs cash. So, if you could get some investment in, that was on a grant basis, that’d be phenomenal.

[00:39:18] Andrew Rafal: And so, somebody who comes to you that’s looking for help, what is the coaching look like and whether it be you or they work with somebody else, like let’s walk through kind of a high level of a coaching program for a business owner on the financial literacy side.

[00:39:32] Tracey Bissett: Sure. So, with the clients I work one-on-one with, first, there’s kind of a questionnaire where we get kind of the nuts and bolts of how the business runs, the things and the processes and practice that are in place. Next step is for me to do that independent financial assessment where I compare at least three years of financial statements year-over-year to themselves as well as to industry benchmarks, to see how things are trending and then debrief with the client and walk through as we talked about going through those statements and seeing how the story, they told me how that shows up in the numbers so there can start to be that relationship with them in their financial statements. From there, we move into creating a cash flow forecast. And so, I coach them on how to do that. I provide them with a shell but it is the clients who go away and do it with my guidance and support. From there, we move into creating a dashboard of kind of the key financial metrics for them that they should be monitoring and we get that all set up with their numbers.

Then the final piece is really to look at the pricing of their most predominant products or services to make sure that they’re profitable and that there’s no room to move. Typically, that’s where we do find some things that can help improve operation. Even if they’re doing well, there’s always stuff that can be improved, and then kind of wrap it up with a summary of all of those recommendations. So, it is really a hands-on coaching experience. It’s not consulting. I don’t go away and do everything on my own and kind of show it to the client. It’s really them hands-on involvement. It can be if it’s a little bit bigger company, it may be that the owner is involved in some pieces. They may have somebody who’s on point to do kind of that activity working with the spreadsheet but the owner is learning all of it as well but they may not be the one doing all of the entering of the data.

[00:41:21] Andrew Rafal: Is that normally over the course of like six months you’re doing this program? Or is it as long as a year?

[00:41:26] Tracey Bissett: Three to four months, actually. The key to doing it to build on all the successes is to keep the momentum up because if we space it too far out between meetings, then it’s kind of, “Well, what did we do last time? I’m not sure I remember,” and then we kind of repeat. So, I see the best results when we have good forward momentum and we keep it going over the three months, four months is still okay too.

[00:41:49] Andrew Rafal: I assume working from home hasn’t really been a big issue for you because your clients, most of them, you’re working virtually anyway.

[00:41:55] Tracey Bissett: Absolutely. Most interestingly, I find that even before COVID, remote was my preferred delivery method but also the clients because, as we talked about, money’s emotional. They’re often in a place where they’re feeling embarrassed or frustrated with the financial performance of their business. So, they like to be in the environment they want to be in and it’s often with cameras off when we are using Zoom and tools like that because you don’t necessarily want to be looking someone eye-to-eye when you’re talking about things you’re not pleased with in your own company. So, it allows for a little bit more vulnerability and I think it works fairly well. The other thing that works well is because we can share screens and we can work on the document at the same time. We’re not trying to struggle to see the same computer screen kind of heads bumping together, trying to look at the numbers because it’s so small.

[00:42:47] Andrew Rafal: Your website is full of a lot of seems to be updated, relevant stuff, which is great. When I was doing some homework before this, I mean, how many podcasts have you been on? I was going to say it’s like, “Whoa.”

[00:43:06] Tracey Bissett: Maybe 35 or 40 I would say. Yeah. I’m pretty active on shows and I have a YouTube channel I’m getting up and running that’s dedicated predominantly for entrepreneurs. So, it’s going to be kind of videos that outline all those questions that people have that just kind of want to get the short nuggets to answer it. So, stay tuned for that to come soon.

[00:43:28] Andrew Rafal: Awesome. So, you’re guests on shows like this, Your Wealth & Beyond, but then you have your own podcast as well.

[00:43:33] Tracey Bissett: Yes. And coming up on my three-year anniversary of Young Money so I’m really proud of that. We actually just launched a scholarship this year for post-secondary students. So, our podcast today that came out was announcing the recipients of that first round of scholarship money.

[00:43:50] Andrew Rafal: And that’s the YM Scholarship fund?

[00:43:52] Tracey Bissett: Yes.

[00:43:53] Andrew Rafal: So, what are we doing there? How are we raising money? And then how are you dishing it out?

[00:43:59] Tracey Bissett: So, proceeds from my business predominantly from my work with entrepreneurs are being handed out to the post-secondary students who study in Canada. They don’t have to be Canadians, and I’m looking for students who help others achieve goals. So, they had to share a short essay on someone they’ve helped achieve their goal and outline what their plan is for their future so that it really aligns with visit financials, values of giving to others, and having organized plans for the future. So, it’s really amazing. I had intended to give out five scholarships. The amount of money is not significant but I was so touched by the story so we ended up giving out seven, which is great. When I was that age, I was not aware of most of the issues that they’re going to tackle in the world so it’s so exciting to see what they’re going to be doing from looking into indigenous land rights to dealing with mental health issues to addiction issues. One of the recipients wants to do nursing in remote communities to make sure that people have great access to health care. So, it’s tremendous their individual efforts and then collectively what they’ll be able to accomplish going forward.

[00:45:14] Andrew Rafal: That’s tremendous. Then just the domino effect of how you guys are helping them and then what they’re going to do to shape other people and it just kind of continues to pay it forward there.

[00:45:24] Tracey Bissett: Yeah. For anybody listening, if you know someone who’s going to go to post-secondary or who is in post-secondary, please encourage them to apply for scholarships. The statistics are really startling that most students do not apply. So, there is free money to be gained out there. You’ve just got to apply. Once you win one, and you get that on your resume, make sure it’s on there. That’s kind of a pre-validation for other scholarships to say, “They were a winner. Let’s make them a winner again.”

[00:45:52] Andrew Rafal: All of this will be in the show notes so it’ll be very easy for you as listeners to jump on, see what’s happening, be able to help support, and potentially even maybe work with Tracey. So, as we come to a close, if you were to tell an entrepreneur that’s getting started or maybe in your teaching, it’s like, here are one or two books, not that you wrote but like that you recommend that can help somebody understand finances, understand the long term, do you have a couple of favorites that you could recommend?

[00:46:25] Tracey Bissett: Not an easy-to-read language that I usually recommend as a go-to. I know a lot of people focus on profit first. I like the concept and I like the way that it works. You got to be profitable before you can do it. So, sometimes people read that one and think that’s going to be the kind of the holy grail for what they need to do. So, I would say find, whether it’s TV shows, YouTube videos, podcasts, with somebody that resonates for you. I think that’s a really good way to learn and you’ve got to like the way that they speak and the way that they explain things. If things sound confusing, they’re not the right person for you. So, not exactly an answer but my best advice for that. One practice I would totally recommend though you put in place, we kind of danced around it, but I think that you should have at least monthly, a regular time you review your finances. I think weekly for a small amount of time is a really good cadence.

And so, I do have a gift for your audience. Andrew. It’s a money meeting agenda that the business owners can download and it’s at CashCoach.biz. And so, if you’re not even sure where to start, the first meeting might be looking at the agenda and just getting comfortable with what are the questions and then maybe next time you’re going to tackle one of them. So, a money meeting agenda to get you started at CashCoach.biz.

[00:47:47] Andrew Rafal: Perfect. And that’ll be in the show notes. Yeah. It’s just creating that routine. For us individually here over the years, use different technologies and we’ve talked about this on previous shows but the current team, I have the Comptroller and CPA firm, they brought us in line with a software called Xero, and Xero then it’s kind of like QuickBooks but for whatever reason, it was just much easier for us to visualize and see and do the projections but really get a handle on the numbers and being able to really easily compare it to year-over-year or month-over-month or quarter-over-quarter. Whatever business you’re in as Tracey, as you mentioned earlier, you got to know your numbers, and you got to stay up on it and you can’t count on anybody else. No matter if you have a good coach, you have good CPA, if you have a good bookkeeper, you have a good whatever, it’s still as a business owner, the buck stops with you and you can only answer to yourself.

[00:48:43] Tracey Bissett: Absolutely. Certainly, if you take your eye off the ball and you don’t have competent people working with you certainly can lead to lots of trouble. So, focus on the positive, know your numbers so you can grow and hit your goals and take your business where you want it to, and be able to do all the things you want to in your life.

[00:49:00] Andrew Rafal: I love it. Well, you’re doing some really great work. It sounds like you found your passion all these years and each day you get to work with people to help them excel and become better at what they do and be able to help more people. So, thank you for doing that.

[00:49:14] Tracey Bissett: Thank you for having me. It’s been a pleasure.

[00:49:16] Andrew Rafal: Probably could have gone on for another couple of hours but we appreciate the time. Have a wonderful Thanksgiving and stay safe, stay healthy, and we appreciate the time. Listeners, stay tuned for another episode of Your Wealth & Beyond later this month. Happy planning, everybody.

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