Why You CAN Afford a Bookkeeper With Nathan Hirsch

Nathan Hirsch is the Co-founder of EcomBalance, a monthly bookkeeping service helping e-commerce businesses manage their bookkeeping and finances. Nathan began his entrepreneurial journey in 2009 by selling products on Amazon and is best known for his involvement in co-founding Freeeup in 2015. With an initial investment of $5,000, Nathan helped scale the business to $12 million in yearly revenue before selling it in 2019.

Nathan is also the Co-founder of AccountsBalance, EcomBalance’s partner company, and the Co-founder of Outsource School, where he teaches business owners proven hiring methods for finding top-tier virtual assistants.

Here’s a glimpse of what you’ll learn:

Nathan Hirsch shares what spurred the launch of EcomBalance
Why is detailed bookkeeping crucial for e-commerce businesses?
Common mistakes business owners make when managing their books
How segmenting books helps accelerate business growth
The three financial reports business owners must compare monthly
Resources for finding vetted CPAs and CFOs to transcribe budget data
Knowing the optimal time to hire a bookkeeper
What is Nathan’s goal for EcomBalance in the upcoming years?
Nathan divulges personal anecdotes and their impact on his career
Why minimum-viable products are a company's most valuable asset

In this episode…

Finances are the driving force behind any company and indicate operational strengths and weaknesses. Most e-commerce business owners are ill-equipped to read and decipher financial statements, yet they shoulder bookkeeping responsibilities. Taking ownership of financials without accounting knowledge is a risk most entrepreneurs can’t afford.

Although hiring a bookkeeper is an additional monthly payment, business owners are relieved from the stress of balancing accounts. Bookkeeping requires understanding accounting principles and allocating time to read and record accurate financial details. Most e-commerce executives can’t commit to recording expenditures amidst their leadership responsibilities. Nathan Hirsch testifies business owners who take financial responsibility are likely to spend more money fixing their mistakes than if they had hired a professional. He implores entrepreneurs to hire a bookkeeper, and, at the very least, review income statements, balance sheets, and cash flow monthly to recognize company trends.

On this episode of the Up Arrow Podcast, William Harris welcomes Nathan Hirsch, Co-founder of EcomBalance, to discuss the pertinence of accurate bookkeeping for e-commerce businesses. Nathan shares common mistakes business owners make when balancing their books, how segmenting books can accelerate business growth, and the three financial reports owners must compare monthly. He also provides resources for hiring vetted CPAs and CFOs to transcribe budget data.

Resources mentioned in this episode

Sponsor for this episode

This episode is brought to you by Elumynt. Elumynt is a performance-driven e-commerce marketing agency focused on finding the best opportunities for you to grow and scale your business.

Our paid search, social, and programmatic services have proven to increase traffic and ROAS, allowing you to make more money efficiently.

To learn more, visit www.elumynt.com.

Episode Transcript

Intro 0:03

Welcome to the Up Arrow Podcast with William Harris, featuring top business leaders sharing strategies and resources to get to the next level. Now, let's get started with the show.

William Harris 0:13

Hey everybody, William Harris here I am the Founder and CEO of Elumynt. I'm the host of this podcast where I feature experts in the D2C industry, sharing strategies on how to scale your business and achieve your goals. I'm excited about the guests that I have today is Nathan Hirsch. Nathan is a lifelong entrepreneur and focuses on the unsexy or boring parts of entrepreneurship, bookkeeping and hiring. He is currently the CEO of EcomBalance and AccountsBalance, and Outsource School. Nathan is best known for Co-founding Freeeup.net in 2015, with an initial $5,000 investment, scaling it to $12 million in yearly revenue and having an acquired in 2019. Today he leads EcomBalance and AccountsBalance and online monthly bookkeeping service for e-commerce and digital businesses and Outsource School and membership teaching business owners how to hire effectively online. Nathan has appeared in 700-plus podcasts and you can follow him on LinkedIn. That said Nathan, thanks for coming out.

Nathan Hirsch 1:12

Yeah, well, thanks for having me. I'm excited to finally be here. I know we booked it out a little bit.

William Harris 1:17

Yeah. Well, and we've been I want to say we first met maybe was in was it in Sujan. Patel's slack group, or was it Benji Himes, one of those two slack groups? I feel like it's the first time that we ended up connecting years ago.

Nathan Hirsch 1:31

Yeah, that sounds right. I was trying to think of it as well. I'm not 100%. Sure.

William Harris 1:35

Yeah. So we've been going back and forth, sharing each other's content working with each other on different things for you know, almost almost close to a decade, I feel like now and it's exciting to actually kind of be here, together with you on a podcast, I want to dig into just like your founder story and what led to that, and this how we can help ecommerce businesses do a better job with their accounts and bookkeeping. I feel like that's something that doesn't get discussed enough. But before we get into that, I do want to at least announce our quick sponsorship message. This episode is brought to you by Elumynt. Elumynt is an award winning advertising agency optimizing e-commerce campaigns around profit. In fact, we've helped 13 of our customers get acquired with the largest one selling for nearly $800 million. And we were ranked as the 12th fastest growing agency in the world by Adweek, you can learn more on our website at elumynt.com which is E-L-U-M-Y-N-T.com. That said, Nathan, what got you to the point where you said I feel like I need to go into the world of accounting and bookkeeping. For e-commerce companies. What was the story or the inspiration there?

Nathan Hirsch 2:43

Yeah, good question. So we sold FreeUp in November 2019. And the original plan was to take a year off travel the world, I didn't think I would see my business partner for the next year. And then COVID Hit shortly after. So we were kind of in a weird spot, we sold the company, we were completely out of the business before COVID head and we didn't really have any new business ideas. And we're stuck inside when you can only watch so much Netflix. So you have a buddy of mine reached out and said, Hey, if you started a course on hiring, I think a lot of entrepreneurs would get a lot out of it. And we ended up launching the MVP of Outdoor School and people really like that. So we kind of expanded upon and added our SOPs and turn it into a membership and a nice little passive income stream to us that helps other entrepreneurs. And meanwhile, what we're constantly just brainstorming ideas, a lot of bad ideas on how to start a business outside of the VA Freelancer space. I mean, we had a non compete with FreeUp even if we didn't, we had already done that. And there and Outdoor School was a nice little way to kind of stay in the space. But we weren't going to build any kind of freelance or VA other business. So at brainstorming different ideas, we always kind of came back to what do we like in a business we like boring businesses like hiring we like businesses that are sticky and have recurring revenue and help other entrepreneurs and we want to stay in the e-commerce space. And we like businesses that go about with the experience that that we've had. And one of the best business decisions that we ever made was hiring a bookkeeper from day one of FreeUp we had learned a lot from our Amazon business on how not to do bookkeeping. I tried doing it myself. I tried hiring college kids to do it. I tried dumping on my CPA at the end of the year doing it once a quarter and then finally realize you need to do it every single month and look at the numbers and make decisions based on what the numbers are telling you. So with FreeUp hired a bookkeeper from day one before we'd even prove the idea before we had a lot of clients and over four Yeah, when we went to sell the business. We had four years of Immaculate books that helped us pass due diligence. But the real benefit was we made great decisions every single month based on what the numbers were telling us and that helped us grow and make a lot of money even if we didn't sell it. So that kind of gave us the idea for bookkeeping, or bookkeeping In service and we did a lot of market research, we interviewed over 100 ecommerce sellers, you can find those interviews on our blog, we publish them. And we looked at competitors, we looked at other people in the space and on paper, a lot of bookkeeping companies are run by bookkeepers who are not so great at hiring and scaling and, and growing in marketing and SEO and all this stuff that kind of goes around bookkeeping. And on paper, that's what we're good at. Obviously, we needed to execute it. So that's kind of how the idea came about. And we ended up hiring a controller here in Denver, built a bookkeeping team around her gave two free months to anyone that would take it to help us break stuff that give us feedback. And, and that's how he calmed down. She

William Harris 5:40

was born. I love it. Well, and what's interesting is a lot of people maybe don't realize just how much of a difference there is, in bookkeeping, for e-commerce. Similar to kind of what you even mentioned about the idea of, you know, trying to find other bookkeepers or trying to train a college student or something along those lines. Somebody that I really look up to a lot is Justin coffin Berg, a friend of mine, he started a company called sports engine sold that the NBC, it did really well. But I remember talking to him one time, and he said, the best decision that I could do as an entrepreneur, is as fast as I can get somebody that knows finance into the business, and let them take that off of your plate. So you can focus on the part of the business that you know the most. And I like finance, I'll say that, like when it comes to math, I love math. I love finance, I actually enjoyed digging into it. But it's a distraction for me, as the CEO of the business to focus too much my time and energy there, as opposed to focusing on the vision and where are we going? And how are we doing it? And so I mean,

Nathan Hirsch 6:43

sorry, I didn't say I completely agree. I mean, don't get me wrong, you should know the numbers of your business, and you should review and give statement balance sheet cash flow, but a lot of entrepreneurs have the wrong mentality when it comes to the bookkeeping. I mean, early on in your business, if you're an ecommerce seller, your time is so valuable, anytime that you spend inside the books, taking a course on QuickBooks reconciling accounts, right, that's a terrible use of your time and not 10 times, you're just gonna do it wrong anyway. So not only you're gonna waste time, you're just gonna have to pay someone to redo it. And cleanup work always cost more than ketchup work. And the real way to think about it is, you're not going to go out of business because of your bookkeeping expense, especially if you're small. And you're you're a newer business, we're talking hundreds of dollars a month, and I'm sure there's services out there cheaper than me. But you will go out of business, if you're spending money on the wrong things, if you're making bad decisions, if you don't know your numbers, if you run out of cash, those are the things that that will actually hurt you. And I think a lot of people have it backwards. They're like, Oh, the first year I'll, I'll do my books, and that'll save me time and money. And then I'll build up and I'll hire a bookkeeper. When really in my mind, it's just a necessary business expense. If you're starting a business, you got to factor in a bookkeeper into that into that business model and hire them from day one.

William Harris 7:59

Well, and especially if you're starting a company, and you're thinking at some point in time, you may want to exit to your point, having all of the bookkeeping done correctly, from the very beginning, makes it a lot easier when you go through due diligence. When you're talking, you know, from an m&a perspective, they like to be able to see that you understand what you're doing, and that they can make sense and heads and tails about what was going on within the business. And that there's a good, you know, story to be told here, this trajectory that makes sense and things like that.

Nathan Hirsch 8:28

Yeah, I mean, I completely agree. And yeah, due diligence was the most stressful six months of my life. And that's what clean immaculate because I can't even imagine going through it without, without clean books. And I've seen people who come to the end, and they'll come to us and say, Hey, I'm trying to sell my business, but I need bookkeeping for the past three years. And you do do it the next two weeks, I can close this deal. And I'm like, Sorry, man, like, there's no way we're doing three weeks of, of books and two year in are three years of books in two weeks. And I mean, stuff like that takes time. So don't wait until you're going to get to a sale or you want to sell like the time to clean up your books as now. And sure it might cost you a few grand if you're going back a bit. And they might take a little time and a little hassle. But in six months, in a year or a year, you're gonna be really happy that you not only have clean books, and it's one less thing off your plate, but that you're getting new books every single month that are accurate, that you can make decisions on so the time that to get cut off and get on a good process is now

William Harris 9:24

it so what are some of the mistakes that you see people doing? Especially when it comes to e-commerce, when they're trying to run their books themselves, that you you end up finding yourself having to clean up or fix or undo and redo? What are those biggest mistakes that you're running into?

Nathan Hirsch 9:40

Yeah, I mean, a lot of bookkeepers that don't understand ecommerce, they'll take the net that's deposited into the bank account and that will be the top line of their income statement, which is obviously not correct. Like you've got Amazon sales, Walmart sales, eBay sales, whatever it is, different fees, refunds, returns, all that stuff that goes in there, and then that you've got that net that's supposed your vacation. So that's one of the fastest ways to see if your books are incorrect if your bookkeeper understands ecommerce, and that's something that normal ecommerce bookkeepers gonna know how to do. And they're gonna use some kind of connecting tools like trying to go from Amazon to Walmart, or sorry, Amazon or QuickBooks, or Walmart or QuickBooks usually doesn't work very well, you need an A to X to connect books, a link my books, something in between, to really make sure that you're getting all the fees and stuff in there. And the other big mistake is just not segmenting. I mean, if you're selling a different marketplace, if you're selling different products, you want to know how each one is doing. There are sellers out there selling five different products, and three of them are unprofitable. And they have no idea because it's all lumped together and they have no idea what's going on. So make sure you work with a bookkeeper that segments your books. So you know what's going on on a per brand per product or per marketplace basis.

William Harris 10:52

Yeah, that's huge. And are there are specific things that you would say, when you're digging into let's just say marketplaces versus other segmentations, certain segmentations that typically matter more to a business where you talk about product and categories or things like that ones that you feel like make a bigger difference.

Nathan Hirsch 11:13

Say, again, product that makes a bigger difference.

William Harris 11:15

Like Like, like, if you're talking to like, which one makes a bigger difference if they're gonna start segmenting. Now, like product segments at the product level segment at category level segment at the channel level, if you're if you're, you know, that can get very, very tedious as well, which, which segments are the better ones to start with?

Nathan Hirsch 11:32

Yeah, I mean, if you're a smaller business, you can just start off with marketplace and then go like per SKU, it just like, you want to start the segment early, and you can always segment more, but at least don't have it all clumped together. And that's an issue that you have, a lot of times when CPAs do the books, because they're doing the books in a way to file taxes. They're not necessarily doing the books in a way that to help you make decisions. So it might all be 100% accurate from a tax standpoint, but it's not going to help you make decisions on a month to month basis.

William Harris 12:00

Yeah. And so what other decisions could you learn from segmenting things differently? What are ways that you can use the information from doing books correctly to help accelerate your growth?

Nathan Hirsch 12:11

Yeah, I mean, to me accurate books. And so to me, the way that I've always learned bookkeeping is you want to compare this month to last month, and this month, the same month last year, and then you want to look at trends. And you're going through all three reports, and you have a finance meeting that's on your calendar every single month. So you get the books by the 10th. By the 15th. Each month, whatever it is, you have a meeting on your calendar that you don't miss for any reason. And if anyone wants my meeting, go to e-comm bounce.com/agenda. And you can grab it to same meeting, I've been running for six plus years with my business partner, but you're comparing Hey, as payroll gone up as payroll go down our margins going up margins going down. But what about our PPC costs? Can I hire an agency? Do I need to cut back on payroll? Do I have a budget to launch another product? How's my cash flow? Am I going to run out of cash with the summer coming up and associated? So these are things that you have to be doing on a month to month basis, and you're going to get better at it you're going to overtime, you're going to get to know your numbers better and better. And that's going to help you make better decisions. And it's going to allow you to ask questions, if you don't understand a line item, you can send it to your bookkeeper or your CPA and and really understand what's going on and where the numbers are coming from.

William Harris 13:20

So here's an interesting hot take, do you have a preference on where you're thinking or how you're thinking about adspend? We do advertising, right? So that's like this is one that we're a little bit more passionate about, about where that ends up on, like the books. But how are you looking at ads been evaluating that as far as let's say you've got a business that is struggling a little bit, and they come to you? And they say, Hey, there's this really big line item for advertising cost? You're looking at as a straight cost. Are you looking at this as a way to help them grow? From from a bookkeeping perspective?

Nathan Hirsch 13:55

Yeah, I mean, the real answer is a I'm not a bookkeeper and be sure we don't give people like advice of, hey, this cost is too high. Like our goal is to deliver accurate numbers. And what you're talking about is more of like that CFO role. If you think of accounting in a big bubble, you got your CPA Tax strategy, LLC formation, filing your taxes, you got your bookkeeper to give you accurate numbers each month, and segmenting correctly, make sure all fees are accounted for. And then you got the CFO, fractional outsource full time, whatever it is, and they're there to take the numbers and make business decisions of the numbers and project cash and project sales. So I mean, what you're talking about is more on a business decision basis. And I mean, it can go so many different ways. You could have a great agency of that agency, it could be something that's just getting started or it could be something that's been wasting money for years. Like there's so many different ways to look at it. But it's not like we're someone's getting a report from us and saying, Hey, you're spending too much on ads cut back. That's not the role of the bookkeeper.

William Harris 14:53

Yeah, that's fair. I didn't know if you had done enough of this to where you say like, Oh, I've got my own hot take opinion on it. I'll tell you my heart. opinion, let's do it. Um, when when we look at this, a lot of times what we saw, and especially this happened during would have been 2021. All the iOS 14 stuff happened. And so people's reporting that they were getting on their return from their ad spend in platform had changed in a significant way. And we noticed there was a big trend of a lot of people coming to us saying, Well, we had a return on adspend or an M, er, that was 5x. We told the agency that we actually need to be at a 7x in order for us to be profitable, right. And this was coming oftentimes from the finance team, or somebody working with the the marketing team saying, No, we're not profitable, you guys need to be more profitable on the ad spend. And so what would happen is agencies would pull back on that ad spend to make that happen. And so they would maybe, maybe they'd end up pulling back on prospecting or something like that, maybe leaning more towards retargeting because it has a higher reported return on adspend. You can see my air quotes, I gotta make sure I get that in frame, they're reported, right. And so what would happen, what we saw is, they would go, you know, the next month, they would go to the point where they were actually losing more money when it came to profitability, they had a higher reported return on adspend. But when you look at the actual EBITA, it was lower because they weren't even covering now, basically, they're their overhead because they're spending so much less money. And then they say, Okay, well, we didn't make money again, this time. And so the finance teams get in with a marketing team saying, Guys, you still aren't profitable, we need to figure something out here. And so the marketing team says, Okay, well, let's go to a 9x. That'll solve our problems. And then they get to a 9x. But again, they scaled back on the ad spend so much to the point where they're still not covering their overhead, and it wouldn't matter what they did. And so what we saw is oftentimes, maybe a lack of communication between the finance team and the marketing team getting on the same page about what that ads been means. And just because it's a big line item, does not mean that should be considered a cost in the same way that a lot of other costs are, because the cost that should be leading towards increased revenue. So it's a very different kind of approach, if that makes sense. Yeah, it does. What

Nathan Hirsch 16:58

are you seeing? Just curious, why are you here? For like Amazon ad spend, like what are you seeing, obviously, it's getting more competitive. And he just overall thoughts on where that's going and what you're seeing it's,

William Harris 17:09

it's definitely getting more competitive. And so there's a difference, I think, between the way that we look at D2C versus Amazon. On the D2C side, when you acquire a purchase, you acquire that customer typically as well. So you have that LTV that you can build up on. That's not true on Amazon. And so I would say that I put a higher emphasis on profitability per purchase on Amazon than it would on D2C where I might be willing to say to somebody on the D2C side, maybe you acquire somebody knowing that you're not gonna be profitable on that purchase from a CAC perspective until three months from now, that's not true on Amazon. But a lot of people are getting more aggressive on Amazon. Part of that is, Amazon has made it to the point where you almost can't search for anything, within reason where the entire above the fold is all ads. And so there is competition that you need to pay to play and you've got to be there. I think as far as where that's gonna go, I think that's just gonna be considered to be a part of what is necessary on Amazon. And you're going to have to know your numbers. And you're gonna have to do a better job with that. There's an app that I like, Chad Rubin, I actually just had him on the show a couple of weeks ago, I think now. And what they do is they're actually optimizing pricing. So if you actually these are your products and you can change the prices for them. Increasing pricing to find a better profitability margin for you. So you might be able to spend a little bit more on the ad side of things if you raise your prices. Now you can still make profit otherwise you had in your cellar fee, you know, your FBA fee, your your ad spend in a lot of people don't realize that on a lot of products, they're actually losing money.

Nathan Hirsch 18:46

Yeah, Chad's always up to cool stuff. I'm excited to see where this new company goes.

William Harris 18:51

Yeah, and if I didn't call that out, the company is called Profasee. It's a really, really interesting company. And if you're on Amazon, and you're trying to figure out how to be more profitable there, I highly recommend it. Um, so from your experience, what financials are the most important to know and follow as a business owner? So we talked, obviously a little bit about profitability and stuff. And we talked about segmenting things, but what are the ones that you like to look at the most? He I mean,

Nathan Hirsch 19:15

there's three reports that you just have to know as an entrepreneur and this is going to help you with your own business can help you invest in business. If you're like me, and you have a lot of money in the stock market, you got to know how to read these reports. So income statement, balance sheet cash flow, and obviously Income Statement shows you how much you're making and losing balance sheets shows you how healthy your business's assets compared to dead and then your cash flow, especially in e-commerce where we kind of mentioned that a lot of e-commerce businesses go out of business not because they're unprofitable, but because they just run out of cash, especially if you're you're buying inventory in different segments, every business a little different there. So just being on top of those three monthly reports and my kind of message is like don't take a course on QuickBooks, don't. Don't learn on how to use QuickBooks, you don't even have to log into QuickBooks, but make sure that you are reading income statement balance sheet cash flow every single month for your business and comparing those trends this month compared to last month, and this month compared to same month last year.

William Harris 20:14

And that's where that fractional CFO or somebody could come in and help make you help people make better decisions around those numbers. That said, knowing that that is not you, you're not an fractional CFO bar, there are certain red flags that you at least in your experience look at, and you say, Oh, these are things to be watching out, especially if you're an e-commerce business. And maybe you know, on the cash flow side of things, you talked about inventory, maybe it does come down to the way inventory has handled it from a tax perspective at the end of the year or something like that. I don't know, I'm throwing things out there. But are there ones that you look at as red flags to be aware of?

Nathan Hirsch 20:50

It's funny, I feel like we kind of live in the e-commerce vanity number world where people will just throw out like, Oh, I'm a seven figure, I'm an eight figure seller. So sure. I mean, you got a lot of these times you go right to the profit, like how much are these companies actually making and getting good terms is incredibly important. I've seen people that are selling on Walmart, or even in retail stores, Home Depot, whatever, but they're not getting paid for 90 120 days, whatever it is, and and they have no real plan to make sure that their business is cashflow positive, you get companies like eight-figure, and all that that's coming up for that reason. So that's what I kind of look at is profitability and cash flow. And then you kind of go right to the margins, like, are your margins going up over time or down over time. And if they're going down, what's the actual plan that to turn that around and, and then looking on like a payroll side, like, there are a lot of people that they get in this habit of hiring, and then they gotta give raises, and they gotta get bonuses, and then they go on another marketplace, or they gotta hire another person and their payroll and contractor and freelance and VA costs are just creeping up over time, without them realizing that their business can't really support that kind of growth.

William Harris 21:58

Hmm, yeah. You know, you talked about margins growing or, or, or, you know, declining over time. One of the things that we've noticed that we've seen with a couple of clients, one particular client launched a new they were, they were high end, particular niche, and whatever they were, I will say AOV, maybe $1,200. And making that up, but it's a little over 1000. And they launched a new line of products, that was meant to be like their low end stuff. And so it was maybe $400, AOV. And what happened was, as you can imagine, just by having those ads there, just by having that be the hero image on their website, there was a significant amount of purchases that went to those products when they launched this. Now, the the downside to that was, let's say profit margin, percentage wise, they were within the same realm of of what they're normally running at. But when you looked at this from dollar, amount, it was a big difference in dollar amount of profitability here, per purchase. And so they were making slightly more top line revenue, year over year, but their profitability was down year over year. And so this was one of those things where that, you know, we had to help. And because we dig into the PLL, is of all of our clients that we're working with, I shouldn't say all of them, maybe about 40% of them, whoever's willing to, we were able to say, you know, as a result of this, we need to increase the amount of ad spending that's going towards some of these other products, maybe reduce the amount of ad spend, that's going towards the cheaper products. So that way, we can make sure that we maintain that profitability for you. And so profit optimization on the SKU level is something that we like to do with a lot of clients. And people don't realize that you can get very, very granular on this, even down to how we optimize the feed within Google ads platform or Google Shopping, things like that. So that way, you're optimizing the profitability, you may not actually increase your top line revenue, but you can increase that bottom line. And I think that's a bigger deal for most businesses than they realize. Yeah,

Nathan Hirsch 24:06

I mean, I agree with everything you said. I mean, that's why you kind of need someone who can actually dig into the finances and be like, what does this mean? Like, okay, and I also tried to avoid, like, there are people that are like, You need to be having these margins, or these are the KPIs you shoot for, or like stuff that's just very generic. And it really is on a business bit by business basis. And there's just exceptions to every rule, like something that's good for your business might be bad for something else. There's strategy involved, there's things that could be okay, on a short term basis that leads to something good long term time or long term. There's other things that could be a bad trend that you need to fix right away. So it's really tough to kind of talk in generalities when it comes to finances.

William Harris 24:47

And so let's say that somebody they're working with you, or maybe they're not, but whatever, they've got their books cleaned up and they feel really good about where their books are at now as an ecommerce store. They've got the right data flowing in and they can make these decisions. But they're lost on what to do with the data now, are there places that you know of that you, you know, circling swimming in this pond could recommend that you're like, hey, go here, you can maybe find a good CFO or look for people with these kinds of titles currently? Or how can they find those people that can make decisions with that data?

Nathan Hirsch 25:20

Yeah. So with all my companies, we try to partner with other people in the space that do stuff that we don't do at a high level with the same values as us. So if you go to EcomBalance partners page, right in our site, we have a whole list of different CPAs different CFOs. If anyone wants an introduction, shoot me an email, Nathan@ecombalance.com, more than happy to send you their way, regardless of whether you use our service or not.

William Harris 25:43

Yeah, that's great. That's helpful. And I imagine these people that you have, you know, vetted them, because you've been able to work with them. And you say, Hey, we've seen the way that they're handling these books, and they seem to understand things. Obviously, there's a limited amount of vetting because you're not the CFO as well, but you're saying in the vetting process we've done or what does that vetting process look like? Yeah,

Nathan Hirsch 26:01

I mean, it's people that we've sent clients back and forth with, like, the CPA that I refer is my personal CPA that I've used for 15 years, they helped me sell a company, I'm forever in debt, and they have a lot of different services. They're not a large firm, but medium sized, firm. And so I anything that I personally use is definitely top of mind. But there's also people in the space that I have sent clients, to me that have nothing but great things to say about the person that that's kind of what they're getting from. And so that's a good record as well.

William Harris 26:29

Yeah, that makes a difference. Okay, let's say, when is it the right time for e-commerce merchants to decide that it's time for them to be done with doing the books? We hinted at this at the beginning where we talked about like, you know, day one, sure, to a point. But are there other signs and symptoms that you would say where it's like, maybe somebody's been running it for themselves, they didn't do this day one, they've been running for themselves, and they're starting to notice these things taking place. And you're saying, This is a clear telltale sign, you need to get somebody in managing your books.

Nathan Hirsch 27:00

Yeah, I mean, I kind of default to like you should have your you should have someone manage your books at all times. If you're not doing it now. Get someone to do it. We're recording this in June, it's actually a perfect time to do it, just because tax season is over. And you've got until the October 15. Let's say you got an extension. And if you want to give your bookkeeper time and not be rushing and not be stressed in October, if you still need do last year as books, now's the time to find a bookkeeper that understands ecommerce that has the bandwidth to take you on that can handle that project. And the last thing you want to be doing is trying to find a bookkeeper like January to April, that's a terrible time right before tax season, you're gonna pay the most money, you're gonna have delays, you're probably going to find an extension anyway. So that like summer months is really the go to but I mean, if you're not on monthly books, where you're on getting on time books every single month, and your books are caught up, that should be a big focus to get the right setup, get the right bookkeeper get a monthly finance meeting on your calendar and get into that good process as soon as possible. Possible. And if it takes three months, it takes three months, but in a year, you're gonna be really happy that you did that.

William Harris 28:08

Yeah. What are what are two to three year goals that you have then for EcomBalance? Like, where do you want to take this company over the next couple of years,

Nathan Hirsch 28:19

I always hear like, Oh, you're just gonna like flip this business or something like that. Or like you have a history of selling businesses, like I sold one company. So I don't know that necessarily true. But like our by this partner, Connor, my goal is to have a portfolio of businesses that help entrepreneurs, we have Outdoor School, which is planning continuing to run, we have EcomBalance and AccountsBalance are two monthly bookkeeping brands. EcomBalance for ecommerce sellers, AccountsBalance for agencies and other services. And I mean, we think bookkeeping is me around for the next 30 years plus, and is a pretty solid business in our portfolio that we can build on and from there, we want to add other companies, whether we're buying them whether we're starting them and, and kind of have this portfolio of businesses, the two people that we sold FreeUp to Mark Hargrove and David Morin. They just, they just load up on companies and just hold them forever. And that's kind of what we do in the stock market, my business partner and I and kind of what we plan on doing here. So our goal is to consistently grow it, I think, a little different than FreeUp. I don't think and I don't think bookkeeping can handle just massive growth at once. Like if we added 100 clients tomorrow, that'd be very difficult than our team but I think it can handle constant steady growth where you're adding 10 clients every single month and that's what we want to do for the foreseeable future and eventually build a business that's bigger than FreeUp and and have it something that we keep for years to come and yeah, we just love that space. It's boring. And most of its is run by bookkeepers which we like it's kind of hilarious being a non bookkeeper and in all these different communities running a bookkeeping business, but yeah, that's kind of our overall mindset.

William Harris 29:57

I like that you talked about like the buy and hold stuff. energy as well, even within the stock market. This is unofficial advice for anybody listening, but I'm a buy and hold kind of guy as well. And when you look at ecommerce as a percentage of retail sales, it makes up about 15% or so it's absolutely just, it's still an infant, right. And so being in the e-commerce space, again, this is not this is talk to your financial planner, or whatever. But I would say there's still a lot of growth left for e-commerce, businesses and things have been beat up a little bit, especially in our space. And so I doubled up on I shouldn't say doubled up, I don't remember how much more I put in, but I put in more into Amazon and Shopify being, you know, two of the dominant players in the e-commerce space, just with the assumption that, you know, if you look at, let's say, 15%, will you give that a few more years? When's that gonna get to 20% 25 30%? I think there's still a lot of growth for e-commerce as a whole. But again, not official financial advice. Talk to your CPA, your financial planner, whoever you want to on that. You and I are very much in lockstep there. Yeah. Well, and I'd say if we, if we want to go down that tangent for just a moment more, I'm also really big into genetics, again, not not talking about anything, like I got into CRISPR a little bit, I think about like, where's gene editing going to be in the next 1020 years, there's a lot of growth for that being a very emerging field potentially as well.

Nathan Hirsch 31:25

I like it I one of my just investing philosophies, we're getting off track here, but don't invest in anything that you don't understand. So I kind of shifted away from like health, the health industry, and it's just pretty far away from from my core competency.

William Harris 31:38

There's a lot of a lot of intelligence in making sure that you stay within the realm of what you understand. I know Warren Buffett talks about that a lot and sort of just about anybody who's successful in that. I sometimes look at some of these other ones as as Gamble's that are just fun and interesting and things that i i Let's say enjoy more as hobbies of researching and say, Okay, well, this is an interesting sector that I think is going to do well. Um, what about I want to get into the personal side of who is Nathan Hirsch that as well. What about your childhood? Is there something in your childhood or something that made you the way that you are the type of person that can see something, say, Oh, that's a really unsexy business. I'm going to turn that into a business and grow that and sell it or whatever that might be. What made you this way?

Nathan Hirsch 32:29

So I think the unsexy parts of business kind of came as I just became more of like a veteran entrepreneur and like, see what worked and what didn't. But I think entrepreneurship, there's a joke in my family that it all comes down to french fry. So I'll explain. i My parents were both teachers growing up, grew up middle class, never report never wealthy, like always had a roof over my head. And but I grew up in a town with my dad, I grew up in East Longmeadow, my dad taught Longmeadow. And so I got to go to the law middle school system, which was better. And all my friends, their parents were like doctors, lawyers, dentists, entrepreneurs, like super wealthy town. And I was just like this middle class person going to this very rich school, public school. And so like growing up, my parents were always very frugal, they taught me how to save, couldn't have better loving supporting parents. But they always made me buy anything that I wanted myself, like my first car had to pay for myself, like any video game, I wanted to pay for myself. So I got jobs at a very young age. So that kind of taught me work ethic and value of a dollar and all that. But even like going back younger, whenever we'd go on ski trips, my parents were big skiers, I always wanted to get french fries, at the cafeteria, and the lodge would always bring a lunch, my parents would never let me get french fries. So I think in my mind, I was like, when I grew up, I want to be able to buy french fries anytime I want. And I think that's what kind of stemmed, like, make money for yourself or for yourself, and all of that. So I think if I ever went to a therapist, which I've never done, and kind of get to it, I think like all my ambitions for like being self sufficient and financially sound and just like having financial freedom and all of that just comes down to wanting to buy my own french fries as a kid.

William Harris 34:14

I love it because it reminds me one of the things that we say sometimes in business is stay hungry, right? And yours literally stemmed from hunger, right, not just hunger for success or growth, but an actual hunger for French fries. It reminds me of actually one of my first jobs when I was a kid as well, delivering newspapers. I think it was 11 when I got that job, and my mom was really great about helping us get that set up and work on that. But I can remember, you know, getting a paycheck at like 11 and being able to do something with some of that cash. And I had like a neighborhood pizza party where it's like so I had invited some of the kids neighborhood kids over it's like I wanted to buy my own pizza, right. It was like that was a really cool thing to be able to do like you said to buy buy your own franchise buy your own pizza. Yeah, and

Nathan Hirsch 34:57

I mean all these jobs that I got, I got I had so many different I've never had a real job after college but jobs in high school and college like it all taught me just having a boss sucks. And I kind of gave me assurance for what life was like in the real world. And I wanted no part of it and and that motivated me to be an entrepreneur as well.

William Harris 35:17

What was your what was it? Maybe this we didn't talk about this? What was your first job? What was the job that made you realize you're just like, yeah, no, I'm gonna be an entrepreneur like this, I can't do this.

Nathan Hirsch 35:26

So my first job that I actually liked a lot, I was the umpire umpire my town, they pay me 20 bucks, 25 bucks a game for like a one hour two hour game, which is awesome. And then they made me the head umpire of like the little league sorry, get like 300 bucks a season and I had to manage all the schedules. And I think that's when I learned like people are super unreliable and they wouldn't show up. And I would have to stop what I'm doing and drive to the game and umpire myself and, and so that was that. But I the biggest one was Firestone. I used to work as a sales intern at Firestone. And I know absolutely nothing about cars, like cars are not my thing. In my mind, it's a way to get from point A to point B, I don't really get like people's fascination with it. But my job was to sell people car services, I knew nothing about cars. So you learn a lot about sales and rejection. And that at a very young age, which I think is skills that I still apply to this day.

William Harris 36:18

That's good. There's something about being having to go through some loss and some failure. In early days of you're just like, This isn't good. I need to figure out how to break through this. This is painful, I need to figure out how to change that, that I think helps to drive people in in sheltering kids from too many of those scenarios, doesn't benefit them out. Obviously, there's good pain, there's good struggle, there's bad pain is bad struggle. But in many ways, a lot of these these micro struggles with with a boss that you don't like or people not showing up that you scheduled or whatever that might be, are catalysts for significant growth personally and professionally.

Nathan Hirsch 36:57

Yeah, I mean, there's so many kind of just ups and downs, whether like you're a teenager trying to figure out your life or like an early entrepreneur, and you kind of just learn from the different failures. And as you get older, you start to become numb to it. When things are going well, you celebrate a little bit, but you're like, Alright, how do I prepare for other things that could go wrong. And when you fail you you don't think you're going to become homeless and life is over. And you kind of look at it as a lesson that you're going to be better for. So

William Harris 37:23

yeah, where else did you learn to be an entrepreneur? Are there books or podcasts that you particularly like or listened to or read that you say, these have helped shape my mentality about what it means to grow and be successful?

Nathan Hirsch 37:39

It's funny, I like back when we started FreeUp, which I had an Amazon business before that, but I consider a FreeUp, like my first B2B where I had to learn like marketing and SEO and the Amazon business, we made a lot of money, but it was mostly timing more than anything else. We just got in super early, but like we never, like I've read some business books, like Four Hour Work Week and stuff like that. But I never really listened to podcasts. And I'd never joined any, like masterminds or had any coaches, a lot of what I did was just trial and error and taking what I had learned from all these internships, about customer service and sales and the keeping a customer long term and negotiating and like, all of that kind of stuff. So for me, part of the fun of being an entrepreneur is figuring it out yourself. And I always try to stay away from like groupthink, where it's like, everyone's doing this lead generation formulas like you need to do it too. And more of like, hey, how do I carve out something different that no one else is doing. And like podcasts is a good example. Like now podcasts are blowing up. When I started FreeUp I started going on podcasts. And it was just a free way to get in front of people. And I mean, going on the hundreds of podcasts during FreeUp, no one else was really doing that. And it was a great way to just get our brand out for free and, and it was definitely different than what everyone else was doing. I think at the time, like Facebook ads was like the main thing that everyone's going crazy over. So yeah, I always tried to kind of be a little different and carve out something unique to me.

William Harris 39:00

I like that. What are you afraid of? Is there anything that keeps you up at night that you say this is tough, being an entrepreneur is tough, whatever that might be.

Nathan Hirsch 39:10

I think I shouldn't say I think every entrepreneur, I can't verify this, but kind of has the same fear of just like blowing everything like blowing all your money, like ruining it for your family, like investing in some business. Like I'm pretty frugal, but it's still just like that irrational fear of like, like never starting another successful company again, and then somehow, like driving everything you have into the ground. And I think like I have a kid on the way that's due in August. So you're kind of always just trying to be like, alright, like, you can take risks, but let's be smart about it. And it's just a rational fear that I think I have and I think other entrepreneurs have.

William Harris 39:48

Yeah, yeah, I think we can all relate to that. Coming back to that. Then you mentioned that you're you haven't seen a psychologist or a counselor or anything along those lines, which I think is actually The exception to the rule for most entrepreneurs, how do you stay grounded during the stress of you know, building growing, operating running a business? Is there a routine or a song that you listen to that you're like, This is the song that I have to listen to in the morning to like, shake off, whatever, you know, bad juju is going on? Or like, how do you stay grounded and pushing forward?

Nathan Hirsch 40:22

There's an inside joke between me and my business partner, Connor, that he's my therapist. So when he's like the most calm, cool, collected person, I don't think I've ever seen him upset my entire life. And he'll shrug stuff off, and I'll be like, Yo, this is blowing up like, this is gonna be a disaster here, like what's going on, like freaking out? And he's always like me, dude, we're gonna figure it out, like, calm down. And so I think he's kind of one thing that's kind of prevented me from from having to go down that route. Because whenever, like, you still kind of go through highs and lows. And I'm definitely way different than I was during the FreeUp days where I was hustling all the time, and I had some Amazon money, but like, I didn't have enough money to survive the rest of my life. Now. Now you're, you're kind of like, we're busy building business for fun. If stuff doesn't work, it's a completely different situation than if FreeUp failed back in the day. So But even now, I'm like, Oh, my God, we like having landed a client in two weeks, like what's going on? And he's like, Dude, we're gonna figure it out. Trust the process. And I think that really keeps me more stable, so to speak.

William Harris 41:22

Are you familiar with Traction by Gino? Wickman? II?

Nathan Hirsch 41:26

Oh, my favorite books? I think it's back there.

William Harris 41:29

Oh, nice. It's a little blurry. So I can't quite see it all the way. But yes, I love that book as well. When you described your partner, that's that's my business partner as well. I don't know. Are you the visionary then? And he's the integrator?

Nathan Hirsch 41:43

I think so I do think yeah, I love that book. I think that it sometimes there's a little black and white that gets blurred at Toller. I think if you're growing like an Apple or an Uber, that's true. But most of the time, we're not trying to necessarily build the next Uber, like we're trying to find a very boring industry that we can take our percentage of and run it a different way with a high level of customer service. So with that, were both like brainstorming ideas and thinking of the future or both executing the, to some extent and like sure, I wanted to build the next Silicon Valley startup, maybe you do need to really, really separate it. But it does merge together a little bit, at least in our situation. Yeah,

William Harris 42:26

at least from a personality standpoint, I totally resonated with you where, you know, that is me to my business partner, Jeff, where, you know, he, he definitely shields the rest of our team from a lot of my psychosis of, of, you know, it's like, oh, what's going on with this? Like, this is like, this is terrible. What just happened with it? Like, what are we going with this and he's very calm, cool and collected in very many ways. The opposite of me, even down to the point where it's like, I'm an Apple guy. He's a Windows guy. Like, we have so many things that we're very opposite on and helps kind of calm and balance me out. What about famous people? Sometimes people have fun stories about this. Have you ever met anybody famous, any fun stories about that?

Nathan Hirsch 43:07

So the only thing actually is I have two famous stories. So I used to work as a caterer and I'm very, like fast paced. So I was really good at working at this catering company. So when I was a high schooler, and there are people there where it was like their real job, and they put me at a VIP table for the this actor friend from the nanny, I don't know if you've ever seen that, like, way back in the day or whenever I get that voice. Yeah, I think she's actually the head of like the Writers Guild or the actors guild or something right now. But I got to like to wait on her VIP table. So that was kind of cool. And then Mariano Rivera came to our high school, his son went to Quinnipiac University, and at the time, they were exploring it and he came to the Athletic Center, and everyone had this like, huge line, and I ran around back and got to see him, like, get snuck out back and I was like, Hey, will you sign a ball? He's like, No, I'm like, Can I shake your hand? He's like, Sure. So I shook me around Rivera's hand and that was that

William Harris 44:03

but no ball. That's a bummer. That's good, though. That's cool to see him shake his hand, right. I'm coming up towards the end of our time. If you had to give just any piece of advice to an entrepreneur, probably in the e-commerce space, but doesn't have to be but just people who are listening to this podcast you'd say what is the one piece of advice that you would give them when it comes to literally anything mental health with this or what tool they should use? What's the one piece of advice you'd want to give?

Nathan Hirsch 44:33

I'm a big fan of minimum viable product. I try to do that with everything like with Amazon back in the day I tried drop shipping 10 products and if people left me bad reviews or whatever something bad happened I would have just stopped the business model and tried something else. With FreeUp I gave all these people some free hours of VAs and they liked it. I was going to spend more time building it out if they hated it. Just move on and Outsource School and we launched it we didn't know if people like it or hate it. If they If I would have refunded everyone and moved on to the next thing and EcomBalance and AccountsBalance is no different. We gave all these people, two free months of bookkeeping. And if no one stuck around after that, all right, we tried, we didn't invest a lot of money, we move on. And I remember being I live in Colorado now. But one of my one of the things I did not love about the Florida entrepreneurship community that I was a part of, is it always felt like it was, hey, give me $500,000. And then I'll start working on the idea. And to me, it's just so backwards. It's like, go do market research, go talk to your ideal customer, go get sales, like, if you can sell something, everything else will take care of itself. Money will always follow there. But you got to spend more time testing it. And just because you think it's a good idea doesn't mean it is and there's plenty of bad ideas that we've tested that we're like, huh, like, I don't like that. But that worked for our customers. So like, let's do that. So big proponent of just low risk, high reward minimum viable product? Yeah.

William Harris 45:54

Yeah, MVP, right. I love that as well. Especially back from my SAS days. MVP was something I think we talked about a lot where you sometimes all you have to do is put up the landing page and just see can you actually even get email addresses of people that are interested in like, sometimes that is the literally minimum viable products? Like, are people interested in this at all? And if they're not, maybe you don't have anything worthwhile? What about this is the my final thing, I have a fun little game that I like to play, which is just called What's that mean? I'm gonna give you an English word. It's one that I don't think that you know the definition for there's just random weird English words. And I want you to give a definition of what you would say this means but you know, make a sound believable to us where it's like, clearly, that's not what it means, but we're gonna make it sound believable. What's your word is Dragoman Drago M A N, Dragon Man, what does that mean?

Nathan Hirsch 46:51

someone that loves Dungeons and Dragons. So their Dragon,

William Harris 46:56

obviously, I mean, it's, it's right there in the name right? Like, we don't even need to look that one up to find out if that's true. Which, what does it mean? It means an interpreter or professional guide for travelers. Not at all what I would have thought interesting.

Nathan Hirsch 47:09

When you said the word I was like, I've heard that before somewhere, but I don't know. I've never.

William Harris 47:14

I'm impressed that you have feelings on John Oliver someday. Sure. Okay. So Nathan, I really appreciate you coming out here. giving us your time here to your knowledge and wisdom to us. If people wanted to work with you, if they want to follow you connect with you. What's the best way for them to do that? Yeah, connect with me

Nathan Hirsch 47:33

on LinkedIn, Nathan Hirsch, I put a lot post a lot of daily content there about hiring and bookkeeping and boring parts of business. Go to outsourceschool.com You can check out our hiring process there. And if you mentioned this podcast and you go to ecombalance.com, you get two months free.

William Harris 47:48

Awesome. Again, thank you very much for coming out here today, Nathan. Thank you. Thanks, everyone. Hope you have a great day.

Outro 47:57

Thanks for listening to the Up Arrow Podcast with William Harris. We'll see you again next time and be sure to click Subscribe to get future episodes.

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