Ep 13 – Dave Olsen & Shane Rowley with Nimbl – Fitness Finance
A lot of small business owners struggle with getting accurate financial information because it requires specific knowledge, accuracy, and more than anything, time. And they can’t afford a full-time CFO or even a bookkeeper to do the work… so they end up feeling stuck and struggling when it comes to taking control of the financial health of their business. Dave Olsen and Shane Rowley, Co-founders of Nimbl Accounting Services, both know the pains of running a small business all too well. They also know how crucial it is to get accurate financial information to make the best decisions to grow your business. Helping small business owners has always been their passion and led them to start Nimbl. A full-service accounting company that serves NPE clients in the USA & Canada.
Dave started his career in public accounting and served as CFO to many start-up and venture companies in Canada. Shane, on the other hand, started as a tax specialist in Utah and helped small business owners save on taxes. Dave and Shane met three years ago when Dave was already up and running with a new business model for providing all kinds of financial services to many small companies. They saw a huge demand helping small business owners solve accounting and finance challenges and they officially rebranded to become what Nimbl is today.
In this episode, you’ll learn…
- How Dave started his career in public accounting and became the CFO for multiple companies.
- How growing up in a family who owned a business taught Shane how to help small businesses with taxes and make accurate decisions based on accurate information.
- How they met and started working to help small business owners who can’t afford a CFO or a full-time bookkeeper get accurate financial information.
- Nimbl’s mission to help small business owners with accounting and finance so they can focus on what they do the best.
- The importance of keeping business and your personal life separate, even when your business is small.
- Dave and Shane’s recommendations on corporate structure and what entity fitness business owners should choose.
- How setting up the right corporate structure can dramatically reduce your tax bill and protect your personal assets- including how they saved a small business $12k by making this switch just last week!
- Contractors vs. Employees: What’s the difference and impact for your business from a legal and tax standpoint.
- Best practice to set benefits for your employees.
- Tips for when you want to expand your business to multiple locations.
- And much, much more…
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Sean Greeley: All right guys, welcome back. This is Sean Greeley here with another episode of Secrets to Their Fitness Business Success podcast. I’m here today with Shane Rowley and Dave Olsen, co-founders of Nimbl. Excited to have you guys here today. Welcome to the show.
Dave Olsen: Good to be here.
Shane Rowley: Thanks, Sean. Good to be here with you.
Sean Greeley: Okay, awesome. So let’s get a brief overview of Nimbl and what you guys do.
Dave Olsen: Sure. So we do, back to the accounting department for small businesses. You take everything off your plate from bookkeeping, payroll, paying bills, invoicing, tax returns, anything that’s kind of in the back office accounting world, we’ll just take it off your plate and let business owners focus on what they do best.
Sean Greeley: Awesome. So for all of our clients that own small businesses in USA or Canada that are struggling with finance, accounting, payroll, taxes, forecasting, all the stuff they don’t want to do, but we have to do to have good information to make good business decisions, you guys can handle that.
Dave Olsen: Yeah, exactly. So you think about a big company that has an accounting department that just handles it all, well that’s us for small businesses. Now you get a full team, CFO, controller, manager, bookkeeper, but you only pay for just the very slice of what you need of that team instead of having full-time people yourself, or trying to do it yourself, whatever situation that you’re in right now.
Sean Greeley: Awesome, I love it. And you know, so many of our clients struggle with, not just the fundamentals of accounting and systems to track their books, but as you know, you’re always trying to piece together multiple, usually vendors and people to make this work, when you don’t even understand exactly what’s involved in what you’re doing. So they have the bookkeeper over here that’s reconciling stuff, they the banker over here, they have the CPA doing taxes over here, they have the payroll company. Then they’ve got to do planning for any facility or for growth, and they go talk to a CFO, who’s helping them do some budget and [inaudible 00:02:05] and none of these things talk to each other, none of it’s information that’s tied together to be efficient. And then I’m spending a ton of money and wasting a ton of time to not move forward, really, actually at the end of the day.
Sean Greeley: I am trying to secure capital and loans and all that kind of stuff, I have good plans for debt management, and there’s just so much to do. And I love the concept that you guys are coming into this space and really being all inclusion, where you can start small and you can scale and grow as you need to, and be flexible in providing the support to businesses this size. So we’re excited to have this work, excited to have you on the show. SO thanks for being here.
Dave Olsen: No, thank you.
Shane Rowley: Thanks, Sean.
Sean Greeley: Okay, so let’s tell people about your background story. And I should share Dave is from Canada, Shane is from the US, a Utah boy. And you guys have a really interesting story of how you got into accounting and eventually got together to form Nimbl. So David, I’d love you to kind of share your story and how you got to where you are today.
Dave Olsen: Yeah, I’d love to. So I’ve been involved in small business most of my life. I grew up working for my dad, construction contracting, very small business in Canada while growing up. And went to school, got my master’s in accounting, and worked for a very big, international accounting firm. And then really realized that where my heart was, was in small business. I was looking for a way to give back into that world. And I was able to leave public accounting, and become the CFO of this startup company, and realized pretty quickly that being a full-time CFO of a startup company is a full-time job. And what I also realized is every small business needs a CFO’s expertise.
Dave Olsen: And so I saw the opportunity to be the CFO for multiple companies at the same time. So I was able to do that at a bunch of companies, including a venture capital client and some of their other companies. So I got to see a wide variety of small startup companies, family-run, kind of mid-size small businesses, and then some rocket ships as far as those that were in venture capital. So, kind of wide range of experience in that way.
Dave Olsen: What I also learned is that the role of a CFO in a small company, they kind of expect you to do everything. So I was the CFO, the bookkeeper, the insurance contact, the banker contact. I was doing everything, and realized that I could really spread myself out more if I had help. So I hired some bookkeepers, and they worked in the background and got some of the work done, and allowed me to leverage my time more. And over the years realized that this is a great business model, that every small business in the world needs this kind of service, and many don’t know that’s an option. They think they hire an unqualified bookkeeper that kind of knows how to do the books but doesn’t really know maybe the more budgeting, or the projections, and the high-end stuff. Or they overpay for a CFO level and have them be the bookkeeper as well. And a lot of companies don’t realize there’s an option in the best of both worlds.
Dave Olsen: I think it was probably about two or three years ago, I realized the model’s really working, helping a lot of small businesses and wanting to help more. So we really started building a team, foot on the gas, and have really grown in the last two or three years. And basically on my own started calling it Venture CFO, and just a few months ago we rebranded to Nimbl. And we feel that really describes what we help small businesses do. We help them be nimble by being able to focus on what they do best, not being bogged down by hiring managing or accounting people, or doing accounting themselves or whatever. We just take that off their plate and let them run.
Sean Greeley: I love it. And Shane, we’re going to get to you in just one second, but I want to point out for everybody that it’s so important what you just said. Every business, even in the startup days, needs CFO direction. It’s the time when you make the worst decisions, because you don’t know how to structure and where to go, and then you burn a ton of time and energy and waste resources later, because you don’t have just simple advice to structure correctly from the start. And then as you kind of get going a little bit, generally speaking, the people you’re using, and you and I had a conversation about this in some of our show prep, everybody’s either under-qualified or over-qualified. You’re either paying too much for senior, high-level help or you’re paying a number but it’s just not the right help because they don’t understand all the pieces and how they fit together.
Sean Greeley: So this is just a phenomenal pocket for small businesses’ needs, that flex range of everything. And I know we’re going to talk about this more on the show, but it can really save yo a ton of money, not just in liability and taxes, but in just wasted time and [inaudible 00:06:59] cost of setup and structure, and good access to information that’s going to save you from not sleeping at night, when you don’t get things in the right state of affairs in your business.
Sean Greeley: So that’s fantastic. And tell everybody, please, what part of Canada you’re from.
Dave Olsen: From southern Alberta.
Sean Greeley: All right, fantastic. We got a lot of Canadians as clients and on the show, so I want to let them hear that represent. All right, so Shane, here on the other side of the fence here, (laughs) with the US, Utah, tell everybody about your story and background.
Shane Rowley: Yeah, so I’m here local in Utah, where we’re headquartered. I started my career out in the tax world. So I’m a tax specialist, focused very heavily on kind of that corporate world with tax structure, but grew up the same way as Dave, in family business. So the whole idea of saving on taxes, setting up your structure the right way, owning your own business to figure out the way you’re paying the least amount of taxes, but the legal way. Also having the most income as possible and growing your business is what I grew up hearing everyone talk about around the dinner table.
Shane Rowley: So I went in taxes with that mindset, with really learning how to help small businesses. After awhile, I got sucked into the startup world. Here in Utah the startup world’s very bright, booming business right now, and was able to be a CFO of two different startups. One in the BioLife industry and then another one in the health consumer products industry. And what I realized during that time is, I usually would come into these companies a little bit later, like in a year or two after they’d already been in business. And there’s just so many problems with their financials, their balance sheet, they weren’t making great information. We always say accurate decisions usually are made from accurate information. And they had no historical information to make these decisions off of.
Shane Rowley: And so I was really able to come into these two different companies as their CFO, growing from pre-revenue up to over a hundred million dollars of revenue. And basing all those decisions, a lot of it off of those historical financials. You know, where is our analysis at, where is our break even, what happened, which led to being kind of on the other side fence there, the CEO of a venture backed company as well. To basically work with the CFO and kind of make those decisions and help those business owners do what they need to do. So I met Dave about three years ago and he was already up and running with what he was going on, and we were talking about this need of, hey, all these small businesses, they can’t afford a CFO, those cost $300,000 in the US. Sometimes they can’t even afford a full-time bookkeeper, those are about $40,000 in the US. But they need all of these services and it’s costing them tons of money, costing them tons of time without that.
Shane Rowley: And we were able to kind of come together and figure out the solution that we could come in for less than the cost of a bookkeeper, but make sure they’re secure in all those areas, from their entity structure to their tax structure to their accounting records, and kind of everything in between. So, like Dave mentioned, we both come from the small business side, and I think where you’re born, sometimes you just continue on that path and it’s our passion, and we just want to continue to help those small businesses, help them be nimble. So just like Dave said, our name mentions, and ideally through our experience help them go from nothing to a hero. Zero to a hundred. So that’s kind of where I come from and how I became a part of Nimbl.
Sean Greeley: Awesome. Okay, love it. We’re going to break down some more of those pains and solutions here in our discussion today. So I want to tee up some different scenarios and just kind of get your take on them and your advice, your suggestions for everybody listening. So if I think of some of the tens of thousands of clients we work with in the US on small business and fitness industry, everywhere from the startups to the multi-location franchises and [inaudible 00:10:57] organizations, a lot of people get to a stage where they’ve grown the business, but the scenario they don’t have any skills or background in when it comes to finance and accounting, and as you said, it’s a mess, right? It really is a mess.
Sean Greeley: And they’ve probably neglected it for a long period of time, but it’s now getting to point where they do have to take a look and take some responsibility, and grow in this area when it comes to understanding their business, but also putting systems in place, putting structures in place, and putting new controls in place. And sometimes that means they have no books. They have a bank account, and oftentimes the bank account money may co-mingle with their personal finances, but there might be no books, no accounting system. If it is, it’s not structured any way that they could see a report or understand what’s going on. Some of them haven’t paid taxes for a year or two. They been operating under the radar and haven’t paid taxes, and it’s overwhelming, really. And they’re scared to really adjust the problem because no one kind of wants to face that mess, right?
Sean Greeley: It’s much more exciting and rewarding to just go make a sale today and let’s put our head in the sand and avoid that tomorrow. But for those who recognize they find themselves in a place that, yes, I need help, and yes, I’ve got to take responsibility for cleaning this area of my business and my life, where do you start? How do you start unpacking that and getting on the right track?
Dave Olsen: Let’s say the first step is to not beat yourself up. And just count yourself among the most business owners, who go through the same thing. Most entrepreneurs, they’re just focused on building up sales and keeping the business going, and the last thing on their mind is the accounting. And that can take you to a point. I mean, if you spend all your time worrying about accounting then you’re not building your business. Then you’re not going to get anywhere and you don’t need accounting anyways, so we understand that everybody must get to that point where they realize more needs to be done. A perfect world is somebody has an idea for a startup and they hire us right from the beginning, and we help them get it going. But we recognize that’s not usually the case.
Dave Olsen: So I’ll say a couple things and let Shane chime in as well. But probably, if I could say the starting point, the most important thing, is just keep your business and personal separate. It’s much easier to look back and clean up what’s going on if you just have a business bank account, business credit card, and just keep it all separate. It’s pretty easy to recreate what happened. I shouldn’t say easy. Easier to recreate what happened if it’s all separate fro the beginning. So that’s the first thing. The other is to have some kind of legal entity. And we’re not lawyers, but to have, most people think of an LLC. To keep their business in that rather than just in their own name. So, that’s a couple thoughts. Shane, you have a turn.
Shane Rowley: Yeah, I would just add, what you said, get a business bank account and try to run everything through it. Like Dave said, it’s a lot easier if we can follow cash, we can recreate financials for you, we can get your taxes filed for you, make sure we have accurate, timely financials to some extent, if we do that. Have one credit card you use, or just use your debit card. Basically, those are probably the best practices, but if you are a mess today, and you don’t know where to start, we come in and we help you through that. We’ll look at your personal accounts, we can help identify what was business, what was personal, and we can recreate from there, and then teach you going forward the best practices. And what you’ll find is what we teach is actually going to be easier for you in your life as well. You’re not going to be stressing about it, you’re not going to be losing sleep about it. We’re here to help.
Sean Greeley: Awesome. And we should say, [inaudible 00:14:54] you’ve actually helped several MP clients who’ve been in that position and have had to rebuild and reorganize and restructure. And we can just kind of talk through some of those steps. So I know you talked about the first step is look at your entity, right? So if you don’t have an entity, let’s create one. And if you do have one, is it set up the right way? Is it structured the right way to be vested up for your savings and benefit and that kind of things. I know you’d say, that’s kind of step one, is really the entity and separate the finances. And for those who have co-mingled everything, even if you don’t have the entity yet, just set up the, even if it’s a separate checking account, but start putting the paper trail and the spending and the revenue in one account that’s not like, we’re going to buy groceries, and you’re paying your personal bills and utilities and all that kind of stuff, right? So start to break it up.
Dave Olsen: Perfect.
Sean Greeley: Okay, and then let’s say we haven’t done any of that. (laughs) How far back can you go? In terms of when you’re starting to rebuild and help people organize so they can have books, and they can file taxes if they haven’t filed taxes, they’re a year late or more. Again, I think a lot of people are really scared of like, I’m going to go to jail, or something’s going to happen. And I’m glad you mentioned, Dave, just welcome to the group of every small business owner that’s neglected this area because you’ve been busy in other areas. So you’re not alone, you are more than likely not going to go to jail, and it’s just a matter of just starting to move forward and there’s ways to address that. Can you kind of take, maybe just for an example, and we obviously won’t use any names, but sharing some examples of where do you start in starting to rebuild and rework things for people?
Shane Rowley: Yeah, we had an NPE client, just a month ago we were working with. Never had accounting records, everything was done in a spreadsheet, which was actually really good. And where we started with him is we just went back to his last tax return. We said, “Okay.” That’s where he wanted to start, he said, “I don’t want to go amend my tax returns.” And we said, “Okay, that’s great.” We started right there and we just moved forward. And we went through the Excel documents, went through his sheets, went through his bank statements, kind of just reconciled all those things [inaudible 00:17:18].
Shane Rowley: Yes, there was a lot of mistakes, a lot of things we had to correct, true up, account for different things. But what it allowed us to do is we just had a starting point. And once we have a starting point we really can just work with you and go through all the transactions until we can get that into a balance sheet, and an income statement that you can learn to read. And ideally what we do is we put that within typically QuickBooks Online. So something in the Cloud that you have access to, we have limited access to and we [inaudible 00:17:46] possibilities are within there, to make sure everything’s clean for you. And just get you to a point so then you’re current.
Shane Rowley: I mean, our biggest thing is we want you to sleep at night. We don’t want you to worry, we don’t want you to be stressed, that’s potentially what we do is we come in and you don’t worry about going to jail, like you said. We want you to just be happy that we’re here helping you and knowing it’s accurate, it’s timely, and everything’s being done right.
Sean Greeley: I love it. And you can get a plan to get right, right? In this area of your life and your business, and you can keep focused on the areas where you can actually, as an entrepreneur and business owner, make an impact to grow revenue, to build your team, to work on your sales and marketing, serve your customers. And you guys got the rest of it, and will take care of that for them. Fantastic.
Sean Greeley: Another big question we get a lot in, comes in all the time, is corporate structures. So, what type of entity should I create? And, what’s the difference between some of these entities? And, I have this type of entity, should I move it to a different type of entity? And this is one, I know you guys do it all the time, and it comes up often, and Dave, you can speak to some Canada versus US part of it, but most of it is very similar in a lot of the commonality. I’d love you to speak to, what are the recommendations you make in this area for people?
Dave Olsen: Yeah, I can just touch briefly on Canada, because actually in most cases it’s simpler. In Canada, you can either operate just out of the, it’s called a full provider, if you’re just kind of by yourself, and if you want to keep it simple, you operate in that way. But it’s actually, in most cases, better to operate at a corporation. And so even if it’s just you, you’re the only owner and maybe you’re the only one working in your business, if you set up a corporation, that creates legal liability protection for yourself. And then there’s also tax breaks for setting up the corporation the right way. So I won’t go into all the details about all that, but basically knowing that, basically you’re two options are usually a full providership or a corporation, and in a lot of cases setting up a corporation is a good way to go. And we can help you look at that and make the best decision for your business.
Sean Greeley: Awesome. Shane, where would you come in on that for the US side?
Shane Rowley: Yeah, on the US side it’s interesting because you can make an argument for every entity election out there, whether it’s a C corporation, LLC, or S corporation. However what we’ve found works best for MPE clients, these gym owners, fitness gyms that exist, is the S corporation really gives a big benefit. And the reason why is there’s something in the tax code that basically allows you to pay yourself a reasonable wage, and all the additional profit in excess of that wage, isn’t subject to FICA taxes or self-employment taxes. So that’s your Social Security and Medicare taxes. And that accounts for 15.3 percent.
Shane Rowley: And so we’ve actually worked just recently with an MPE client, where we were able to go and explain to them and consult with them, of switching their LLC to an S corporation, paying that gym owner a reasonable wage, as the IRS describes it, and as a result, saved over $12,000 in self-employment taxes. And they will get that benefit every single year if they continue to have the same amount of revenue. And this is an entity that’s doing about $150,000 of profit, just for some context there, over $12,000 of self-employment tax savings there.
Shane Rowley: So, I mean, an S corporation is going to always give you that biggest bang, from a tax structure standpoint, but it’s always good to just understand that S corporations, LLC’s, the income and loss that happens to them throughout the year flows through to your individual tax return. They don’t pay taxes at that individual level, at that entity level, I should say, they flow through to your individual. And then I’ll just say, for the most part I would avoid C corporations in this realm. The double taxation, the corporation gets taxed, and then anything that you distribute to yourself is also going to get taxed. So I would highly recommend against that.
Shane Rowley: The S corporation election, to make that for 2020, expires on March 15. And so we have about however many weeks left in the year until March 15 to kind of make that election, and if you miss that election, there are some ways to do a late relief election, but you’re usually stuck until the following year.
Sean Greeley: Okay. So for those who are listening to this recording before March 15, definitely go talk to these guys and find out if there’s opportunity for you to adjust your election and essentially save significant tax benefits to you that are at your bottom line, as opposed to paying out in tax. And we should also mention, not only in tax savings, but from literally, even in just asset protection and legal liability standpoint. You know, used to be years ago, single owner LLC use was the recommendation, used to have LLC’s for everything. And now the court’s have ruled that they can pierce the veil, the single owner LLC’s, and come at you if there’s a problem in your business where an S-Corp you’re going to have more protection with your business against your personal assets. So you can protect your family and your home and some of those things where you might be unprotected if there’s a problem or a lawsuit in your business, or those type of things that can really wipe people out.
Shane Rowley: Absolutely. Yeah, single member LLC’s, I mean they’re great maybe when you’re first starting out and just get going, but eventually you want to either have a second partner in there, so you have a separate entity layer there protecting you, or making that S election also does that for you. And so obviously we’re not attorneys, we can’t give out legal advice, but having that separate level is absolutely necessary and if not, I don’t know, if a barbel falls on somebody’s neck and all of a sudden might risk everything that’s in your personal life.
Sean Greeley: Yeah.
Shane Rowley: You definitely don’t want that, so just setting up a separate entity, having it be separate. Single member LLC is a disregarded entity for most states, so you won’t get that protection. So just make sure you have that corporate structure set up the right way.
Sean Greeley: Yeah, and I can say, just from years of experience, we have seen, unfortunately, cases where, I mean even stuff you wouldn’t think about, but someone drops a dumbbell on their toe in your studio, and all of a sudden, lawsuit comes. And if you’re not protected, not just with your legal structure, but insurance as well, some of these pieces that really cost nothing and are super easy to do, doesn’t take much to get this handled, but you’re at great risk. And your business is at great risk. It’s just too easy to not protect yourself, so get it handled. If you’re listening to this, and think, “Oh, maybe I need to make some adjustments here,” talk to the Nimbl team, get some information, and find out if there’s an opportunity for you to better protect your assets and your company and yourself through this adjustment.
Sean Greeley: So, okay, great. Another point that comes up all the time, and with startups, people are just starting working for themselves, as independent personal trainers, and then eventually maybe grow to have a facility, and they start hiring a coach or two. Even if they have an outdoor bootcamp, they’re hiring a coach or two. There’s always this question of, should I have contractors versus employees? And there’s a couple things that come up with this from, what’s the legal definition? What’s the tax difference? What does that mean for my accounting? People think it’s really overwhelming to have to do payroll and to have to figure out all the things with employees. But then, they also are struggling when they’re dealing with a lot of contractors, and there’s not much control, and there’s a lot of chaos.
Sean Greeley: And we see a lot of times, businesses are growing and they’ve got, especially in the group training models where they have a flurry of contractors and just a lot of chaos in the business because they haven’t aligned just a few key employees, and then can still have some contractors in place to balance the load, if people are out of town or sick or whatever, and then need coverage. But this is always a question we get a ton of on, how do I navigate that throughout the stages of growing my business? I’d love to get your thoughts on this from both a tax, legal perspective, but also just some of your best practices recommendations.
Dave Olsen: Now go first, Shane.
Shane Rowley: I’ll go over some of the tax differences and then Dave will definitely have some things to talk about about how we make that easy for you to hire employees.
Shane Rowley: From a tax difference, I mean sometimes you think, “Well, contractors, I don’t have to pay that employer tax.” So I definitely want to have everybody as a contractor because that 7.65 percent FICA, you know, Social Security, Medicare, the employer typically has to pay that to employees as well as the employee paying their portion. So, people say, “I’d love to have all contractors.” Those are sometimes referred to as 1099 people. The employees, those are people you direct and manage. So the difference between those, obviously we talked about the tax difference, but the employees, if you direct or if you manage or if they directly manage in some way of the aspects of the business of what’s being done, how it’s being done, typically they will always be defined as an employee.
Shane Rowley: Now if you need a yoga instructor to come in once a week, and you go and find someone that’s a yoga instructor, and they come in and they teach a class, and they tell you their rate, and then you agree to that rate, and whether you negotiate or not, you can potentially call them a contractor. They’re not doing anything for your business, they’re not managing people. They’re kind of not on your work chart, they’re just simply someone that’s coming in to do what they’re doing. And so I think just distinguishing that is really important, because if you start paying everybody as a contractor, and then you get a payroll on it, where they come in, they could retroactively come in and make all those contractors employees, hit you with a big tax bill on it, and then also everybody’s got to go amend their tax returns as well.
Shane Rowley: And so you really just want to avoid that. Think, are you helping manage these employees or are they just separate people you’re hiring? And if they are employees, Dave can talk about that, where we take, you know, that’s simple.
Dave Olsen: Yeah, that could lead into how we can help you with, actually both sides, employees can be pretty daunting because you think I need to set up a payroll system, we need to register with the state for payroll accounts, and unemployment accounts, and get workers’ comp, and there’s all kinds of things that go into payroll. And there are a lot of things, but we handle it all. We have our payroll system that we use that does everything, does all the filing, and you don’t even have to think about it. All you have to do is recruit and hire employees, and decide what you’re going to pay them, and then we really take everything from there, so really nothing to sweat about. And really only a very small extra cost over hiring contractors. You’d probably be surprised how minimal the cost is to have employees.
Dave Olsen: When you do have contractors, you need to make sure that you collect a W-9 from them. And W-9 is kind of like a W-4 for your employee. W-4 tells you the employee’s information and how much tax to withhold and that kind of thing. A W-9 is similar in that you get the contractor’s tax number and their name and address, and then after the end of the year you need to send them a 1099 form. That basically reports what you paid them for the year. And there are certain rules about who you have to send them to and thresholds if you pay them over $600 a year, that kind of thing. But in most cases, if you’re paying somebody over $200 a year to provide something you’re charging for in your business, you need to send them a 1099.
Dave Olsen: There’s pretty severe consequences for not doing that. Sean was talking earlier about the mess that some business owners get themselves in and it’s a lot cheaper and a lot less pain to just get it right from the beginning. Probably just a few years ago, we came into a company that just neglected any 1099 contractors for three or four years, and they ended up getting a, it ended up being like a $400,000 bill, from taxes that should have been withheld and reported for that. So pretty big consequences, but pretty easy to comply with if you think about from the beginning and then you hire us, and we just handle it all for you.
Sean Greeley: Yeah, and I’ll just reinforce, this is stuff that you don’t want to try and figure out and do yourself, just call these guys and get some help, and they’ll make it easy for you so you can keep focused on growing and running the business, and don’t have to worry about this. But we see this particularly, not just the federal level of this impact but at the state level, a lot of states are cracking down a lot more on the health and fitness industry. The fitness industry is growing and so they’re looking at not just the big gyms and clubs, but some of the smaller mid-size, and really this kind of stuff. So this is the time, certainly, to make sure you’re set up for success and you make things easy.
Sean Greeley: And I should mention, we get a lot of people ask questions like, “What about benefits?” And, “How do I even set up benefits in the US?” Having healthcare is a big thing for attracting employees and being able to offer that to employees. And a lot of people think, I could never do that, I don’t know how to do that, there’s so much involved. And again, I know you guys, this is where you can consult and advise and really this is way easier and doesn’t cost what people think it does. That small businesses can set up simple systems through this, and you can feel like a big company because you’ve got something to offer that bigger companies do, even if you’re a small business. So a scenario that you guys can help as well.
Dave Olsen: Sure. Yeah, you can really think of us as your financial quarterback. And there are a lot of things that we do ourself. And we’ll do the bookkeeping, and the payroll, and all that kind of thing. There’s also other areas that are related that we might not, I mean we’re not insurance brokers or health benefits brokers, that kind of thing, but we can be your contact and refer you to good brokers and kind of set it up to be the contact on behalf. You just decide what to do, and we’ll go do it for you.
Sean Greeley: Awesome. Okay, great. Okay, so I’m going to jump to one of the next biggest things we get a ton of questions on and feedback on is, we have a lot of people who are opening brick and mortar locations. Either their first facility and they’re planning to open their own studio, and knocking that out. Or they’re expanding. They’re expanding their current location to a bigger space, or taking on additional space that’s next door and kind of combining spaces. And then you’re also adding additional locations. They’re adding location two and three, and planning how to multiply what they’ve built, and how to monetize that to a greater degree.
Sean Greeley: And as you guys know, growth is expensive. There’s a lot of costs that have to go up front into equipment and buildout and marketing and all the things it kind of takes to get a facility up and running. And so this is a huge investment and commitment. [inaudible 00:33:21] people are signing multi-year leases and commitments. Some are also buying commercial property throughout this process. And how do you advise people to start figuring out how to finance this thing, how to fund it? How to start to ensure they’re going to be successful? The cost of getting this wrong is massive. So I’d love for you to kind of unpack this for everybody out there listening.
Dave Olsen: Yeah, I can give some thoughts on how to get started in that way, and Shane can add some thoughts about some options for financing. But I’d like to mention that really, the first step is just having a plan. You need to know what you’re getting into and have a budget of, it doesn’t have to be that complicated, but get quotes from contractors or know what you’re going in per lease, and what the terms are. Know what you’re marketing plan is and have a plan for what you’re going to spend there. And it really doesn’t have to be complicated, just write on a piece of paper if you want, or put it in a spreadsheet, just to have some kind of idea what you’re getting into. If you get started, it can be a black box of spending. And even if you have access to some capital it can be dried up pretty quickly with how expensive it is to get going.
Dave Olsen: So just having a plan is great, and if you feel like you can create that plan yourself, that’s awesome. If you want us to help, we can walk you through how to set up that plan.
Shane Rowley: Yeah, and I would just add, know what your cashflow is. If you have recurring revenue coming in, make sure your expenses match or are less than that income so you can continue to pay if you have loans or other things.
Shane Rowley: You mentioned about getting financing. We partner with a couple different groups to make sure, they are your advocates in finding loans for you. The work with hundreds of different banks, whether they’re lines of credits, small business loans, larger equipment loans. A lot of times when you buy equipment, there’s financing options through them as well. And the thing to really pay attention to is what’s the annual interest rate that you’re going to have to pay. How is that really going to affect you, what does that really do for your cash flow, and how long is it going to take you to pay off? Are you going to see that ROI from it? It’s really easy to build everything out awesome, right when you start, but sometimes maybe that’s not the right option. You just have to grow into it and make sure that the cash is there going forward so you don’t put yourself in a bad option.
Shane Rowley: But we’re definitely there to quarterback and help you find those loans, and ways to kind of help you grow and finance what you need to do.
Sean Greeley: That’s awesome. And I’ll just add from our perspective, what we see a lot is people just not asking good questions, not getting answers to good questions. Like, “How much capital do I need?” And, “What kind of working capital do I need to protect and maintain?” And really just getting support with that planning process. It is a critical one. We’ve seen people, and even people who have cash and have done a great job with sales and marketing, but they’re open broke because they spent all their cash. And then they’re out of cash and then they’re super stressed, versus people who, they protect their cash and they find other ways to fund some of these investments that are going to be paid off over time and get return over time.
Sean Greeley: But not open broke, as we say. That’s a scary place to be and it really comes down to, as you said, just really having a good plan, having good support to map out that plan, and help you navigate that plan and navigate those circumstances so that you have, always, protection and reserves and access to the capital that your company will need to grow. And to get off the ground. Give it the support it needs to get up there and be successful and be profitable in producing the finished result and return that you want to see as a business owner.
Sean Greeley: So I can’t stress this one enough, it is the most important area that people don’t take the time to do. The pro forma, the forecasting, the financing work, because they’re just not comfortable and it’s not their skill set. In this scenario, I highly recommend, get support. Get help with it. Don’t try to do it all on your own. Your time, your brain energy is going to be in so many areas to get your business up and running. And if this isn’t your favorite job, in your skill set, or even if it is, you need support in this area so you can go crush it in all the other areas that matter, to building the team, to doing sales and marketing, to serving the customers as you’re growing the business.
Sean Greeley: So thank you so much for taking the time. And again, go get help, and that’s what the Nimbl team does. Okay, we covered some major topics here. I would just like to open the floor. Any other major points you think would be most helpful, or words of advice, or kind of tips for everybody out there in small business land, and trying to figure out how to succeed and be more profitable, and be more financially, fiscally responsible when it comes to leading their company to success? So I’ll ask each of you that question. So Dave, what would be your comments to everybody?
Dave Olsen: Yeah, I think it’s more of a recap of what we’ve already talked about. Just don’t neglect it. It doesn’t have to be expensive, and we take it off your plate. I mean, we can take care of it. It doesn’t have to be a big deal, but it needs to be addressed so there’s not that weight and that baggage that’s dragging you down. And then you can go forward with your sales and marketing, with your training, whatever you do best as a business owner, and let us just take care of the rest.
Shane Rowley: Yeah, I would just add on that, try to build out a forecast. If you have a bunch of recurring revenue coming in right now for clients, know what that revenue is, forecast it out, figure out what your growth is going to be, maybe what your return is going to be. Look at your expenses and make sure that you’re profitable every month, that you’re taking a little bit of profit off the table and that you’re continuing to grow, and so you’re not ever worried about that.
Sean Greeley: Awesome. Well you make it sound too easy. (laughs) And I’m so glad you said, just most important is to take responsibility for getting a plan and getting help with that plan. And just don’t be scared. I mean, really, a lot of the stuff is way easier and very inexpensive to get support and resolve. And it doesn’t have to be a big deal that people think it’s going to be in their head. When they get into it, it’s actually pretty easy to get in a good state, and to manage it.
Sean Greeley: So, fantastic. I’m so glad we had you guys here today to talk to our community. Very grateful for all the work you’ve done with the NP clients that you guys have served. Today we are very excited for many, many more of our listeners and clients to get connected with Nimbl. So I want encourage everybody to please check out www.npefitness.com/nimbl. That’s N-I-M-B-L. Again, npefitness.com/nimbl. N-I-M-B-L. And learn more about what Nimbl has to offer. Go say hi to Shane and the team. And yeah, final thoughts, guys?
Shane Rowley:Thanks for having us.
Dave Olsen: Yeah, it’s been great to talk to you, Sean.
Sean Greeley: Okay, thanks again, and have a great day.
Dave Olsen: Thank you.
Shane Rowley: Okay.