Make Upgrading Your Accounting System A Priority with Nachman Lieser

Andy Splichal 0:00

Welcome to the Make Each Click Count Podcast. This is your host Andy Splichal. We are happy to welcome this week's guest to discuss today's topic, which is make upgrading your accounting system a priority. With Nachman Lieser. Today's guest is founded a bookkeeping company currently generating over a half a million in revenue with just three employees based on the belief that spreadsheets suck. A big welcome to Nachman Lieser. Hi, Nachman.

Nachman Lieser 0:27

Hi, how are you?

Andy Splichal 0:29

I'm good. I'm good. Thanks for joining us today. So let me ask you, let me start here. How did you discover that there was a market need for what you offer.

Nachman Lieser 0:41

So I offer two different services. Just let's have that part clear. So I started off as a bookkeeper. I have a bookkeeping company that does bookkeeping for small to medium sized businesses. And what happened was actually the interesting part because I, I went to school to college for an accounting degree. And that was working at that point of time as a CFO in a in a warehouse. Like it was a whole kitchen company that was a wholesaler. And I was the CFO of the kitchen company. And I was at the same time going to school. Now my plan actually was when I finished school, I was gonna go more to public accounting and, you know, get my CPA and eventually opened my own practice. I had a very hard time landing a job, I really wasn't too interested in going really into corporate, like, you know, in Manhattan in the city going into like the big four accounting firms, I didn't find my place there. And the local CPA firms, I had a really hard time getting a job. They saw me a lot as a threat, they were like, you're gonna come work for us. And then two years now you open your own, like your own accounting firm. So like, why should we take you? So at that point, I decided that I'm just going to open a bookkeeping firm, because that's what I've been doing for the last for the four years. While I was, I was doing bookkeeping, and my specialty was a lot about understanding accounting and a very deep level. So one of the accountings, I would call it more cost accounting. It's like understanding, you know, how much profitability the action make of this product? What is your total overhead? What is your variable cost? Where most of your sales coming from? What is your break even point? Well, like those kinds of different angles, that you know what I, you know, what I would focus on a lot. And when I came into the company, where I worked in the past, they had, they had no books, I mean, they had some books, but it wasn't it wasn't real. By time I left you know, they have proper books, which showed exactly, you know, my boss knew at that point, like which products are making him the most money, which products are losing money. Also, at some point, like if you don't know what your how much stock you have in you reorder different products that drains that will drain your cash flow. So sometimes when you want to like analyze a company, it's not just about the profit and loss with a company joining cashflow could be an inventory, which are called a silent killer. So I kind of worked it for four years, made sure to finish school. And when I finished school is when I wanted to really go for accounting, I had a hard time. So I decided I'm just gonna open a bookkeeping company, because I opened up a bookkeeping company. And we started to work with small to medium sized businesses. And I went through everybody my contacts, I called everybody, you know, tried to gain some customers, and like, I'd say, five to six months into the game, we already had one employee, and you know, we had a decent amount of big accounts that, you know, we should kind of stabilize the company. And then we started to work with Amazon customers. So I had this Amazon client that reached out to me, and he said that he wants he and his partner are splitting. And they want to kind of do like a buyout. So an Amazon is two type of businesses does those resellers, people who like buy, like let's you know, buy a dual jewel, and you know, just sell it. And then there's people who sell their own line, like bringing their own product in China. So this was our own product. Now, usually, when you sell your own product, you don't have that many. So this guy had like 10 products. He was selling a lot, but only 10 products. But he wasn't 10 SKU. 10 Yeah, ten SKUs. So but he wasn't a partner in alternative excuse, he was only a partner if three out of the 10 excuse. So what they needed was a p&l for the last couple of years. They needed also profitability per SKU, plus the needed overhead per SKU. And plus, they also want to know inventory values and all that kind of do a proper buyout. So that's where I came into the picture. And we spent hours and hours not hours, months putting together the full picture because they literally had nothing I got I was handed over like two years worth of bank statements and we had to go through every purchase order and all of that information. And finally we put together the whole picture for them, and they were able to move on. So there I was thinking of like ways how to expand my bookkeeping company. And one of the ways I was thinking is like Now I really spend so much time doing all these, you know, doing doing all these spreadsheets and all this work for these Amazon sellers. If I can kind of turn this into a software, you know, this could really be good. So first of all be able to move a lot faster.

Andy Splichal 5:15

Cool. And that'sand that's really connected books was put that into the software,

Nachman Lieser 5:20

Right. So originally, we were planning to do the software for ourself. We didn't plan on selling it. But then we started speaking to people like other sellers, and you're like, Hey, I know you have your bookkeeping company we have in house bookkeepers, but we would still use your tool. So now we've kind of built so what we kind of do is you kind of pivoted and just made two separate companies, you have the bookkeeping company. And then we have just a tool, which we service today over 1000 customers, we have people just using the tool, they log in and they have their own bookkeeper or other bookkeeping companies use our tool as well. We don't have a problem with that.

Andy Splichal 5:47

So let's talk about that. Let's talk about the tool and 1000 customers. What does your tool? I mean, I think you had mentioned it briefly. But what is your tool providing these Amazon sellers, that they're not getting typically or not getting from their bookkeepers?

Nachman Lieser 6:06

So I would I mean, our tool is used by bookkeepers. It's not like,

Andy Splichal 6:12

Right, but I guess the bookkeepers aren't giving that data typically to their customers. So

Nachman Lieser 6:17

Yeah, so the thing that I would say about the tool is there's I would say, there's two main aspects of it. The first thing is that we give you clarity. So my whole angle and into the accounting and bookkeeping field is all about clarity. My background is in Texas. And that kind of serves a lot. A big difference between my tool and the other tools out there is that we bring the data into QuickBooks in a certain format, where you'll have a lot of clarity. And besides that, we also have reports on our website, which will break down so let me just give you an example. You see in QuickBooks, you do a million dollars a month of sales, you're like, how do I get the breakdown? You see a million dollars a month in sales. And then you see, let's say 500,000 Cost of Goods Sold or expenses, you see, they made no money last month. And you're kind of like, okay, I understand, how does this make sense that I did a million dollars in sales, and I made no money. There's something's wrong here. So the problem with that is when something goes wrong, if you're running a few 100 different SKUs, you have to end up running accrual based accounting, you have to understand the average cost of each SKU, and then plus all the Amazon fees associated with that, to kind of know how your numbers all plug in to understand what's really going on. And that's what that clarity is what will give you. So we'll give you a breakdown on our website, which will match back to your QuickBooks p&l. So if you see on our website, using QuickBooks, you did a million dollars in sales, and you want to break down of that million dollar sales, you go to our website. So you go to our website, and we will we will show you on our on our website, the breakdown of your sales that you see in QuickBooks by SKU will show you the Amazon fees breakdown will show you the cost of goods sold, we'll break everything up for you by SKU, and then to kind of see a you know, these SKUs, I really thought I was making money. I see I'm losing money. Over here, I'm making money here I'm losing. So then you kind of get to see how everything plays out. But you need that report that takes the QuickBooks data and breaks it out for you. So that's kind of what we give you those two stuff, which is extremely powerful and helps you make proper decisions in order to grow the business on a monthly basis.

Andy Splichal 8:26

You know, accounting is boring. How can you excite it up a bit for listeners, I mean, how, how is this going to affect the bottom line is is going to move the needle as far as growing your company.

Nachman Lieser 8:41

So I would say one of the things why counting is boring is because sometimes you have to do a lot of work. So the thing that I like about using the software is that for the bookkeeper, it makes it a breeze instead of the bookkeeper being busy with downloading spreadsheets all day and kind of like doing pivot tables and figuring it all out. They just kind of like go directly to the software hit a button goes in, so they don't have to focus on all that. And the other nice thing is that we have reports in the website. So for a business owner, like if they want to look over reports, instead of like waiting to get like some spreadsheet from the bookkeeper via email once a week or once a month. And then like when they get it they're just so busy that it passes through their mind. You know, whenever they're in the mood, they can always just log into the website, take a look at a report kind of go through the numbers and they can also filter it you can filter which products you lost money which products made less than 10% profit margin, you can play around with all these different filters and kind of see how you want to see the data. So what I think is that if it's made very easily available to you, you know that's kind of when it it won't be that boring you know if you have to kind of work in it. I feel like it's hard.

Andy Splichal 9:50

Now why just Amazon why not? And you're just this is really us services just for Amazon, right?

Nachman Lieser 9:56

So no, we do Amazon we do all countries you do Canada, UK, all that and we also include exchange rates. Then we also do Walmart, we do eBay. And we also do Shopify.

You do Shopify. Okay. Yeah, that's what I was gonna ask. Now, I know that there are other people doing this, you know, I mean, the one that that jumps into my mind is like Helium 10, you can calculate fees for for Amazon your profitability, how is your software different than that.

So the difference between Helium 10, and liberty Helium 10 analysis, Helium 10 is more understanding profitability on a SKU level. Versus, but also it's more focused on the accounting. So our our strong point is that we give you that QuickBooks integration, where at the end of the month, you can take all your numbers and kind of see how much money you're making, and back it up to the report. So everybody runs different reports in Amazon, meaning there's like 100 different types of reports, you can pull. So you could look at Helium 10. And then you could go back to QuickBooks, you'll see different numbers, they're not going to match, you're gonna have discrepancies. Now there is discrepancies. For example, let's just say a scenario, let's say Amazon reimbursed you $20,000 for a SKU that got damaged in the warehouse. I don't know if that's going to show up on Helium 10 report, because that's just the reimbursement. But an hour report, it's going to show up because it's part of the accounting transactions, and you need to take that into account. Now, one of the things with our software works is our software reconciles to the bank deposit. So what happened was says Amazon seller gets paid once every two weeks. So let's say your disbursement is $50,000. And let's say that means that's a you that 100,000 sales yet 50,000 and fees, and now Amazon is giving you 50,000. So we go through every single order, every single refund, and we reconcile that towards the deposit. Because we bring the data into QuickBooks, we need to be able to match what came into your bank, otherwise, the data is not going to be accurate. So by us, every single fee is accounted for and reconciled for in terms of which I can guarantee every single software works that way. But the biggest powerful part is that the report that we show you on analytic side is going to be the same report, you're going to see your QuickBooks, and to kind of be able to make sense out of the numbers versus if you just go to Helium 10, or any of the other stuff you won't be able to.

what is the most important things, even if you're not using your software? What are the most important things to be tracking? In terms of keeping keeping up to date with with how you're doing on Amazon? What numbers should you be tracking?

So I would say this, like two big metrics, first thing is to know your profit margin on an item on a skill level, to really have a software that does it all. I mean, I see it all the time. We onboard people, we onboard people to our platform. And you know, they kind of thought that they knew their profitability. And after all that, the see how the profitability changed around, and they kind of like they can't believe it. But you know, they and then they start cutting out certain SKUs.

so your profitability after all of these?

After all the fees, storage, PPC, returns, refunds, adjustments, everything included. And also even like, for example, also, like we added a feature recently, where we help you calculate landed costs. So let's say you're bringing in a container from China, and it costs you let's say, five to $6,000. That container, you want to split that container, to the products purchased based on volume. So let's say you have five different products in there, but you don't want to split it, you know, 1000 each, because some products take up more space on products take up less space. So you want to kind of split that we have a feature for that, that helps you allocate the landed costs, so you kind of understand better your cost of goods sold. But you want to make sure that you have really clear cost of goods sold, and really clear profitability and item level. Also you want to count to you want to account for when the cost changes, like let's if price goes up, price goes down, you want to counter that as well. And you want to you know, take that all into consideration. The I would say the second most important part might even be the first is to monitor your inventory levels. So I, for example, have seen an Amazon seller who did 25 million of sales on Amazon one year. And then at the beginning of the year, he had like $3 million worth of inventory. And then he kind of like was very excited. So he started increasing inventory without even realizing what's going on. And by the end of the year, he found himself at $6 million worth of inventory. Now, if he did 25 million in sales, his profit margin, his net profit after overhead and everything was 1.4 to 1.4 million in sales, but his inventory went up to 3 million. So technically his whole profits instead of taking home a nice paycheck, got buried back into inventory. And it really drained the business because, you know, the business made 1.4 million, but inventory went up with 3 million. So additional 1.6 million came, I guess some additional resources like from loans or other stuff, which they had to pay a lot of interest and they're having a hard time paying back. So what I would say is really knowing your your inventory value, and making sure that your inventory value is not increasing like a crazy number, month over month. So if you see your inventory value, let's say after, you know, the end of the year is is at 500,000, you know, three to four months later, the inventory value shouldn't be a million unless your sales drastically increased like crazy, but you want to kind of keep track of your inventory value. So because otherwise, you know, you could be showing huge profits. But you'll you'll be, you'll still be very tight on cash.

When did you launch Connect Books?

Connect books was launched like three and a half years ago.

And how many clients? Did you say you have?

We have we're serving now over 1000.

That's a ton. Yeah, how did you grow so quickly?

I mean, we got a big team out here. And you know, we have people constantly taking care of it. But I would say that what differs my product and a lot of other products that a lot of other software's that people build, we actually built a product for ourselves, meaning, it wasn't something that we kind of like thought, Okay, we want I am not a developer, and I have no background in developing. But it's not like, you know, kind of sort of let me build some type of software. It was actually something I was doing for my business was bookkeeping. And I built this to for myself, and then I made it public. So those usually are the best businesses where you kind of see there's a need for it, you solve

your own problem. And then and then you say, solve others, right. Now, do you have a favorite success story from a client that you can share?

Sure, we had a customer that sign up to our platform. And we didn't do the bookkeeping for this customer, meaning we have customers that we do bookkeeping for. And then we have customers that we don't do bookkeeping. So she actually did her own bookkeeping. And she had came, what happened was with her that they had a very good Amazon business. And they were making a year like three to four. And they always had in the bank account, like $40,000. And then at some point, the bank account start getting less, less, less, less, less less. And they kind of they couldn't figure it out. They're using like, it wasn't Helium 10. But it was like such a type of tool that gave profitability, you know, like you mentioned before, like analytics on an item level. And according to that tool, they were making money. Now that tool wasn't accounting for a lot of Amazon fees, or all other stuff that go on. And what ended up happening was that she came to us and she wants to like go through a full have a full detail bookkeeping package, like you know, where she can have QuickBooks properly set up and see her net profit margins and see exactly where she's losing money. So it took us some time we set her up, we got her going on all that. And then the end of the day, we ended up she ended up seeing which products she was losing money on. Now, for example, one of the stuff other software's when calculating was unsellable returns. So when somebody has, when a return comes back to Amazon, we actually check every turn what the reason is, if it's sellable, we put it back into inventory, if it's not sellable, we take it out. So then we expense it. So she she was kind of seeing which products she was losing money at. And then she said, Look, if I'm losing money in it, I'm not selling it at a loss. So she went and hiked up the price. And once she started hiking up the price, she's started making a lot of money. And you know, she kind of got her business back. And I actually didn't know about the success story till later on. Meaning I remember when she first started out with us, and we helped her out. And then I was by a trade show like six months later. And she came over to me and she's like, I have to really tell you this story. And she's like, now at this point, our businesses, our caches, like building back up. And we're kind of you know, where we need to be. She's like, I was scared to constantly increase the price and certain products. But when I saw that I'm just not making money, then what's the point of keeping it so I just moved up my pricing and a lot of products. And now she's making a lot a lot of money.

It's great story. Who is the perfect client for your software, they're out there listening and they should contact you.

I would say somebody who really wants to get clarity. So someone who's really looking to understand profitability, and have accurate, you know, numbers and know exactly what's going on and are looking to have a proper set of books. You know, those are our clientele people are just looking to file taxes, like you know, just to kind of like dump some numbers in and take some numbers out. That's those are not the people that are for us. People for us are people who are detailed, want to have every number ironed out and want to kind of understand exactly what's happening.

And how does your fee structure work?

like a tear step level, we have like a few different packages that we offer. So we have like, we have two different integrations, we have one which people want every single item in QuickBooks, like the one I have the history of every single product, they want to itemize the QuickBooks and the SKU level. Some people don't want that they find it too overwhelming. So we offer both different packages, an itemized QuickBooks and non itemized QuickBooks. One of the biggest benefits of using an itemized QuickBooks is that when the costs change, meaning when you run a report and connect books, on your on for a SKU profitability, if that skews itemizing QuickBooks, we will pick up the cost from QuickBooks. And the benefit of that is that when the SKU when the chain that when the cost of the SKU updates, and updates and connects automatically. So if you have like five, 600, SKUs. And every time the cost changes, you need to always go on to like that platform where you keep track of all these skews and update with the new with the new cost, you know, that can kind of be very time consuming. So versus if you just go if you have your QuickBooks itemized, and every time you get a bill you just entered itemized you don't have to keep track of every time updating your platform, hey, that cost changes. Because as long as you update in QuickBooks, QuickBooks, as long as you enter the invoice in QuickBooks, and there's going to be a new SKU with a new cost that will automatically get that order goes over to connect books. And then when you run a report and connect books, you'll see the profit cost of goods sold on every single SKU,

and we'll add the fees are they by SKU by how many?

So we have like a tiered stuff based on order count. If you go to our pricing page on the website you put in how many orders do we see exactly the price. So we basically have three different tiers. One is the an itemized digression. One is some integration. And one is just reports. Like if you just want a reporting tool, without using QuickBooks, you can sign up for that as well. And then we also recently rolled out like a lite version. So we basically we had customers who wanted to take a lighter version of like, let's say somebody only does 100 orders a month, and they didn't want to pay a minimum. We have packages starting at $49 a month for somebody when he was like 100 orders. And we kind of we disabled certain features know to not make a complex, it should be easier. So if somebody only does 100 orders a month they can kind of they can use a lighter package.

And with your system can you calculate projections.

So we do have like a reef, it's a restock to more. Now it's like you can do is it's only for Amazon FBA. It's only if you're using if you're selling an Amazon and Sony for FBA. What we do is we can tell you, based on your recent sales will tell you how much you need to restock. And based on how many quantities you need to send into FBA.

That's cool. I mean, I guess what I was asking though is let's say you're charging $10 Can you Is there a way to like what would happen if I charged 15 As far as profitability?

No, we don't have that cool feature that we added on

Okay, cool. Well how can an interested listener perfect or not perfect? Just wants more information? How can they learn about working with you guys?

The best is if you just come to our website connectbooks.com We have live chat on the website any questions you have the rest is just put in the chat and somebody will get back to you pretty shortly and you know help you out on anything you need.

Cool any got any specials going on for Make Each Click Count listeners?

Yes, we are offering I will give 10% off for the first 12 months for any listener from this podcast and the coupon code is going to be each click. The coupon code is limited to the first 25 signups so whoever wants it should grab a quick.

Alright, well we'll put that in the show notes below. Now, anything else before you before we wrap it up today?

Oh, it was amazing to be here. And if anybody has any questions, just feel free to visit our website and ask us any questions you have.

Fantastic. Well thanks Nachman. Thank you for listeners. Remember if you liked this episode, please go to Apple podcasts and leave us an honest review. And if you're looking for more information on connecting with Nachman are learning more about connect books you will find the links in the show notes below. In addition, if you're looking for more information on growing your business, check out our podcast Resource Center available a podcast make each play count.com We have compiled all of our different past guests by show topic and include each of their contact information in case you would like more information on any of the services I've discussed during previous episodes. Well that's it for today. Remember to stay safe, keep healthy and happy marketing, and I will talk to you in the next episode.