Big Talk About Small Business
Hosted by Mark Zweig and Eric Howerton. Our Mission is to inspire, empower, and equip entrepreneurs with the knowledge and insights they need to succeed in their ventures. Through engaging conversations with industry experts, seasoned entrepreneurs, and thought leaders, we aim to provide valuable strategies, actionable advice, and real-world experiences that will enable our listeners to navigate the challenges, seize the opportunities, and build thriving businesses.
Big Talk About Small Business
Ep. 116 - Why Most Small Business Owners Panic
The ground is always moving under small businesses, but panic isn’t a plan. We pull back the curtain on how owners can stay liquid, avoid blind spots, and turn volatility into an edge. From COVID’s lopsided rebounds to today’s AI hype cycle, we trade war stories and walk through simple tools that keep you out of crisis mode: a living cash flow forecast, weekly working capital tracking, and practical pipeline probabilities that tie sales to actual receipts.
You’ll hear why recurring revenue is a stabilizer, how deposits and milestone billing improve cash timing, and where collections discipline makes or breaks growth. We get blunt about financial oversight too: don’t outsource vigilance to a bookkeeper or a bank. Owners need clear approvals, segregation of duties, and regular reviews to reduce fraud risk. On the strategy side, we explore diversifying customers and suppliers, mapping exposure by industry and category, and building backup sources before you need them. Many small wins, like more small customers and fewer long-term commitments, add up to big resilience.
We also tackle the mindset piece. Entrepreneurs love to “sell more” and they’re right, revenue solves a lot, but only if you protect liquidity. Stay light on fixed assets until demand is proven, use dropship or subcontracting early, and invest in offers that are hard to unhook from. AI remains a powerful tool when it saves time and boosts output, just like email did, but the core still wins: deliver value, fast, with less friction. If you’ve been feeling analysis paralysis from the headlines, this conversation will reset your focus on the handful of moves that matter.
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Do not depend on your bookkeeper, your CPA, your bank, anybody else. Cause no one here's why. No one cares.
SPEAKER_04:Like you do. I look, I'm not gonna disagree. And there's also a lot of opportunity for fraud. We're back. Yeah. It's another episode of that big talk about small businesses. Indeed, it is.com. Hell yeah.
SPEAKER_03:We need to do that after we say it is both go hells, yeah.
SPEAKER_04:Hells yes.
SPEAKER_03:I don't know about that. Okay. Um we can do it. Now I feel stupid. Why'd you start us out like that, M? I was just trying to be a little bit funny.
SPEAKER_04:You could have said I don't think so. Well, I've never the hells plural was strange to me. Well, that's the way to say hell yeah. Is it? Yeah, hells yeah. Oh, I didn't know that. So I'm not hip like you, man. I don't know. Okay, I'm an old man. You're you're hips. Young and good we'll get you're pushing 80. Yeah. Thanks. In 13 years. Just a little more than 12.
SPEAKER_03:Oh, don't mean me. Well, yeah, but I mean, it that's actually a long time because I mean, if you rewind 12 years from where you're at right now, yeah. I mean, that seems like forever ago, right? Yeah. When you were 55.
SPEAKER_04:Doesn't seem like forever. Oh, it doesn't, does it? Seems like yesterday. I was 55, 12 years ago. Come on. I think I met you when you were 55. Yeah, that's about right. When we actually no, no, I was younger than that.
SPEAKER_03:Yeah, because I I gave you hell when you turned 50. It would have been uh I think I was around on your 50th birthday. Were you?
SPEAKER_04:That would have been I don't think you were. That would have been oh wait. That means maybe I gave you hell when you turned 55. 52. Or 52. Okay. Yeah. Maybe it was 52. Maybe it was, yeah. Anyway, I I was at 52, I felt pretty young and pretty strong. I still do. I feel wiser though now. Oh, you're definitely wiser. You know? Yeah. Because I've been through a lot of economic uncertainty. Ooh. That's the nice transition. Surviving economic uncertainty. You know, my first reaction when I saw that is is there ever economic certainty?
SPEAKER_03:Never.
SPEAKER_04:In your experience? Have you ever?
SPEAKER_03:No, never. Never. I mean, number one, I don't think even on a macro scale, there's certainty. Right. So, but definitely, you're like diluting yourself. Yeah. Right. Yeah. Maybe you can delude yourself better in other words. You drink your own Kool-Aid. You know? And then definitely like within your business, there's never economic certainty either. No. So anything can go wrong at any time.
SPEAKER_04:Anytime. And you can't always predict it. You know? Yeah. There's just so much that can go. I mean, like, whoever would have thought COVID would happen. Oh, yeah. You know?
SPEAKER_03:Yeah, and it just did what it did. But on the other side of it, I mean everyone thought it would have been a good such a good rebound. Right. And like, and then some industries just did, I mean, better than they've ever had records. It's true. For like years and two years straight. Yeah. I remember some folks with a uh a canned good company, you know, that uh that sells through a major retailer was saying like COVID was the best year that they've ever seen, ever, ever in like over hundreds of years. And they're like, this is great. But the problem is, is next year when I have to, you know, set my new metrics, they're like, I think I'm I don't know if I'm gonna be around to be the one that has to supersede the sales this year, you know, because everybody expects more, right? Yeah. But they're like, yeah, it's just gonna be impossible.
SPEAKER_04:I saw that last night when my students were doing their presentations on their consulting projects. It was a packaging company that does like point of purchase displays and things like that. And they just did so well after COVID. Yeah. I mean, they were doing twice the revenue they're doing now. Yeah.
SPEAKER_03:It just exploded. Yeah. I mean, hell, even our uh white spider did a lot. I mean, we just exploded after COVID or during COVID because everybody finally well, everybody finally realized the internet was real on.
SPEAKER_04:That's what I was gonna say.
SPEAKER_03:You're you were doing so much stuff to help these products for pickup, delivery, and all that. Yeah, I mean it just I'm sure it's like, oh, everybody's like, oh shit. I mean, I do need to have better stuff on my product pages. Yeah, for the algorithms.
SPEAKER_04:Yeah, exactly. Yeah, that was that was good timing. Well, the all the recreational vehicle companies, the bike companies, any outdoor activity related stuff did well.
SPEAKER_03:Yeah, just the big I think the big sufferers. Well, you know, obviously like restaurants and anywhere, did a lot of events. I mean, that was a major sufferer.
SPEAKER_04:Yeah, home home improvements did well too. Oh, dude. I remember we're sitting around their house, they're like, you know what, that couch sucks. I mean, we were like, we're gonna go on vacation. Instead, we bought like a$4,500 sofa or something. Right. You know, everybody's building decks.
SPEAKER_03:Yeah, exactly. Lumber went out the roof because the demand was so high. Yeah, yeah. That's crazy. But anyway, I mean it's a good point, like about uncertain, like you just don't know. You know, and so I think that uh, you know, somebody that is in business, like I, you know, my my philosophy, to be honest with you, is I really don't pay much attention to it. Yeah. I just keep my nose down and just keep grinding on the value and the vision that was originally set out. Like I think that's the harder thing, in my opinion, is staying focused on why you're doing what you're doing.
SPEAKER_04:I think you're right, because it's so easy to get distracted and negative and worried and 100% and and start panicking and doing things that take you away from that.
SPEAKER_03:Right. Yes. And I'll be honest with you, Mark. Like um, I've never experienced I've always experienced that in business, in every any business that I've had. Uh, about what you just said about you can get yourself worried and panicked and stuff, but I've never experienced the velocity and the mind-boggling amount of change that I'm experiencing with the AI company I have uh with Ad Fury LA. It's nuts, dude. Like it's on another level, like of just the uncertainty as to what's coming next. And, you know, and I mean because you have one company that, you know, like a Google that does this, then you turn around and you see Meta's doing this, and then you have an open AI doing that. You know, there's kind of change and your offerings quickly. Yeah. Oh, yeah. Yeah. And then like they'll they'll build stuff that you've already built, and you're like, well, how the hell am I supposed to survive against you know a hundred billion dollar evaluation company, you know, or whatever? It's just astronomical. But then you start realizing like, but I think to that point, you know, as a business owner, like I'm like, I will fall into that because all I'll do is really read industry dues on it. And I spent two and a half hours this morning about it every day for last year. And it takes you into the vortex, right? Of worried, confusion, of you know, contemplation into this second guessing, second guessing, yeah, strategizing, you know, ducking and dodging. But then whenever you you, you know, like I think I've been been a little bit faster now to kind of go back, okay, wait a minute. You know, what what is it that's that that's at the core? Really, what is my audience? What was the vision? What area are we playing in? And then to remember, you know, that uh that there's just so much room for people to continue to help. And this is all going to come down to service-based businesses at the end of the day. Yeah. Like all this AI job. Sure. It's going to it's going to encourage a whole new layer of service-based businesses helping other people with the technicalities of it, how to make it all work and operate.
SPEAKER_04:Yeah, I was just at a board meeting here last week out in LA for a company I'm part of, and they had their their guy talk about how all the different ways they're using AI in the company. It's very interesting. You know, there's there's a variety of different directions you can go.
SPEAKER_03:Yeah. Well, it's the it's the same premise. Like, yeah, it's just a t it's a it's a tool, a really smart fast tool. Yeah. You know, but it's I think it's the same premise, like on how, you know, um, you know, emails changed uh how we used to write letters and make phone calls. Like it's just it's still communication. It's just different. But if you didn't adapt to that and start doing email soon, yeah, you'd be uh we know a guy like that.
SPEAKER_04:He's like 86 years old. He only writes letters, he can't text or email, and it's like it's so annoying to try to communicate with this guy. Yeah, how old is he? 86. 86. Yeah. He I didn't even have to say everything just slows down, though, if that's the way you are. Yeah, it's just uh it's it's really difficult. Is are you hot? I'm hot in here. No, you are you're just hot. Um, I'm not. I'm looking when you're an old guy, you're cold all the time. Okay, it's just it's constantly cold. Is it yeah? Why? Why is that? I don't know. Your circulation's not as good. I don't know what it is, but no, I'm I'm totally comfortable in here. Okay. Um, but no, um, so yeah, it was interesting. All these different ways the company that I was just with is using AI um uh, you know, as a design tool and marketing and research and all the different things they're doing. Yeah. And then and the the CEO of the company and founder, he said he used Chat GPT recently to write a love letter to his girlfriend. He was real proud about that. Yeah, yeah. That's can definitely happen. While his ex-wife sat there in the table with us. Um that's great. I I was embarrassed, but she didn't seem to mind, and he certainly wasn't self-conscious. They've been going. Yeah, I guess so. Um, so but let's get back to the topic surviving economic uncertainty. There's always uncertainty out there. I do think it's critical to have some tools and gauges in your business. I know you're not a real big fan of the numbers and and and tracking those, but I am, okay. I am a a I am a big, big believer that every single small business should be doing continuous cash flow forecasting.
SPEAKER_03:Oh, I I don't disagree with that.
SPEAKER_04:Yeah, it's just you just don't like doing it yourself, right? Right, right. Yeah. It wigs me out too. Right. It overwhelms me really quick. Well, it's it doesn't have to be that hard once you get your system set and you just have to maintain it daily with a rigor that a lot of people don't have. You know, that that kind of discipline is what it takes. But you know, it's pretty pretty simple. You create a spreadsheet, every bill that you know you've got, all your recurring payments you put in there week by week. Yeah. Make your columns across the top, week one, week two, week three, whatever, with the dates of the weeks. You schedule out when you get a bill, you plug it in when you're gonna pay it. You know when all your recurring payments are, your rent, your insurance payments, utilities, uh payroll, all that. You throw all that in there, and then you try to anticipate the hardest part is trying to figure out what the revenue is gonna be. Yeah. Now, if you got a typical service business, some, you know, if you got a business-to-business business, usually that's a little bit easier because you can see like what the historic payment practices are of your clients. So you know, if with company A, you send them a bill for$10,000, so you're gonna get paid in 62 days. Right. You know, and you can plug that in then 62 days out in that week that you expect to collect that. But a lot of businesses have a lot more volatility than that, and you don't know exactly.
SPEAKER_03:Do you use like I am pretty relentless about pipeline? Yeah. I mean, do you use pipeline in that forecast? You can you can do that. Yeah, single. Pretty tight on thing. Yeah, we're gonna sell this much work and yeah, and the pennant closing cycle. Like I only look at the negotiating and close, I only count that as part of my pipeline. You know what I'm saying? Sure. To have more some level of confidence. And yeah, if it doesn't close, there's a there's like what happened, you know what I'm saying?
SPEAKER_04:We used to we used to even take it even further than that. Not only would we have the pro the projected um revenue from the pipeline, but then we looked at the revenue versus the for the actual revenue versus the forecasts and came up with a factor to adjust that by. Oh, really? So you could see like, okay, historically over time, we only do 88% of what we say we're gonna do. Kind of like a closing ratio. Yeah, based on the pipeline. So we take whatever our calculation is and then multiply that by 0.88. Yeah, yeah, yeah. And that's kind of your your cash flow projection. It's an adjustment. Yeah. Yeah, it's an adjustment to it. I mean, obviously, yeah. I mean, cash flow is what we're talking about. You're not talking revenue. Right. But, you know, you know, like if you sell a job and you've got deposits on it or however you bill for whatever it is you do.
SPEAKER_03:But would your does your revenue though projection come into your cash flow?
SPEAKER_04:Because I mean that's kind of okay. It starts with that. I mean, depends on the business. Right. You know, I told you, like in the motorcycle business, we could get a deposit, but we don't show any revenue from that at all. We make a sale that's a deposit that's cash, but it's not a revenue. The revenue's not earned until the bike is built. Yeah. Yeah. So the two of those are kind of disinseparate from each other. Yeah. You could have a professional service business like in our management consulting business where we always build up front. We get some kind of a retainer deposit. Or you could have a business where you do something and you immediately send a bill. That's why I love monthly recurring.
SPEAKER_03:Yeah. Oh, God, yes. You know, that's I mean, my my businesses are fundamentally set up on that, right? Because you can so much more count the cat you count the revenue, you can count the cash, you can really run a business better, a lot easier on something like that. That's why recurring revenue businesses are worth more.
SPEAKER_04:Yeah, that's very less volatile. And especially if you got a great business where it's hard for people to unhook from you. Yeah. You know, those are the ideal ones where you're they're paying you every month, and to disconnect is a big, big hassle.
SPEAKER_03:And so I look at my entire business based on monthly recurring, and then anything that's one time is just to me is like a little bit of icing. You know, it's good for cash flow. Right. You know, now I can't predict it, but it's definitely nice to have nice to have that cash in.
SPEAKER_04:Oh, sure. You might be able to say, like, we're gonna get$20,000 a week of uh, you know, things that just come in over the transom that we don't know about now. Yeah. So you just plug that in every single week. Yeah. But the cash flow forecast, super critical.
SPEAKER_03:And and how would how are you relating that to this, though?
SPEAKER_04:This is surviving economic uncertainty. I've got to be looking ahead to see if I'm gonna have a problem. Yeah. So if I can look out eight weeks and go, holy cow, we're gonna be short$100,000 in eight weeks that we don't have and not don't look like we're going to have, and don't look like we've got the credit to get that$100,000, then I can say, now I've got eight weeks to head that problem off. What are we gonna do? We're gonna slow up on payments, are we gonna go sell something new and bring some money in? Are we gonna change the way we bill people? What are we, you know, it allows you to head off the problem with some notice versus getting out eight weeks and go, holy cow, on Monday, um, saying to yourself, you know what, we're not gonna have enough money to meet payroll on Friday.
SPEAKER_03:So, and so speaking of this, like this first bullet point it's talking about nearly two-thirds of all small business owners sought economic insecurity as their top challenge, the highest level in over a decade. So, would you also recommend that they have cash reserves? Like if you put if you put something like, for example, you get three or six months. I've seen some people talk about that. Like I've seen nonprofits talk about that more than anybody, but I mean, would I recommend it?
SPEAKER_04:Is it nice? Of course, it's nice, but you can't always afford that. Right. The typical small business is undercapitalized.
SPEAKER_03:But should people be trying to budget for that? I mean, that's a good way to to maybe help you fend economic uncertainty, right?
SPEAKER_04:I mean, yeah, it'd be great if you can, but I mean, I got businesses right now that don't have enough cash as it is. How in the world am I gonna have uh cash reserve?
SPEAKER_03:Yeah, I was gonna say I've never had a business that has this cash reserve. Like to me, it's uh I it's it's probably a big corporate problem, right? Like a big company that can think that way.
SPEAKER_04:Yeah, or sometimes it's it's smaller companies. I mean, I work with one company that I'm very intimate with that let's say they do like 15 million a year in revenue, they're sitting on like eight or nine million dollars in cash. In cash? Yes, it's crazy. Just sitting in the bank, just sitting in the bank, okay. Now, why are they in that position? Well, they're very old, and the people who own it don't need the money. Okay.
SPEAKER_03:Well, they know can they not use uh that cash and get like interest off? Oh, I'm sure they think they're putting it somewhere.
SPEAKER_04:Yeah, you can park it somewhere and it's just liquid, but it's liquid available. Exactly. It's available anytime they want, it's right there, you know. But I think that's an unusual situation. But there are companies out there like that where the owners are just super conservative. Yeah. They maybe they have a lot of money or they've got everything they need, and then they just let it pile up in the company. Okay. I but you know to your point, it takes a long time for something.
SPEAKER_03:Yeah. That's a 40-some odd-year-old business right there. Well, because a big part of it is that the owners have to get through their buying a bunch of shit when they have money.
SPEAKER_04:Exactly. Paying for their kids to go to school.
SPEAKER_03:Yeah, you have to go through all their vacation. Oh, I finally made it, so I'm gonna spend money here and do all this kind of stuff. Then it's like, I really don't need any of this.
SPEAKER_04:I got everything I need. Yeah, it's probably more than I need. Right, right. Right? Yeah. And so it builds up. But most companies I think are undercapitalized. That makes them more vulnerable in a in a downturn. They need to be using tools like cash flow forecasting. The other thing I like to look at on a continuous basis and plot it out week by week is working capital. Yeah. Which I define as short-term assets minus short-term liability. So, like you know, liquid assets like like uh cash and accounts receivable, okay, throw that in. And then, and then on the down on the negative side, it's like accounts payable and current portion of debt that you have to pay. And if you add those things, if you take the the uh uh expenses out of the out of the um uh the the liabilities out of the assets, you come up with a number. It's just the assets minus the short term current assets minus current liabilities. Uh-huh. And if you track that every week, if that's going up, that's good. If that's going down consistently, it's bad. So what were you talking about? What is this again? Basically current assets minus current liabilities. But that equal what? Working capital.
SPEAKER_03:Working capital, that's right. Yeah. Okay. So you could basically what it what your company needs to kind of it's your liquidity.
SPEAKER_04:Yeah. It's your it's it's a it's a it's a liquidity number, and that gives you an indication of how well you're gonna be able to suffer downturns and pay your bills. You see what I mean? I do. So if I saw that week after week after week going down, I'm gonna get worried and go, what am I gonna do here to change this situation? So what does it mean for a person like myself that never looks at any of this stuff? It means you sure as hell better have a good business manager or financial manager. Yeah, just be so well healed you don't care. Well healed. Yeah, that you could just keep throwing money into your business. I guess those are the other options. So what if I don't have any of those? You better start doing it yourself.
SPEAKER_03:I don't know what to tell you. No, I have always had good financial partners, yeah, you know, which for that very reason. Sure. You know, because I don't want to, I mean, and I think it's okay. I want list, I think it's important for listeners to understand like entrepreneurs come from all exactly.
SPEAKER_04:Yeah, you gotta do what you do well and not do what you don't do well.
SPEAKER_03:Yeah, and so you shouldn't not do a business because you don't feel like you're financially astute. Now it's taken me the funny thing, and like, and and so maybe there's some somebody listening that's kind of can can share their brain, like you know, with me on this is that um or can relate to me that you know, over the years I've gotten a little bit better at this. Yes, you know, like I can under I I can here's my problem. I've got your pay in your literacy has improved over the years, but it has, but just in for my own sake, uh-huh, not for the business sake. Okay, okay. And I I think you might enjoy this discussion a little bit because it is kind of odd to me. Because I don't I'm very different than I I mean, like you, my JS, my business partner. I mean, we all kind of know it, but you know, my I don't have the capacity to think down to to get down into those numbers and weeds. Like I just like it's it's not that it's necessarily boring, it's just to me it's unproductive. Yeah, I don't know how else to better put it. And it's not because I like I think I could enjoy I like actually when I do. I'll tell you what, my number skills come in, and I know I have them when you're battling to survive. Well, okay kind of you've said that before, though. It's true, but they really come to play, and maybe this is part of battling survive, they come into play when I'm building quotes. Does that make sense? Yeah, because that's a part of the sales process. Right. Yeah, like like selling stuff. Like I I can yeah, yeah, I like I've really like, and I and I know how to, yeah, if I if I'm broke if I'm brokering in a scenario, like I used to do a lot of print brokering back in the day. I made really good money on that. I'm sure, but I mean I would do a lot of research to get to the lowest price and understand the specs, making sure I was comparing apples to apples. You know, very, very financial, kind of intensive work. So spend hours in that. And then I get the lowest price with the highest quality, and then I would find a really reasonable calculation to then mark up that was that was a fair market value to my client and know the percentages and everything. I knew how much cash that thing was going to bring in and how much work it was going to take. That's where all my energy would go into when it comes to, but but it's funny, I have found very few people in my career that could do that, that or that go down to those weeds and and will spend the time in that because it is monotonous.
SPEAKER_04:It's it's all part of the sales process for you, which you just find more interesting and more exciting. So for you, it's more of a positive thing.
SPEAKER_03:Yes, it is positive, you know? Yeah, I don't like looking at numbers and talking about all the worries and yeah.
SPEAKER_04:Exactly. That's just positive. It's just another sale, it's another job, right? It's another source of income. That's right. You like to focus on the income side. Yeah, that's right. Let's build this. Let's quit talking about how we're all screwed. Now, I look, I understand that too. I mean, I do think entrepreneurs are good at that. It's like, you know, a lot of entrepreneurs aren't that good at personal money managers. Yeah. Because it's it's it's not what they do. They're more interested in making more than they are in trying to preserve what they have.
SPEAKER_03:My answers always go just drive, get more revenue. Yeah. That's always my answer. It's never saving cause, it's never cutting back.
SPEAKER_04:Yeah, you're not saving the candle. You're trying to make the best use out of the light while the candle's burning. Right. Instead of just like, well, do I want to light my candle or not? It's like, light the damn candle, but make so much money that you can buy more candles, right?
SPEAKER_03:Revenue is always the answer in my in my no, I I get it. I I Well, we're having we're having financial problems. Let's then we need to sell more. Yeah. We need to make more phone calls. We need to have more meetings, we need to go. It's true. That's always that's uh a hundred percent of the answer for everything. That is so much the entrepreneur's mindset right there, I think.
SPEAKER_04:So I think it's important for people that are listening. Like, if that's how you're thinking, then that's okay. It is okay. It's definitely okay. It's better than okay, but you still need to take care of business. You still have the hygiene uh related to operating your business, and you gotta have decent numbers on it, and somebody's gotta be looking at what's happening because yeah, you can be selling a lot of stuff and not collecting the money to go broke, right?
SPEAKER_03:Yeah, I mean, and if you're an entrepreneur, you're most likely gonna be a very good collector, necessarily. Like you don't ever want to be the back, it's negative, exactly. Yeah, yeah, yeah. I've never, I've never, I mean, I would do it in survival modes. Yes, I would do Alex and Maud, my first, you know, my sure my Alex Mil and White Spider, yeah. Big L. Yeah. He so in the early days of White Spider, I we had just gotten to that bigger building and we were building our team. And I mean, uh, and we had a you know, some pretty substantial payroll building up and whatever. But he would every day I'd walk in and he'd want to talk about these freaking numbers with me. He'd pull me in his office and I'd have to sit there. Your eyes had glitched. Oh, dude, I was just like, it was like the worst for me. Like, and and and I would just entertain it, and I'd be like, Yeah, yeah, yeah, yeah, yeah, yeah. Act like I was really paying attention so I could just get out and get on the phone and or get back to sell something. Right. But he would, and so I didn't really pay much attention to those meetings, you know, because they're so uh uh recurring. And then he would like, man, we're you know, we're having problems, you know, and we got payroll coming up on this day. I'm like, okay, yeah, yeah, yeah, yeah, yeah. And they go back. And then the next day, hey man, we're really like we really, you know, have to bring in some revenue, what's going on there in sales? I'm like, man, you know, this and that talk, whatever. And then by like Friday, I remember this a couple times this happened. He's like, dude, seriously, we have payroll uh on Monday, and we have no, we don't have enough cash to cover it. We're screwed. And I'm like, well, how much do we need? And he's like, you know, we need 20,000 bucks. I'm like, oh, well, I got a check in my truck for$35,000. And literally, dude, I'd walk out to my truck and I'd go, are you he goes, you're freaking kidding me? I'm like, no, no, no, no, no. I got it, I got it like it Monday. Yeah, yeah, yeah. I got it last week when I was meeting with the client. I forgot to bring it in. Oh my god. And I go in and I go out in the truck and it'd be like watered up in my seat a little bit, frankly, and up. He's like, I'm gonna freaking kill you. He's been wigging out because he's been worrying about this all week. And I've had that check. That's hysterical. Yeah, but that's how much. But hey, on that point though, real quick. I'm sorry, I'm taking over the show.
SPEAKER_04:No, that's all right. I mean, take over, it's your show. Yeah, it's just the Eric show. That's fine. It's good. I mean, we did put out a social media post recently where I was the guest.
SPEAKER_03:Listen to Eric Howards with Big Talk Host. Talk to this guest, that's awesome. Um, but on this, like, um, I think what's really important, you know, there does need to be somebody that is financially focused. Yes. I would say, and I'm gonna know if you agree, this person should also be either a partner with you in the business or an executive that's really overseeing the business. Yeah, you can't not, and this is my point, do not depend on your bookkeeper, your CPA, yeah, your bank, yeah, anybody else. Because no one, here's why. No one cares. Like you do.
SPEAKER_04:I look, I'm not gonna disagree. And there's also a lot of opportunity for fraud. Yeah, that's okay. I mean, I there've been so many cases of embezzlement and and money stolen from companies by bookkeepers and accountants when the owners weren't really aware of what was going on.
SPEAKER_03:Yeah, you gotta be yes. Yeah. So yeah, especially if you're an entrepreneur, you're starting business, you don't like numbers, you go get you a bookkeeper. Yeah. That, you know, and you're trying to save money and you don't really know them, you didn't really interview them. You just need somebody to freaking run your QuickBooks. Boy, that you're right. That is a very dangerous position.
SPEAKER_04:It's a bad pit, man. It is. That's a very dangerous position to put yourself in.
SPEAKER_03:Yeah. And then you don't have anybody auditing that. Yep. And if you send it to your bank thinking other people are gonna audit it for you, you're not auditing anything. No, they don't know what's going on, they don't know enough about the business to really see anything.
SPEAKER_04:All they care about is you got enough money in there to make your payments to them or whatever you got to do. Yeah. So yeah, it's it's true. So yeah, I think um that's a good point. Make him an owner if you can, um, or get your spouse or partner working with you on some of that. Sometimes it's necessary, as much as it may not always be great in the long term. Um, so it says here cash flow and liquidity is survival fundamentals. Well, that's what we were just talking about. Yeah. Uh, one year survival rates in certain census divisions declined in the wake of past economic downturns. I don't that doesn't surprise me. I mean, yeah, a recession businesses don't do as well and fail. I'll put that in the same category as the research that I was talking about here on a previous show that if you don't drink water, your urine is more yellow. Okay. That's about from the department of the obvious, right? Or if you don't go to the office, you get sick less. Right. That's another bit of published research. Oh, that's that's that's insightful. That is so insightful. It's so shocking. In a recession, more companies don't make it uh through a year. Uh that's a shock. Um here's another point: cost management and operational resilience, rising costs, inflation, compliance, labor are major pressures under uncertainty. 70% of small businesses say rising prices have significantly affected operations. Yeah, it's a big problem right now for sure. Anytime you have inflation, it's a problem. But things like the tariffs affected some industries a little more than others. You know, some businesses don't care about tariffs. I mean, here at podcast videos, it's not gonna impact you at all, right? Unless you got gotta buy a new mic and it comes from China or something. Right. Maybe it costs more than it used to. Yeah. But that's such a small part of your operation. Yeah, it doesn't, it doesn't and it doesn't really impact us that much at all. But when you're making stuff and your supplies suddenly go up like 200%, that can be a problem.
SPEAKER_03:You know what? And I think that like, how do you you know I've it's for every single business has its own unique way to you know survive or to compare with economic uncertainty uncertainty. Because back to like when I was talking about print brokering, right? I never ever had just one supplier. Yeah. Ever. What's a bad position to be in? It's really bad. And and I mean it is to be honest with you, like some of that is is like it's more about prioritization with your strategy, you know, like and how you have people focus on things, you know. I mean, to me, that's that I maybe that's how I I personally look at the uncertainty is I'm I'm have I have I built backup defenses in case something does happen. Like, am I able to pivot quickly? Oh yeah, I know. You gotta pivot on this. Right. Um, yeah. But I mean, I I am always thinking about how to like because I do think like what if what if you know, what if YouTube completely makes this where everybody gets a free free microphone and camera and across the entire United States? Like, I'm screwed. No, exactly. So what am I gonna do? Well, here's what I'm gonna do is like I'm gonna pivot my business really quickly, put out new sell sheets and go to market, like, hey, we edit them now for you. Yeah, yeah.
SPEAKER_04:You've got I mean, there's there is truth to the fact that you've got to be able to mold your business and your offerings to changes in the marketplace. Yes. But again, some businesses are easier to do that with than others. You're right. I mean, if you got a manufacturing business and it's small, it's got no buying clout, okay, it's very difficult. Um and and most of the other people in the business are doing much higher quantities than you are. Sure. It's hard to go find an alternative supplier. You know what I mean?
SPEAKER_03:I would say yes, I agree with that. Especially on short notice. Right. Like you're screwed. Yeah, it does make sense. When the tariff hits, yeah, and then you only you don't have a backup. But if you spent the last six years building backups and constant like it, what's that review process, right? Like to where you're it's always have these folks.
SPEAKER_04:Yeah. I mean, again, I mean, you know, some things you just can't even buy in this country. No, it's they're just not available. But but other things, uh yeah. I think you're I mean, so there are things you can do to recession proof your business in terms of finding multiple suppliers. Yep. That's something that you said. Working on turns, working on terms, anticipating um problems that being tuned into the market. So if you need to adjust your offerings quickly, you can. Yep, yep. You know, it it it it I think a good example of that was, you know, you mentioned earlier, like restaurants were hammered and opened, right? Yeah. I mean, some of them seem to do so much better job than others, and others just didn't change a damn thing.
SPEAKER_03:You know that is such a that is such a good point uh to articulate what we're talking about. I remember everybody, a lot of the restaurants were just like shut down. Yeah. They didn't do anything. No. But I would go to Tropical Smoothie down here in Al Road.
SPEAKER_05:Uh-huh.
SPEAKER_03:And those managers were killing it. They have more business. And I went and talked to one of the franchisee owners. He's like, I've we've never been this busy. Like, I mean, it's just freaking just absolute destruction. They sold more smoothies and more food, and they're freaking killing it when other folks have not adapted to the circumstances. Exactly. I think that's part of it. You how do you survive economic uncertainty? You have to be ready to adapt quickly and just try things out. It puts you, if you're a good entrepreneur, it puts you back in that entrepreneurial mode, you know, of okay, there's uncertainty, but but with uncertainty comes opportunity. Yeah, it does. If you respond uh appropriately, it really does. Like you can actually, you can actually capture a lot of market share. Exactly. You get market share then when other people aren't. Yep. It's just like the Walmart thing, like when COVID happened. Yep. Like Walmart, like they had pickup, they've been working on it, you know, in delivery, but the big thing was pickup, and nobody really, really believed in it. You know, it's just kind of like, oh, that's cute. You know, a lot of people are talking like that when that shit happened. You know, they empowered that and they said, Oh, wait a minute. Let's ramp that up. Let's ramp it up. Yeah. And they ramped it up and they quickly they did it, they did it quickly. Yeah. While everybody else just shuts doors and we're going, oh, what do we do now?
SPEAKER_04:Yeah, it probably got them a lot more share in the grocery market than they had before.
SPEAKER_03:But you know, this is an interesting conversation because as I'm thinking about it, like just like in the case we were talking about like the parts manufacturer, right? Um and in the case with Walmart, you know, you know, specifically like with Walmart, but they they were diversifying their business, like to begin with. Sure. Whereas like the parts company you're talking about wasn't really diversifying. And so to deal with economic uncertainty, I mean, just in general business practice, you should maybe be diversifying and exploring innovation.
SPEAKER_04:Investing in new things, yes, and new distribution channels and new new revenue opportunities. Oh, no question about it. If that's part of your culture and your way of doing business and your strategy, yeah, you're bound to have something hit.
SPEAKER_03:Yeah. It's kind of like a like the the that's the I feel like that's baseless's theory with Amazon, right? I mean, like, how are you gonna knock Amazon down? Well, you're gonna make like so what if another online retailer comes in? What do they care?
SPEAKER_04:Yeah.
SPEAKER_03:You know, and so what if another cloud storage company is what do they care? They got so many facets of business, like they can basically take a hit and keep moving.
SPEAKER_04:Small businesses though, and you know, especially depending on what they are. Yeah, I mean, like really small businesses have a harder time, though, because they don't have the resources to explore things. You know, the owners may just be doing their job every day, sure trying to keep up with the demand. Like, you know, one of my students did a did a um his project, his consulting project on a local donut shop.
unknown:Oh, really?
SPEAKER_04:And it was an idea for a donut shop. I I know you do. I've heard it. I it's inappropriate for this audience. But no, I Plus it's a trade secret. Those um anybody want to holler. But but seriously, the the guy who owns this donut shop, he's Asian. I don't know if he's Laotian or something. He bought it a couple years ago. Uh-huh. He goes to work at 1 a.m. to make the donuts, and he works until 2 p.m. seven days a week. Now think about that. That's like 91. What is that? 91 hours a week or something on that order. That's 12 times seven? That's 13. No, it's 13 times seven. Yeah, 91. Okay. 91 hours. 91 hours a week. This guy works, turning out donuts. I mean, he didn't have any time to do anything else. No. You know what I mean? He's just trying to survive turning his donuts out. Now he does a great job at it. He's got a good business. And what's the name of his donut business?
SPEAKER_03:It's it's Cronuts on uh oh yeah, over on uh MLK. Dude, my daughter loves that. Like the high schoolers love that place. Yeah, yeah. So they love it, man. Donut Cronuts. Yeah, exactly.
SPEAKER_04:Yeah, I mean, he's killing it over there. He is, he's killing, and he knows all his customers. Like he gets to know them by name and he knows what their orders are. This guy's like a machine, you know? I mean I mean it is impressive as hell. Yeah. But the but the my point is though, it's going to be hard for that guy to invest in and doing things a lot. Yeah, to to anticipate. Yeah.
SPEAKER_03:And to have like figure out diversification. Yeah, exactly. But you kind of have to. It's one of those things you really have to do. You know, and I think that that's but to the point of this conversation is that he's at high risk for economic uncertainty. Yeah. Like if something happens to where he cannot operate his business because of outside macro or even personal. Like what if he gets I mean like if he gets hurt or something? Super vulnerable. And super vulnerable.
SPEAKER_04:Yeah. And what if it like comes out that donuts are cancer causing well, you know, or I'm not saying they are something like that, and that's all you've got. Yeah. You you got a problem, you know. Whereas you could have been making some kalachis. Yeah, maybe you should have been making salads, you know, for like after 12 o'clock, they they sell salads. Yeah, hot dogs. Yeah. Yeah. Don't even get me started. I did. Did you have a hot dog recently? They're so disgusting. Um, I did hear last night one of the presentations. There goes our hot there. Oh, shoot. No, hot dogs are wonderful. So delectable. Um, no, there was a uh there was last night one of the students, his project was on a chicken processing facility. Hell yeah. It was absolutely disgusting. The amount of detail that he got into about what happens in the chickens. Oh, I was just like cringing. I'm like, dude, spare us some of the the gore, uh disgusting details. Let's just get into the business. It's it's my class, Small Enterprise Management, where they do a consulting project on a on an area business, on a small business, and they try to help them increase revenue. Oh, okay, yeah, you can increase profit, reduce risk, and increase the value of the enterprise. But anyway, speaking of hot dogs, I mean, chicken processing is about the most disgusting thing that ever was. I I I uh just like so gross. Ah, please. I don't want to get into it. Um, now they their business had some some vulnerabilities in it, which were pointed out by my student. Yeah. In terms of they had way too few suppliers of the chicken, and they had way too few customers. Yeah. Okay, so it's a bad combination. Like they have like just a couple big customers. Right.
SPEAKER_03:Just a couple big customers by all their product. That's hey, that's another point about this. It is. Not just the number of customers. And I actually think about this. Yeah. You know, which might be maybe I'm thinking, you know, personally, I'm thinking about a lot of these things that are not necessarily financially being prepared, right? Definitely thinking, because when I think about clients, I don't just think about the number of clients that I have, but I'm also thinking what lines of businesses are those clients in.
SPEAKER_04:Yeah, well, yeah, that's a good point. Because some of those businesses they're in may be more vulnerable and volatile, right? 100%. Which could then affect you.
SPEAKER_03:Oh, big time. Like with White Spider, we would have like, I remember I felt really vulnerable when we all of a sudden I can't remember what category it was. I think it was in beverage. We ended up having like a good portion of a lot of the big beverage companies, you know, in our portfolio, or maybe it's beauty or something. But it was it was like oddly a lot. And then it was taking a good percentage of our portfolio. And I'm like, man, like this is very vulnerable. Like what Walmart's like, we're out of the beauty supply business. Yeah. And then it'd be like just hell, I mean, it would trickle down in hammer us. Sure. And so just even not only is it like in the industry of retail, but you can get even more macro, like what categories retail, right? Because you might have, you know, if you don't have beauty, but then you have baking supplies. Right. You know, and then even look at the brands, like, okay, private labels will look more secure than just maybe just some, you know, school of bread. Yeah. Yeah. Get smaller brands with larger brands and private label. I mean, you build a little triangle that where you just you have some security in your market segmentation.
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SPEAKER_04:I I do think though that having too few uh clients or customers really hurts a business. It hurts the value, it makes it hard to sell, diminishes the value, makes it a lot more vulnerable. I love businesses where you got a million small customers. Yeah, 100%. You can afford churn. Exactly. Yeah. You can get fired by one, you still got a thousand others. That's it, man. Okay.
SPEAKER_03:Yeah, then you can start plucking away at who your best client set is, right?
SPEAKER_04:Yeah. Like who you're actually wanting to work with. That's a good position to have. So that is important to be thinking about that. What else do you think is really important when you start thinking about recession proofing your business or dealing with a volatile economy?
SPEAKER_03:You know, I think that it's you know, I was thinking of this earlier, but I've maybe it's just a lot of work I've been in, but like I don't have um just speaking as an entrepreneur, like if all hell comes, right? In in the business, uh there's not much that I'm tied to as far as like ongoing, ongoing debt requirement. Yeah. You know, I mean, like honestly, like it would probably take that's a good point 60 to 90 days to kind of just wind down.
SPEAKER_04:Just wind it up, wind it down from a financial standpoint. That's a good point. I'm glad you brought that up. Yeah. Because that's another reason, you know, like the classic small business wealth building strategy is own your own building. But I always tell my students, it's like, I'm not gonna buy a building for any business until it's been in business for a long time and I know how big it's gonna be. Okay, because the worst thing to do is I'm starting a new business, I'm gonna go buy a building because it's a good tax write-off or whatever. It's a good wealth building strategy. Now you're stuck with the overhead. Yeah. Okay. Wait until something goes wrong with that building. Yeah, yeah. That's so so that's another point, is is uh I think is good that you brought up is like avoiding long-term commitments that you can't get out of. Yeah. Yeah.
SPEAKER_03:Like buying big machines. They're gonna create. I mean, like I remember back in the day when printing was a lot bigger. I was like, God, I'd be so scared to run that business on these millions and millions of dollars machines.
SPEAKER_04:I had a friend of mine that sold those like whatever eight-color presses, just or whatever. Hotbird, right? He was the expert in it, and really he knew how to program them, and then he would recondition machines. He was buying them in Germany and brokering them, selling them here, made a fortune. Freaking fortune. No, he did. I bet he did. He made an absolute fortune. He was like the guru of those things. Oh, well sought after person. Yeah, back then. I wouldn't want to be in that business today. It's probably horrible, right? Could well amount of printing.
SPEAKER_03:Maybe it's not. Well, depending on what they're printing.
SPEAKER_04:Yeah.
SPEAKER_03:You know, I mean, like if you're print printing just good old sheet fed, but I mean, if you're printing doing corrugated and packaging, yeah. It's probably doing quite well, actually.
SPEAKER_04:But yeah, so that that is a good point, though. Like some businesses are definitely more capital intensive and require longer-term commitments.
SPEAKER_03:Yeah, that puts you extremely like if an economic downturn happens or something, like you're you can be you can be screwed pretty quick. And it's just extremely stressful to be rolling with that kind of looming commitment, you know, over your head, especially if you're brand new. Like, I think that's a big thing. Like, it also depends on what stage in business you're in.
SPEAKER_04:Exactly.
SPEAKER_03:You know, I might buy one of those presses. If I had multiple lines of customer segments, right, and you had diversifications of offerings. Yes, it's not just printing I'm making money in, but I'm also making money in like trade shows or whatever it might be, service-based stuff. So you're not betting the whole farm on that, is what you're saying. Yeah, I mean, like, but if you're like a I've seen like t-shirt folks have been the worst that I've the worst that I've seen like that get themselves involved in things, like they'll go out and buy a t-shirt press for like 50,000 bucks, and they'll have it on a you know, on a bank loan before they even have any business.
SPEAKER_04:I know that's crazy. I would be farming out my pre-shirt printing until I knew I had a viable business. Yes. I would, I would be well, yeah. I I oh this is this is a really important point. It's yeah, save your capital. Yes, don't make the long-term commitments. That's right.
SPEAKER_03:Don't it and it comes back to our big point we always talked about. Don't look at the profit line when you're starting a business. I know it's not, that's not the thing. It's not, man. Look at your revenue lines, right? Look at your cash. Look at what your your profit is just to make sure you're not going backwards unless you have cash to spin best. Right. But the thing is, is like just like go as thin as you can to try more revenue. And then once you have your book of business, you have more confidence in the things that you can start cutting costs down.
SPEAKER_04:There's always and making longer-term commitments that say incremental costs. That's right.
SPEAKER_03:Yeah. And the basic rule of thumb is the more you buy of something, yeah, the less per unit it goes. Right. The costs go down. Sure. So as you get bigger and you have a bigger check, then you should get bigger deals, better deals. Yeah. And so just drive more revenue and more sales, and you're gonna have a good answer.
SPEAKER_04:I've seen so many people make that mistake. I knew a guy that went into the online like t-shirts and all these accessories and stuff, and he bought big quantities because it was cheaper per unit. Oh, bro. And then he ended up with stuff that he could not sell. No. Whereas he would have been so much better off if he'd had a drop ship mode. 100%. Okay. Find out what the market wants. Have tons of options, okay? Just market them. If you sell them, you know those are good. If you don't sell them, you don't worry about it. It didn't cost you anything to speak of. You know what, Mark?
SPEAKER_03:This is some of the problems. That's why I'm so glad we do this show. Because this is some of the problems that people that young entrepreneurs or new entrepreneurs get involved in. It's true. Because they'll listen to some of the big talks, like from Mark Cuban, which are obviously they're excellent entrepreneurs, but they're probably not talking in your vein as a small startup business, right? You got to know who you are and what you're up to doing. Yeah. Like, like if you have a billion dollars in capital from your investors, you're in a totally different league than a one-person show that's going to start a t-shirt company. Yes. So you don't need to be worried about profits. You don't need to be worried about all these market sectors and have 15 PowerPoint. Like, just get at the sales, man.
SPEAKER_04:Yeah, sell some t-shirts and find somebody to make them up for less than what you pay that you sell them for.
SPEAKER_03:Yeah. And just and you know what you become? You become an excellent project manager. Right. Like, did you make the order? Did you get all this? And then you know the business and you make a slim. I mean, you don't count your time. Don't go out and start saying, Well, I didn't get paid$150.
SPEAKER_04:I know I should just go get a job now, but you just started out this business. You don't even know what this can do yet, right? That's right, man.
SPEAKER_03:You got to be ready to look dirt poor. Yeah. Because you're trying to build and grow something, which we've always talked about too. That's the difference between solopreneur and entrepreneur is that you're trying to grow something, right? Yep. It's the difference. That's where the value is. All right, Mark. Well, I gotta go. I can't just sit around here and talk on your show.
SPEAKER_04:It's been great having you as a guest. Thank you. You too. Uh no, I think this is a really good topic. Well, I'm glad we talked about it today. And I'm sure a lot of people are thinking, what am I gonna do?
SPEAKER_03:Yeah right now. Yeah. So and they I think a lot of people probably get analysis paralysis, and their their confidence is low because they're not, you know, Warren Buffett. Yeah. You know what I'm saying? Like that's part of the we have too much information. We do. You don't have to be freaking Warren Buffett to start a business. No, you don't. You don't have to be John D. Rockefeller just like an accounting wizard or a Mark Zweig. Yeah, right. You can be a goofy Eric Howerton. Yeah.
SPEAKER_04:And and and and live and survive. Focus on the revenue growth. I do think there's only one more thing I just wanted to bring up, though. Yeah. And that is that the type of business you go into itself, some are more recession proof than others. Agreed. I mean, you mentioned hot dogs. People are going to eat hot dogs good times a day. Okay. Beer. They're always going to be drinking beer. They actually drink beer more often. But a luxury item, you know, like I saw uh one of my students did a his report on a company that has um like online uh golf simulators. Yeah. 24 hours, that's a luxury item. That might go bad in a in a tight economy. You know what I mean? Although their pricing was very reasonable. I thought it was a great business model. But I'm just saying there's some businesses maybe they're inherently more volatile than others. For sure. You need to think about that.
SPEAKER_03:Yeah. Yeah. If you if you're but I'd also say, like, you know, if you're overly concerned about security, entrepreneurism and app may not be the best thing. No, it's not for you.
SPEAKER_04:All right. Well, hey, this has been another episode of Big Talk about Small Business.
SPEAKER_02:Thanks for tuning into this episode of Big Talk About Small Business. If you have any questions or ideas for upcoming shows, be sure to head over to our website at www.bigtalkaboutsmallbusiness.com and click on the Ask the Host button for the chance to have your questions answered on the show. Stay connected with us on LinkedIn at Big Talk About Small Business. And be sure to head over to our website to read articles, browse episodes, and ask questions about upcoming shows.