The Money Conversation Every Entrepreneur Needs to Have with Veronica Diaz & Ana Rebro

Speaker A: I'm really looking forward to today's conversation because I'll be honest, these are not my topics. Money, accounting, how we get money. Not things that I consider myself to be an expert at at all. And so I'm so grateful that you are here. Welcome to this Mother Means Business, the podcast where ambition meets motherhood and success has no limits. I'm your host, Laura Sinclair, and if you're a mom who's passionate about building your own business, you're in the right place. Whether you're launching your first startup from your kitchen table, scaling your side hustle during nap time, or growing your established business while juggling family life, this show celebrates the incredible women who refuse to choose between being an amazing mother and a fierce entrepreneur. Each week, we're diving into real stories, practical strategies, and, yes, a little tough love when you need it most. I'm here to push you past the excuses and give you permission to build your business and live your life exactly on your terms. Because here's what I know for sure. When a mother Means business, extraordinary things happen. So let's dive in and get down to it. Welcome to a very special episode of this Mother Means Business podcast. I am joined today by two incredible guests to have a continuation of the conversation that we had at this Mother Means Business Live in April that I'm very, very much looking forward to. I am joined by Veronica Diaz. She is an associate Vice President at CIBC Business Banking, and. And Anna Rebro, she's CPA CA Partner at Farnham Company, Chartered Professional Accountants. Welcome to the show. Thank you for having me.

Speaker B: Thanks for having me.

Speaker A: I'm really looking forward to today's conversation because I'll be honest, these are not my topics. Money, accounting, how we get money. Not things that I consider myself to be an expert at at all. And so I'm so grateful that you are here at, uh, this Mother Means Business Live, which was our event that we hosted in April. There was a lot of really passionate conversation about this, and we saw that there was some. There's a little bit of confusion around accounting and money and numbers. And so today on the show, I know we are going to address a lot of that and hopefully put some awareness around some of these topics that sometimes can feel a little bit overwhelming. But before we do that, I would love it if you would just introduce yourselves, tell us a little bit more about you, your roles and your families, and just life in general.

Speaker C: Hi, everyone. I'm Veronica Diaz. I work at cibc. I'm an associate vice president, and I Lead two teams. The first team is the Business Client Advice center, which is a team of virtual advisors who are here to help clients who don't have a dedicated relationship management team. They can call us. We'll help them with all of their business needs. Um, and head office. So I lead our head office team. So that means anything from strategy, operational effectiveness, marketing, sponsorships, um, we kind of run the strategic direction of where the business bank at CIBC is going. Um, on a personal side, I have two kids, a, ah, daughter and a son who keep me really, really busy because they're still young and running around. Um, I hope to be a good model for them and make sure that they see their mom, um, helping and supporting entrepreneurs. And on the down low, I actually hope they become entrepreneurs because that was my, um, hope, but I just never got the guts to do it. So I'm happy to be here and provide some support and give a little bit of my tidbits of, uh, banking. And you know, I've done credit at the bank, I've adjudicated credit, I've written credit for businesses, I've gone and seen their businesses. So, uh, hopefully what, uh, um, what I have to say today resonates.

Speaker A: Okay. Amazing. And Anna.

Speaker B: I'm, um, Anna Rebro. I am an owner and managing partner of Farnum Co. Which is an accounting firm in Mississauga. Um, I wear a lot of hats, I'd like to say. And um, I guess my largest hat is being a mom to my two boys, um, Alex and Mikey, 15 and 11. So they definitely keep me busy and keep me on my toes, um, and keep my coolness levels way in check. Yeah, just when you feel cool, they remind you that you're not. Um, and then outside of my motherhood duties, I run an accounting practice. We have 40 full time employees and many, many, many, many wonderful, wonderful entrepreneurial clients. And I love being an advisor to them, but also love watching their stories and journeys unfold. And I love the opportunity to be able to shape their story, I guess, um, any way that I can. So I'm the happiest human you've ever met.

Speaker A: Yeah. So you're really living it and helping these women that are navigating at the same time as a mom and an entrepreneur and a person that's in the weeds and the numbers.

Speaker B: That's exactly right.

Speaker A: I love it. Okay. So excited to dive into this. I know. You know, I get, I have the pleasure of getting to talk to entrepreneurs at so many different levels of their businesses and so many of the Women that I'm seeing now that are coming in to beginning their businesses are coming into this mother means business and coming into our circles, have started their businesses, you know, at their kitchen table, or they're doing it as a side hustle. They're doing it in the margins of life. I'm curious. At what point does a passion project become a business in the eyes of, you know, um, I'm using air quotes for those that are not watching the video in the eyes of the CRA or in the eyes of a bank.

Speaker B: Do you want to take this?

Speaker A: Yeah, go for it.

Speaker B: I mean, believe it or not, there's actually court cases on this, and I'm not going to fully nerd out and talk to you about the court cases, but there is such a thing as drawing a line between something being a hobby and something being a business. And it starts with intent. Um, it doesn't actually need to be profitable, but it needs to be done with the intention of generating profit. Um, so think about, I don't know, knitting scarves and asking people to pay you for the cost of the supplies. You have no intent of making a profit, so it's not a business. But if you're knitting scarves and pricing it so that you will make some money on it, well, there's a clear intent that you have a business, and that's one of the markers that you have a business. Um, a lot of people shy away from declaring something a business officially because they say things like, well, it's not yet profitable or it's small. And I'm not sure that that's the right attitude to have, because the downside to declaring something a business is declaring the income and paying tax, which is, like, not fun. But there are expenses you incur that you can deduct against other sources of income to overall pay less tax. And I think that's enough of a motivator to really think about what you're doing and say, you know what? I am doing this with the intention of eventually making money. It's not this year, but I'm doing it with the goal of making money. And then take those expenses and deduct them and take the tax credit for it, because why wouldn't you?

Speaker A: Okay, I love that. That's such a great way to think about it, is from the directive of intent. Like, what is your intent? And I do think a lot of women get into this and they say, oh, you know, I'm not doing it for the money. But I think it's like, imposter Syndrome.

Speaker B: No, I'm not an entrepreneur. Yes, you are, honey. It's okay. Put it on your tax return.

Speaker A: It's all good.

Speaker C: Yeah.

Speaker A: As you should. As you should. I love that. What about from a banking perspective?

Speaker C: So everything Anna said, um, the intent is really important. We like to see entrepreneurs who know their business are ready to take it to the next level because we have confidence in you and the business, and then we have confidence in helping you and giving you money and helping you kind of grow that business. Um, um, so once you're ready, like, we're. We're here to support, like, we'll open your account, we'll set up you. We'll set you up with credit, we'll help you figure out how are you getting paid, how are you paying your suppliers, and then we'll set you up on our online banking. We'll set you up with our, uh, treasury services so that you can actually run your business properly and see it grow.

Speaker A: I think it's so important to treat our businesses like businesses. Whether you're getting into it thinking it's going to become something that you're making, you know, seven figures, eight figures, nine figures a year, or if it's something that's just going to add a little bit of extra revenue for your family and help out. I think it is really important to take the time to speak to the bank, to speak to an accountant, to actually learn, or a lawyer, too, in some cases, to learn. How do we set these things up in a way that we can be successful in the future? Because we don't always know when we're getting into it, like, how big it could potentially be. I don't know that many wildly successful entrepreneurs that got into it being like, my plan was to be super successful. A lot of these really big businesses kind of happened by accident a lot of the time. And so being able to be set up well from the beginning, I personally think is really important. And I love that you're mirroring that. I'd love to get to this Mother means business live. And some of the conversations we had, neither of you were there in the room, but I've had the best time just filling everyone in on the conversation we had because it was so interesting feeling, recognizing that women really want to have this conversation. And maybe it's something that we've shied away from in the past. And certainly, uh, myself, if I use myself as an example, feeling a little bit almost embarrassed for not knowing what to ask or how to find the information. And so at this mother Means business live. We had a room full of women asking some really honest questions.

Speaker B: Um.

Speaker A: Um, the conversation went. Got meaningful really, really fast. But it was this through line of, why is it so hard to get money? Why does it feel like no one will just tell you what they actually need from you to get it? And I would love to just kind of start there, see if we can address that head on. So, Veronica, why is the process of getting financing so confusing for small business owners? And how much of that is really just the reality of maybe how these systems work.

Speaker C: And I get it. I get why it can be so confused. Like, banks in general are confusing. Forget about business, right? Even if you don't have a background in finance or, you know, accounting or whatnot, even on the personal side, getting your first mortgage, it's daunting. You don't know what you need. You know, you don't know if you're going to get approved. So it's the same thing on the business side. I, um. But there's one piece that I think we have to be honest about. Banks are heavily regulated, and, uh, we have to make sure that we ask all the questions. We have our documents to support. We lend prudently. Um, so there is an element of. Yeah, it's a bit of a daunting task because we ask a lot of questions. Um, but hopefully, I think the differentiator is that you have a good banker that can actually walk you through that and be transparent and not pretend like, yes, just give me this and I'll Credit will approve it. The reality is, credit has some strict guidelines, and we have to be open with you about what's real and what's not. And then having that kind of transparent communication will just help the deal go along. Um, and so it is a daunting task. I get it. Uh, we try to simplify it. It kind of hurts me a little bit when I hear that. But, um, it is our job as bankers to make sure that we're transparent, that we tell you what we need, uh, that you tell us honestly what you're going through in your business so that we can actually make a proper case to our credit folks and just get it done. So, um, for us is really simplifying that for everyone and making sure that it's not as complicated, um, as it appears to be.

Speaker A: Anna, you work with a lot of these clients before they even walk into the bank. Do you have a sense of why these things feel so confusing or why we just don't seem to have this information?

Speaker B: I do. And I think the expectation is that just by explaining your business idea, the banker is going to buy in and get really excited and will have the power to give you financing. And in my experience that's really not the case. I mean, as Veronica said, they are in the business of lending and they want to lend profitably, meaning that they will collect their money back and interest and they only can lend to businesses that can support that level of financing. So generally I think clients get frustrated at uh, the amount of information that's required to put through a credit application. That includes financial statements, that includes budgets and forecasts, that includes sometimes personal net worth statements. And if your financial affairs aren't tidy, as in you don't have this at the tips of your fingers because you haven't been preparing it in normal course, it does become daunting and does become frustrating. And my advice to these business owners is to take it as helpful information for yourself to learn about your own business. Don't do it as um, the busy work exercise with the intent of just giving something to the bank to keep them happy. Do it with the intent of understanding if your business is viable, if you will be able to make the payments and feed your family. Because the last thing you want to do is overextend and then have really, really horrific repercussions later if you didn't plan it properly, ah, at the onset. So look at that as an opportunity to really take your business seriously, really do some planning and see how many cups of coffee you need to sell to turn a profit. Right. Like how many scarves do you need to knit for this to be profitable, including having this debt on your shoulders. And if the numbers aren't, if the math isn't mathing, maybe this is an honest opportunity to step back and say, okay, what needs to change in my plan for this to be viable?

Speaker A: I love that the math is the path.

Speaker C: I'll just add to that. It's so true. Do it for yourself, not for the bank. When we see that you have a handle on your business, you know how much you make, you know what your growth plan is, that forget about the numbers for a second. That gives us a lot of comfort because the numbers are numbers. When you're doing projections, forecasts like, yes, there's assumptions as to why you think you're going to grow X amount, but if we see the confidence in you that almost sometimes trumps the numbers.

Speaker A: Interesting. I was going to ask, and this is one of the questions that was specifically brought up at the event, was like is there a checklist, you know, like is there a line by line PDF document that we can have to know that these are the things like what exactly are we evaluating?

Speaker C: It's a good question. And I'm going to start with the textbook answer and then how we kind of navigate the textbook answer. So there's three C's of credit.

Speaker A: Okay.

Speaker C: Character, capacity, collateral. So um, character is you is what I just talked about. Who are you as a person and who are you as a business? So in the small business space we um, we see the owner as an extension of the business. Unlike larger companies where there is a big org chart where if you leave, the business keeps running. In the small business space, you leave, there is usually no more business. So it's kind of intertwined then from that perspective, from the bank's perspective. And um, when we look at you again, your capacity to repay, although that's the second C. But what's your track history on the personal side? Have you repaid all your debt on time? Does your credit bureau look sound? Do you have collections on your credit bureau? Um, the business, what does a business do? Is it viable? What's your competitors? Um, what are you in the business of? So helping us understand that is knowing who we're actually lending to is really important. Second piece is capacity. So can you actually repay what you're asking for? So then we start looking at the actual financials of the business. We look at the income statement, the balance sheet, how much money are you making? We look at ratios, ah, you know, the payments that you need to make versus the cash flow that you're getting into the company, um, and also on the personal side. So on the small business side, 99% of the time we're going to ask you for a personal guarantee and that's making sure that if the business can repay, you have to repay again. Because the two are so intertwined. That's just table stakes in small business, when you start getting into the larger deals, less so. But in small business, your personal guarantee is kind of your biggest asset. So can you repay if the business can't repay? So we start looking on the smaller end of the deals at uh, your mortgage, your payments, your rent, your um, whatever payments you have to do, uh, on a monthly basis and then combine that with the business. If the business is fully self sufficient, then we don't really look at you that much. We look at the pure business financials. Can the business on its own repay the debt capacity and then the last one is collateral. So I Mentioned personal guarantee, table stakes. Is there anything else you can offer? We try not to get into that. Uh, but if we need it, because we're doing bit of a funkier deal, um, then yes. Do you have your personal property? Do you have investment, an investment portfolio that you can put up as collateral? We look at those, but again, in smaller cases. In small business, we try not to. Like, this is a business loan at the end of the day, not a personal loan. But there are things that for, uh, riskier deals, we can structure to see if we can make work based on your personal assets. So that's kind of like the framework. And then we as a bank have is a bit of a checklist and a credit box. But we try to see, okay, you know, maybe you don't have that great of a collateral, but you as a, um, management in person, like, you've run your business great. We have tons of confidence, um, in what you can do. So we kind of give and take. We won't have perfect three things in every deal, but that's where we start playing around. And every deal is completely different. So this is just fully general guidance. Um, but that's kind of what gives us comfort in terms of those three C's.

Speaker A: Hey, women entrepreneurs. Ready to turn your big ideas into reality? CIBC believes in empowering women to lead, innovate, and thrive. And they're cheering you on every step of the way. Discover the CIBC Women Entrepreneurs Hub. Connect with inspiring mentors, swap stories with fellow entrepreneurs, and access resources made just for you. Because every business is unique and you don't have to do it alone. Whether you're just starting out or taking your business to the next level, CIBC is here to support you. Visit cibc.com womenentrepreneurs and find out how CIBC can help your business soar. Okay, and if now I want to put ourselves in the shoes of somebody that wants to get credit for the first time or wants to learn about this, whether or not this is something that would make sense for their business. What resources am I going to? Am I going to Anna? Am I going to the bank? Am I doing both? Tell me more about what that process would look like.

Speaker B: Um, I mean, from my perspective, I welcome these conversations. And a lot of my work is done helping liaise the business owners and the banks for both of them to get what they want and what they need. Um, it's a great starting point, I think. And Veronica can speak to the resources of the bank. I think there are places you can go directly to the bank and ask the same questions. Ultimately, there is going to be some work required from your accountant. Ultimately, there's going to be some work required from you. And ultimately there's going to be some work required from the bank. It is a team sport, and I think when it's not carried out successfully is where people forget that they're on the same team and everybody's fighting for their own. Um, sort of flag.

Speaker A: Yeah.

Speaker B: Um, I think if we work together when I'm talking about advisors and clients and banks and understand that these are not unfair requests. If a family member or friend came to you to borrow money, you likely would be asking the same questions to make sure that your money is safe. The bank is coming from the same point of view. They're not doing it to make your life difficult. They're doing it to protect themselves and their investors, who are also people. Right. Holding their deposits with the bank. Um, so I think if you look at it for what it is and really take the exercise seriously and understand that it won't be straightforward, it's not going to be simple. You won't walk into a branch and walk out with a million dollars. It's just not going to happen. Um, I think bridging that expectation gap and just having the right mindset for it, I think will help the exercise be a lot more smooth as well.

Speaker A: Yeah. And resourcing yourself for it, too. I mean, obviously we're having this conversation here. This isn't the only place where you can find out this information. And certainly, you know, at the event, it sort of felt like people didn't know where to find this information, which is why I'm so glad we're having this conversation now. But is the advice to walk into your bank to call the branch to, you know, lean on your accountant? What advice would you give to someone that's looking to start this process?

Speaker C: Give us a call. Uh, there is tons of resources out there. We have a lot of people like Anna that we can refer you to if you need help. We have lawyers that we know. We have other business owners that can tell you, you know, what they did, how they got their loan approved, and what was their journey. Um, there's also, like, government. Right. If you think about bdc, the Business Development of Canada, they're in the business of helping entrepreneurs. Like, their mandate is very different than banks. Um, and they exist to support the economy and small businesses within the economy, and they have tons of resources, like, I kind of advertising for them, but they're great. They Have a lot of information. They have a lot of seminars, webinars, things that you can go to to learn a little bit more about how to grow your business. And so, um, a lot of not for profits too, who are there to kind of help and provide resources. So, um, I think step one is call us. We'll connect you to all of those resources. We at the bank have resources as well. We strive to continue to provide more resources and make that journey more transparent. But, um, there is tons out there. So just don't hesitate to give us a call and we'll kind of guide you through that.

Speaker A: It goes back to that sort of do it for yourself conversation that we were having. Right. It's like, we can't go into these things. Totally blind. You. I think there's so much power in information. There's power and knowledge. So taking the time to lean on the resources that are very much available to you to learn. So you're not walking in frustrated or you're not leaving disappointed, or not thinking you're going to walk into the bank and get a million dollars just because you thought that you should.

Speaker C: Um, and chatgpt.

Speaker A: And to be honest, I'm not saying

Speaker C: that it's the foolproof, but like today, it's so easy to get information.

Speaker A: Never been easier.

Speaker C: The first thing, like, just try that, See what it says. It's, you know, taking all the information from the Internet and then that's at least your starting point. So that when you call the bank, you call your account, you call your lawyer, you have some knowledge and you're not starting from scratch. So, um, you know, use the AI tools as well.

Speaker A: Yeah, I mean, I'm a really big believer that there's like, no excuse to not find out these things at this stage. It's never been easier to find information on any and all things. We know that sometimes these tools hallucinate and maybe give us slightly incorrect information. But if we're at least using it as a starting point to find out, okay, who should I call? Who's the person I need to talk to on the other end of that? I think that's. That's really, really important. Okay, I'd love to shift gears a little bit into talking about financial statements and taxes, which the most exciting of topics. I know, I know. Anna, this is your. Anna gets excited about this. I personally, this is the stuff I have to tell you. I've been an entrepreneur for 10 years, and I think the first three or four years that I went into my accountant, I got so Stressed out. And I would sometimes cry leaving the office because it just felt like so, so much too hard. And I'm not a person that's ever really done well in math class. I think I talked myself out of math, to be honest. Now my accountant gives me a sticker because I do. I've come such a long way. I get a sticker when I come in, which I know sounds silly, but it's just something that I have personally struggled with. And wrapping my head around it, I get very stressed out. So I'd love to talk. Let's talk financial statements for a second. Okay, let's demystify this. Talk to me about what financial statements are. What do you actually need to have, and why does it matter to have them?

Speaker B: I could talk about this for a long time.

Speaker A: Well, I couldn't.

Speaker B: And not because I love number crunching, but to me, financial statements are the story of your business for the year. And if you find a way to talk yourself out of the paranoia and, like, the negative feelings you have around things that are called accounting or numbers, forget that and think about what they are meant to represent. The financial statements are telling you the story of your business for the last 12 months and at a point in time. And if you use that information for what it is, you can make really sound, really valuable decisions that can either propel your business forward or sink it down. Um, m. So in my work with my clients, I really do ensure that there's the time and space to not just say, here's your tax return. This is the tax balance. But, like, why? What has your business done? What worked? What hasn't worked? What does this mean? What does it mean to you now? What does it mean to you 10 years from now? Um, so to me, that's my favorite part of my job. It is storytelling about someone's business. So what's included, you say, what are the components? While there is the income statement, which is the 12 months of business activity, and how much money you were able to earn from your customers and how much that cost you to try to service your customers. So obviously, you're hoping to collect as much as you can and pay as little as you can for the expenses that support the activity that captures the 12 months. And then there's something called a balance sheet, which is a point in time. If you took a picture of your business at that point in time, what do you own and whom do you owe? And hopefully you own more stuff than the money that you owe to other people. And every year you get the opportunity to take stock of the year that passed, reflect on decisions you've made, and hopefully move forward with some clarity and some ideas around what to do better or the same. Right. Like if you had a solid year, don't mess with success, keep on going. Right. And I think it's a really important time to do that, at least annually. I wish all business owners had the tools and the resources to have access to their information throughout the year because it is so informative. And the mistake people make often is to wait for a meeting with me, which is often, anytime, anywhere between three to six months after the year that passed for me to tell them how they did. I find that fascinating. I love the privilege of being that person to give them the report card. But it's also slightly terrifying because that means that they had no idea whether they made money or didn't make money for the year and they're waiting for me to tell them how they did. So I'm all about not only reporting at the end of the year because that's what you have to do for taxes, but also being really, really aware of not just the balance in your bank account, but actually the metrics in your business and whether they're moving in the right direction or not. So you can course correct while you're in it. Not once. It's potentially too early.

Speaker C: Interesting.

Speaker A: I mean, I think about the conversations I have with my own accountant in my business and you know, I go in and have my in person meeting with her once a year and I'm in the season of my own business where I'm realizing, okay, that's not enough, we need to do this more. But she said to me, she's mirrored to me that sometimes people just don't even come in for the meeting. They just sort of come. And I'm sure you say this too, they're just, okay, do the tax return. Thank you, we're done. And I do think it's such a missed opportunity to spend the time because it is such a jumping off point for how you're going to make your next move. So I love that from a banking perspective. Veronica, when we think about like financial hygiene, what would be the minimum financial hygiene a business owner needs to have in place before walking into a conversation about financing? Is it financial statements or is it more than that?

Speaker C: For sure, Financial statements. Um, not messy m. Financial statements.

Speaker A: So done by Anna. Financial statements.

Speaker B: Correct. Thank you for saying that. Yes, only by Anna, no one else.

Speaker C: So sometimes like you can't wait till the year end and Anna gave you the financials to go to the bank. Sometimes you need the loan somewhere in between. Then you don't have Anna's financials. And we're not going to look at last year's, we're going to ask you for your quarter financials or your, you know, six year, six, uh, month financials. And you have to be ready to produce that from your accounting system. And sometimes we get financials balance sheets that don't balance. So balance sheet has to balance your assets needs to equal your liabilities and your equity. So if those two things don't match, like that's a red flag for us or sometimes, um, we'll see very round figures. That also is red flags for us. Um, like there is a lot of fraud out there actually a lot right now. And sometimes we see doctored financial statements. And so when we see odd things like that, they're all red flags and they're kind of non starters almost. And so the basic thing is make sure you have good financials. We're not asking you to have audited financials. They have to at least match your tax returns. So sometimes we'll ask you for the backup of what did you submit to the tax agency. Do those match with your internal financials. So that thing is kind of basic. So we want your financials to match, um, is probably the basic thing we would ask. And again, just knowing your business, knowing, you know, as Anna said, like how much money do you make, how much do you sell your unit for your service for what's your cost relating to that? Like being able to bang that out is just very, very comforting for banks.

Speaker A: Yes. Which obviously then has a direct impact on your ability to get funding, which is a large part of the conversation. Okay, let's talk personal versus business finances. Because I know that some of the women that listen to the show and certainly women in my community are sole proprietors and they're sort of, there's a little bit of muddiness from time to time. So I'm curious. Many people started their business using their personal savings or maybe their personal credit card or uh, they borrowed from a partner or a parent just to get started. Is there a risk there? And like when does it start to cross a line?

Speaker C: I mean it's really for the entrepreneur. Like they can absolutely do that. And we often see that it's normal. You want to get your business off the ground. You ask money from your friends and your family. What I would say is just make sure everything is documented. Like the same way you would Go to a bank to ask for money and we get you to sign a loan agreement. Yeah. Kind of have to do the same thing with your friends and family. Like, I know it's your mom, I know it's your dad, I know it's your cousin. But when things turn south, you have to be able to rely on a piece of paper on what you agreed because that's when the clause come up. Uh, so I would say make sure you have papered everything. Make sure you're open about the risks of investing in your business. Make sure you understand, is it a loan or you're actually taking a stake in my business. Like that stuff has to be clear and on paper. Um, for us at the bank, whether it's your money or it's the money of your cousin, it's what we call equity. So it's not loans. And they're usually, um, seen as after, um, postpone loans. So basically you postpone your loan to us. So if your business goes bankrupt, we get paid first and then you get paid second. So to us it kind of doesn't make a difference. But for you, and I think probably Anna, you would agree with this is just make sure you document everything and there is clarity. And we obviously hope that you're going to triple your investment and that you're going to be able to pay back all the loans to your friends and family with interest, you know, but ultimately put that on paper and make sure that everyone is aware of what they're getting into, but totally normal to do that. Encourage you to do that if that's what you want to do. Uh, but just be careful.

Speaker A: Yes. Contracts, say friendships.

Speaker C: Absolutely. Absolutely. It's awkward sometimes. Right.

Speaker A: So awkward.

Speaker C: But need a conversation.

Speaker A: Yeah.

Speaker C: Don't mix business and personal. They say it for a reason for sure.

Speaker A: And if someone has mix some of their personal and business expenses, maybe it's through loans or they're, you know, using the same credit card. How do we start to untangle this? What's the first step?

Speaker B: It's so, so, so, so common. Like for entrepreneurs, I think what needs to be well understood is that their businesses are an extension of their life. There's absolutely no shame with paying for business expenses on your corporate, uh, on your personal credit card or vice versa. Not a big deal at all. What you want to be really solid at though, if you don't have a, uh, dedicated credit card for business versus personal is a system that helps you remember what was spent for what. So maybe that means once a month you go through your credit card statement and highlight the things that related to the business and you track them. It's all about just tracking your record keeping. Again, it doesn't sound fun, it doesn't sound exciting. But at the end of the day it's a little bit of discipline, a little bit of creating systems that work for you in your lifestyle and your business to make sure it doesn't get forgotten. It's really hard to remember 12 months later what all these transactions were on your credit card and what they relate to and even harder to find the receipts. So if you just have a little bit of discipline to say, okay, this is my sadly accounting hour, okay? And I'm gonna sit there and I'm gonna go through my receipts and I'm gonna tally them up in either a software or in Excel just to know that I'm organized and not to have to run around when I had cut off. A year from now, it goes such a long way.

Speaker A: Goes back to that conversation we were having at the beginning about treating your business like a business. Right. Sometimes we have to take the time and do things that aren't enjoyable. I've admitted it. It's not my favorite thing. I still do it. It's just part of it just mhm, part of owning a business. So I love that advice. I'd love to talk about valuation and understanding what our business is actually worth. I think it ties into the conversation around funding and I know uh, exiting and even just the ability to exit a business is something that I love to educate women about because so many women don't even realize that, oh, you could sell your business one day. So I'd love to chat a little bit about that. Anna, for someone who maybe just heard this on the show and was like, wait, I could sell my business. Why should someone who isn't planning to sell anytime soon maybe care about what their business is actually worth right now?

Speaker B: You should have a sense of what drives businesses value because you have a direct ability to influence it up or down. So generally speaking, if we're talking about a business that um, is an operating business is going to continue into perpetuality. Not like um, a building, not an asset, but like a thing that generates money on an ongoing basis. Uh, what it's usually valued on is ebitda, which is earnings before tax, depreciation and interest. And a multiple that is applicable to your industry. So if my business makes a million dollars a year and I happen to be in an industry where the multiple is four, my business is worth four million bucks. Okay, well that begs the question, okay, can I do better? Can it be worth 10? What do I need to do? Well, there are really only two variables in the equation. How much the business makes and the multiple. You can increase how much the business makes by getting more customers, by improving your margins, by controlling your costs. The obvious things, right. And you can improve your multiple by being removed from the business as much as you can. The less it is reliant on you, the more successful somebody else will be buying it and running it without you there. So you end up getting much higher multiples in situations where you've set up a business in such a way that it doesn't require you to be successful anymore. And that takes time. So if you're thinking that in some time in the future, in the next 10 years, I'd like to have a really lucrative exit, you should be thinking about that maybe 10 years before to train the people, to find the people, to set up the system so that when you're ready, the value is there, the business is saleable, and you can have a much more successful exit. At the end of the day, um, some of these multiples are really industry specific or have to do with how recurring your revenue is. So I'm really lucky to be in a business where unless I do something really, really bad, my clients are going to come back because they have to keep filing tax returns and financial statements. That bodes well for a good, strong multiple. Um, as opposed to transactional services where you have to do something once and look for new work right away, say real estate agents, for example. Really hard to prove that you have sustainable book of business that keeps coming back. So some of it does lend itself to the industry you're in. Um, but every business that is, um, sustainable and it's been around for a long time, it has a track record, has a value. The question is, what is that value and how can I affect a better outcome? What are the levers that I can pull to do a better job at it?

Speaker C: Yeah.

Speaker A: Is there anything that you see women entrepreneurs do that maybe is undercutting the value of their business, doing everything themselves

Speaker B: and not delegating anything at all? I mean, yes, it is a badge of honor to say, I'm the superwoman that's a mom, and I you this, that and the other in my business. And I've got my name on the wall. Look at me. And at the end of the day, that business is you. And if something happens to you, there is no business. And that doesn't bode well for Successful sale. Yeah.

Speaker A: More of us need to just put down the badge.

Speaker B: That's it. It's not about ego, right? Don't chase ego, chase financial success. That there's not, not everything is about financial success, but that's an element. We're not doing this for charity, right. At the end of the day, we're doing this lifestyle to have some financial freedom. And if that is one of your goals, the less it can be about ego and the more it can be about systems and sustainable businesses and a machine that runs itself, the better off you will be.

Speaker A: Yeah, we talk a lot about profitability and presence and you can't be present if you are doing everything. You just can't. So I love that you named that. I think that that is so important. And yeah, I really am trying to reject this idea that I have to be superwoman. I don't want to be. I just want to be very average and have a team of people are supporting me because doing everything is the fastest way to burn out. And I've tried it and it's not so great. So, Veronica, does your business valuation factor into how you assess the financing application?

Speaker C: Only if you're buying or selling a business. If we're financing a piece of equipment, if you're financing real estate, if we're just giving you a line of credit to run your day to day cash flow, then no. Um, but if you are selling your business, as Anna said, um, getting on the train early to clean up your financials, see how you can increase the value is just going to help. Um, often you have to prepare your business for sale three to five years before you actually sell it. So it takes time and it takes time to clean it up. But the valuation itself is the key piece of information that the bank uses to finance you if you're actually buying a business or, or for the purchaser, if you're selling the business, that is the thing that is most important in those types of transactions because we actually fully rely on that. We want to make sure also it's a third party valuation, ARM's length, making sure there's, um, you know, the numbers are uh, independently verified and making sure that we're giving you the value, the real value of your business. So that's really kind of the only two scenarios. Great.

Speaker A: Okay, last question and we're going to go real on these answers. What's one thing that you wish more small business owners knew and maybe it doesn't get talked about enough and maybe we haven't or we haven't Touched on it yet today? Anna, do you want to go first?

Speaker B: I guess I'll go first. And it's really difficult, but great question. Okay. Um, what do I wish they knew? I mean, I'm an entrepreneur myself, right? I mean, it gets lost often because I talk to clients about their accounting needs, but at the end of the day, I'm running my own business. Like, what do I wish I knew? Um, I think a couple things, honestly. I think that it does get lonely at the top. So very few people have the privilege of running businesses. And I think you end up living really different experiences when your livelihood is at stake, where you're making sure that your employees earn their paycheck and the paycheck clears, where the future of the business relies on you. And there are very few people that can relate to that reality. And therefore, you find yourself having a tough time finding people that understand and can relate, which is a sense of loneliness. For me, I'm lucky at least that I'm serving all these entrepreneurs, so we can kind of relate at that level. So that that's lucky for me, but that's not for everyone. Um, and the other thing is that you may feel successful in the moment, but what I understand from watching all these incredible stories of all these business owners is that there are ups and their downs, and you could be in the most successful season, as you say, of your life, but the acceptance of the fact that that could be very, well, fleeting and it's not guaranteed, and you just have to keep on going into perpetuity to hold it together is really daunting. I find that really daunting. Um, and I imagine the way I talk myself out of, like, going crazy is. I imagine that every business owner feels that way, right? Because, I mean, you just either keep going or you stop. And, like, stopping is not really an option. So keeping going is what it's all about. But success never really sinks in. Like, it doesn't really matter how much money you make, doesn't really matter how good of a day you had. The feeling of. The fact that this is not success because something else could happen later to me, from my personal experience, is actually really overwhelming sometimes. Yeah.

Speaker A: Yeah, I can relate to that feeling, too. Like, I did this thing, but I have to keep going. I have to be another thing. There's no.

Speaker B: It's never over.

Speaker A: There's no end destination. Every entrepreneur that I know that have exited their business, build something else. And there's not a lot of people that just exit and chill or maybe they'll Chill for a little bit, but then they start building something else.

Speaker B: But not even, like, it's not really about exiting. It's about saying, well, do I consider myself a successful person today? I think objectively, yes. But is it guaranteed to be a success story by the end of my book? I have no idea. Like, there's a million and one things that could happen where there's some real likelihood that I won't be. Um. And I'm really hyper aware of that every day. Um, which I think takes some fun out of it, honestly. But maybe it's just me thing.

Speaker A: No, I think that sometimes we have to relook at what success actually means for us, because I think if we chase this singular definition, and you mentioned this earlier when we were chatting about what success means, if it's just the financial piece, I think there's an emptiness to that. So we really have to. This is something I'm working on with personally, so it sounds like we need to do another episode on this at some point. Uh, but truly it is. It's what is. What does success actually look like for you? Your own personal, independent definition of life.

Speaker B: And I see. I get to see so many stories where, like, from a, uh, if finances were your goal, these people are unequivocally successful. But if you look at the other aspects of your life, who shows up to your funeral, who remembers your birthday, and it's a really stark reminder that it's really not all about money. Frankly, it's not about money at all. It's about making some kind of a difference, I guess. Um, I guess. And we are lucky to have that opportunity. We are in full control to be able to affect other people's lives, to affect the lives of our employees. Um, and I think it's a privilege.

Speaker A: Absolutely, it is. I love that. Veronica, is there anything that you want small business owners to know?

Speaker C: Yeah, two things. So one we talked about earlier, which is the bank sees you first before they see the business. And so I think a lot of owners walk in and it's all about the numbers, which it is. But we, uh, actually look at you and take a chance on you. And so you're as important and having that knowledge about your business and, you know, your future and your growth and what you're going to do is actually very comforting. And sometime what makes or breaks the deal. I've seen deals where the numbers were there, but we weren't so confident on management. And they were like, yeah, we're going to do 20% more revenues, and we're going to do this and we're going to do that, and then you're kind of like, poking holes at it and you're just like, m not sure we didn't do the deal. So you matter as a business owner in terms of giving us that confidence to lend to you. Um, the second thing I would say is honesty. Just be honest. Don't walk in with my business is great. And this is why I need $100,000. If you had a bad year, like, we're going to see it in your financials, but just tell us you had a bad year, why, what happened? What are you going to do to correct that? Um, just be honest with us. Because the more you tell us your real story, the more we can package it up and sell it to our credit team. And it kind of like, relates to my first point. It's about you and how you're presenting your business and how much you know about it and how honest you are about it so that we have all the facts on the table. If we actually find out something after that you didn't tell us, it's not a good look. It's not a good look for us with our credit team who's just going to shut it down and for us as a relationship, like, banker, entrepreneur. Right. Like, we're actually here to support. Truly, Truly. We want to see your business succeed. We actually do. Uh, and so just be honest with us and we'll tell you realistically what we can do. Maybe you're going to walk in, say, you know, I want $100,000, and we're going to say, yeah, no, I probably can't give you more than 50. So it's just being honest and not being afraid of being honest. Not everything has to be rosy. When you walked in, when you walk into the bank, and that's okay.

Speaker A: We're all just people on the other end of all of these things. Yeah. Veronica, what's the best way for our listeners to engage with your team, to connect with them? How do we find them? How do we get started?

Speaker C: We're on dot com. Um, there's a phone number that you can, uh, reach out to us, uh, for business Client Advice center. Um, pick up the phone, call us, you know, reach out to us through LinkedIn. Reach out to us. Um, like I said on.com, our banking centers are there to help. Our banking centers will refer you to our team. Um, and we'll just start from there and talk to you and kind of get to know you.

Speaker A: Amazing. And Your team is all virtual, right?

Speaker C: All virtual. So it doesn't matter where you are. We're on the phone 8 to 8, Monday to Saturday. Well, Saturday reduced hours, but we're here to help. So you don't even need to go to the banking center. Just give us a call and we'll help you.

Speaker A: Hopefully not too many of us are working on Saturday.

Speaker C: Hopefully. So at first when we launched the biz, uh, the. This, uh, this team, I thought we would get a lot of calls on Saturday because most entrepreneurs are working Monday to Friday. Um, and no, we don't get a lot of calls on Saturday. So if you want to not wait too long on the queue, call on Saturday.

Speaker A: Saturday it is. Saturday is. Anna, what about you? How can we learn more about your firm and connecting with you?

Speaker B: Yeah, so I'm on LinkedIn, Anastasia, rebro. Uh, and we have a website, of course. Ah, farnhamco ca.

Speaker A: Beautiful. We'll make sure we put all the links as well as the phone number in the show notes for the episode. So anyone that's listening who wants to learn more about your teams and wants to connect with you is able to do so. Thank you so much for being here and sharing your knowledge and expertise with us.

Speaker B: Thank you.

Speaker A: Yeah, thanks for having us and thank you for listening. We'll see you on the next one. Thanks for listening. If, uh, today's episode gave you the push you needed, share it with a friend. And don't forget to subscribe wherever you listen to podcasts. Ready to take this even further? Head over to www.thismothermeansbusiness.com and become a member. You'll get real business growth, support and build your virtual village of entrepreneurial moms walking the same path as you. Until next time, keep showing up, keep pushing forward. And remember when this mother means business. Anything. This podcast is produced, mixed and edited by Cardinal Studio. For more information about how to start your own podcast, please visit www.cardinalstudio.co or email Mike at mike@cardinalstudio.co. you can also find the details in the show notes.