Gabriel Flores 0:00
Hello, everyone, and welcome to the shades of entrepreneurship. This is your host, Mr. Gabriel Flores. Today, I am very excited because we have a Forbes contributor who writes out in Forbes magazine, also a CPA, Melissa Houston, how are we doing?
Melissa Houston 0:18
Hey, thank you so much for having me. I'm so excited to be here to talk with you today.
Gabriel Flores 0:21
I'm really excited because I, you were talking a little bit earlier, and I hate financing. I'm gonna be honest. Most people that was accounting and like, I don't try to figure out when a bond is going to appreciate I don't I don't know. But I tell you what, okay. But I'm gonna pay somebody to figure it out. So Melissa, let's introduce the world to who is Melissa Houston. Yeah, so
Melissa Houston 0:45
my name is Melissa Houston, and I have been a CPA for over 20 years. However, this was not my first career move. My first career move was in social work. So I worked in social work for about six years, then I moved into Business Administration, became a CPA, and I've been working all things accounting and tax since since then, and a couple years ago, I decided to go out on my own, and help entrepreneurs and business owners with optimizing the profit in their business so that they get to keep more money in their pocket and increase their net worth. Who doesn't
Gabriel Flores 1:20
want more money in their pocket? Exactly. So let's, let's take a step back first, for the for the listeners at home. What is a CPA? What what what does it stand for? And what does it do?
Melissa Houston 1:30
Okay, so CPA is a certified professional accountants. So what that means is CPAs go to school for you know, we do our undergrad, and then we go to school for an additional four to six years, learning the ins and outs of accounting and finance. Right. So it's, it's grueling, and we have to have that work experience in order to get certified as professional accountant. And we are governed by Well, our governing accounting body to ensure that we are following the rules of conduct and professional ethics that are required of a CPA. So you know that when you hire a CPA, you're getting good quality candidates who are educated, experienced, and ethical.
Gabriel Flores 2:13
So it's almost like you went to undergrad, and then you wanted more torture. And so you went for an additional six years of schooling.
Melissa Houston 2:22
Exactly. And it was tough, especially when I was finishing up school with she babies.
Gabriel Flores 2:28
Yeah, so where'd you go to school? Yeah,
Melissa Houston 2:32
I went to school. So I'm Canadian. So I went to school at Carleton University in Athabasca University, and then I got my CPA.
Gabriel Flores 2:40
Nice. So let's, let's talk a little bit about the the technical things of of money. All right.
Melissa Houston 2:46
Let's love talking about man, let's kind
Gabriel Flores 2:49
of dive into it. Because I think this is gonna be very informative episode for the listeners. So let's first let's start out with just the basics. What's the difference between profit and revenue in which is better? Such
Melissa Houston 3:01
an important question, because so many entrepreneurs out there confused? The revenue numbers as being what is the indicator of how successful their businesses, right? And I'm not arguing with the fact that revenue is not imperative to business? Because it is, it absolutely is. But the thing is, if you're bringing in $100,000 in revenue, or a million dollars in revenue per year, if you don't have that profit margin, or those profits to help your business, sustain and keep growing, then essentially, your business won't survive. Like if you're losing money continuously, your capital resources will run out and you will have to close shop.
Gabriel Flores 3:41
Yeah, you know, a great example, I think for the listeners is Tesla. Right? It creates a lot of revenue, but it hasn't turned a profit, you know, but it's I think it's starting to right, it's getting to there. And that's that's kind of why you hear a lot of special like a stocks you hear like revenue and profit right? Now let's let's, let's kind of take another little step back and talk about let's talk about financial power. What what does it mean, given away financial power?
Melissa Houston 4:07
Oh, this is so important, especially for women. I mean, men too, but it seems to in my in my experience affect women, mostly where it can be viewed on so many different levels, right first, if you're in a relationship, and you're giving all the financial power to your spouse, that is a red flag, right? You need to get involved in your finances. Financial Health is extremely important for you. But the same thing goes for your business as well. Right? So if you are hiring professionals like CPAs to help you, I mean, absolutely, that's what we're here to do. We're here to help you. But it does not give you permission to check out of your business finances right? You still own the business. You are the ultimate decision maker of the business. And if you don't understand what's going on in your finances, you really are falling short of being the best CEO of your business that you can possibly be because all you Your decisions should be based on whether they're profitable decisions for the business or not. And the only way you're going to understand the profit is if you understand your business numbers, it's totally acceptable to have bookkeepers, accountants, CPAs, tax accountants, financial advisors, whomever, to advise you and give you the best financial advice you can get, because that's what they're there for. But if you don't understand the decisions that they're telling you to make, that's a red flag.
Gabriel Flores 5:26
Yeah, that's so true. You know, just, you know, it's kind of funny, you know, I'm starting this podcast, I've been telling the listeners, you know, going through this process, and it's kind of important to be the jack of all trades, sometimes, you know, especially if you're an entrepreneur, because you kind of have to test everything that you're gonna ask somebody to do. And that's kind of what makes a good leader as well, right? If you're going to ask somebody to get on their hands and knees to scrub the floor, as a leader, you should be willing to get down on your hands and knees and scrub with them. Now. Now, Melissa, one of the things you mentioned, was kind of women in particular are having some issues, right, and kind of going through a lot of things. In fact, a lot of your Forbes articles are around women business, what are some, in your perspective? Or in your experience? What are some hurdles that women tend to have to deal with more than others? And that you particularly see,
Melissa Houston 6:10
Oh, where do I started? Yes, I mean, you know, the world has changed a lot, especially in recent years. However, you know, I have over two decades of business experience in dealing with the second guessing and repression of women in the workplace, bipoc whomever, I mean, that is real, that exists. And that is an issue. I mean, there's a lot of men out there who only want to deal with men, there's a lot of women out there who want to deal with men, there's like a lot of validation in, you know, maybe the man knows, knows best the man, you know, and that's that's definitely a hurdle, because that's not necessarily the case, I have worked with amazing CPAs that are both men and women and I have worked with terrible CPAs that are both men and women, right? So it's a non gender thing. And when it becomes a gender thing, it gets very frustrating, especially for those who aren't completely competent in their roles. And the the frustration that I have, that I see often right now is although we are making progress, there's less than 3%. And in fact, over the pandemic, it's actually shrunk. That number has shrunk since the pandemic of women receiving VC capital. So that's frustrating, right? So it's more likely to go to men than women. And then for bipoc, it's even lower. There's not enough representation on on boards, women in bipoc, are not on boards, and that needs to change the C suite. You know, yes, we're getting more women in there, but it's still not enough. So you know, there's there's a lot of issues that still need to be addressed.
Gabriel Flores 7:53
Yeah, that's you brought some very valid points. In fact, one of our former guests who in fact, their their organization founder, Jim, it's a local organ organization that founders and actually really coaches them who go in front of the venture capitalists and work on trying to get some of that funding because it is so difficult for the bipoc community and in females. Now, Melissa, you coming in through the the financial world Have you ever had to face any type of the adversity of being a female in your current world? The CPA? Oh, absolutely.
Melissa Houston 8:20
Absolutely. Continuously. This is part of the reason why I did choose to leave as well, right? Because when you're being controlled by others who are making decisions for you, that's very frustrating, you know, you know yourself best, you know, what you're capable of, you know, that the sky really is not the limit and you know, or the limit of your your limitations, right. So, you know, when I always say when people are being faced with that, it's time to you know, seriously look at the situation and see how you can change it for yourself. If people around you are not willing to change, you have to change.
Gabriel Flores 8:53
Yeah, yeah. Now, you mentioned you, you kind of left CPA briefly. Are you? Are you currently a CPA and you're currently I'm
Melissa Houston 9:00
a CPA, I will I will remain a CPA, I left being in the corporate world. Gotcha,
Gabriel Flores 9:04
gotcha. So you left the corporate world to kind of become an independent,
Melissa Houston 9:09
practically start my own business and do my own thing and reach my goals. Yeah. Right. And I have exceeded my goals in my wildest dreams, right. So it's been an amazing experience so far.
Gabriel Flores 9:22
Yeah. Let's let's, in fact, before we let's talk about Forbes a little bit, because you're you're writing for Forbes, how did how did that kind of materialize?
Melissa Houston 9:31
I know this is really one of the most popular questions.
Gabriel Flores 9:35
Tell us about the magazine.
Melissa Houston 9:37
And it'll surprise most people that what I did was like cold pitch them to see if they wanted me to write for them and they were on board. So you know, like, I got over the fear. I got over the intimidation of putting myself out there publicly. I just, it was like jumping off a diving board, right. Like I knew I could do it, but it was having the courage to do it in there. Once you did it, it's like, wow, that wasn't so hard.
Gabriel Flores 10:04
You just slid in the DMS, I'm telling you, I've been telling folks, you know, cold calling is not a dead form of outreach. You know, sending out an email, sneaking into the DMS, trying to get their phone number or even sending snail mail still works for some organization, building relationships, how important is networking for you?
Melissa Houston 10:25
Networking is absolutely important. And this is one of the things I absolutely love about writing for Forbes is because when I get to feature women who are doing amazing things, I get to help them get their story out there. And then build relationships with them. And it's not just through forums. I mean, I meet people such as yourself through podcasts, guesting having my own podcast, just meeting people. And I started my business, right when the pandemic hit, you know, like, it was bad timing. But on the other hand, I still was able to meet so many fabulous people, great connections. And the thing about networking is it goes both ways. And unfortunately, a lot of people don't realize that it's more like, you know, let me take take take for me, it's like, no, no, no, you got to give to you, right? You have to reciprocate, it goes back and forth.
Gabriel Flores 11:11
That's so true. In fact, you know, I wrote an article I believe about the different different teams that are out there, right. Twitter has their spaces, Facebook has their groups, there's different communities out there that entrepreneurs can engage with. However, as an engaging entrepreneur, you can't go into those groups expecting everything and not giving anything in return. Right? It has to be it has to be a two way street and that have to lead with value. That's very important. Yeah. Let's talk about value. How do you provide value to your clients?
Melissa Houston 11:46
To my clients? Oh, wow. Okay, so I love to coach. So I offer business coaching services. And for those who are ready, I do the done for you fractional CFO services. But no matter what I'm what type of service I offer clients, it involves coaching, because I walk the talk, right? Like, I want to ensure that even though I'm helping you make decisions, that you understand the decisions that you're making, you understand what's going on in your business, so that you can advance your business and grow your business and optimize those profits. That's so important to me to see my clients make more money that they get to keep for themselves, because there's so much money wasted, you know, like other people, other corporations are getting this extra cash when they could be keeping it for themselves in lining their own pockets. Very
Gabriel Flores 12:34
true. In fact, you mentioned coaching, so I'm going to ask you some some questions to help help us entrepreneurs out. So first, why are cash reserves important for an entrepreneur?
Melissa Houston 12:46
Yeah, I mean, we've especially seen this during the pandemic, right. So cash reserves are important because economies fluctuate continuously, right. So you know, whether your industry is having a great time during the pandemic, or you've unfortunately had to close your doors, if you're at that time, where you're doing really, really well, at some point, it will, like you will be in a wall, the cash may dry up, the customers may dry up, there's always dry spells in a period. So having that cash to help you through those hard times is extremely important, because cash is the lifeblood of your business. So if you lose access to cash, and the sales are drying up, you have no more cash coming in, but you still have those financial obligations going out, then ultimately, what's going to happen is unfortunately, your business is going to close now 82% of businesses fail due to financial mismanagement. So the number one thing you can do is monitor your cash and ensure that you've got cash reserves to get you through the slower times.
Gabriel Flores 13:48
And you know, for the folks at home, I kind of equate this to when you're buying a home, and they say you need a rainy day fund. You know, it's kind of kind of similar to that, right? Because it is very similar to that, you know, and same thing, I think, like almost any market, you know, you see real estate in the past and peaks and valleys, you know, you just have those peaks and valleys, where currently right now real estate, we're at a peak, right. But if you guys remember 2008, we were at a very deep valley, right? And we had another bout to get a sample, you know, we might hit another value soon. So it's imperative to kind of make sure you know, I'm not a financial adviser either, you know, but it's just important to make sure you're checking your finances. And one thing I talked about too, is like maxing out your IRA, right, putting that 19 Five away button, you know, making sure you're, if you can bring down your overall taxable salary, right? So it's under instead of 24%, you're at 22%. Or if you can get down to 40,000 a year then you're at 12%. That's a huge 10% Right. So what why does it what what are some money management tips for scaling? So if I wanted to scale my business, what are some tips for entrepreneurs?
Melissa Houston 14:57
Yeah, so everybody loves growth right? Grow similar business, they think More money's coming in. So I'm doing really, really well. But the thing is, you have to be careful with growth, because what what comes with gross growth is increased expenses. So knowing and planning out your growth is really important so that you don't run out of that cash, right. And that happens quite often in growth. So not all growth is created equal. So I always recommend when you are creating, like when you are wanting to grow your business, create that financial plan that's going to map out the next 12 months and how you want things to go and reinvest those profits into growing the business don't go out and take out big loans, and you know, all sorts of stuff like that, when you don't necessarily need it, you know, be careful with the debt, that the debt amounts that you carry, because that you know, ties into your cash reserves. And planet that growth. In short, while you're growing, that your profit margins are staying tight. Because if your profit margins are shrinking, while you're growing, what that means is that you're working harder to get the money in the door. So bigger profit margins are always most desirable.
Gabriel Flores 16:04
And so for the listeners at home, what is profit margins.
Melissa Houston 16:08
Profit Margin is essentially a measure of how hard or easy it is for you to bring in the profit in your business, right. So profit divided by your sales is going to equal your profit margin. So it's just really important, because when it comes to economies of scale, like I'll explain so if you have $100,000 of revenue coming in, and you made $10,000 of it, your profit margin is 10%. So if you maintain that 10%, when you have a million dollars of revenue coming in your profit margin, that's going to be 100,000. Right? So there's a very big difference between 10,000 and 100,000. So if you think that keeping 10,000 When you're making, you know, a million dollars of revenue, that's a 1% profit margin. So that means you're working harder to keep that profit in the door. That's a
Gabriel Flores 16:53
great example. And one thing I constantly tell these listeners, you know, we got to focus on working smarter, not harder, right? Yes. Important. Now, one of the things you also mentioned was expenses. And I kind of wanted to want to talk about that a little bit. In your experience, what are some expenses that entrepreneurs overlook? Hidden, hidden cost,
Melissa Houston 17:12
hidden costs, I mean, they really are everywhere, I mean, the one that comes to mind always is deemed subscriptions, I have not met a client yet,
Gabriel Flores 17:20
is not dealing with that, right?
Melissa Houston 17:24
You've got these subscriptions that keep going and you're not using them. So that's a really easy way to save money is to go through and cancel subscriptions that you don't need your advertising costs. I mean, that's huge, especially for online businesses that are using Facebook ads. Right now, that is a huge money site with the changes, the iOS 14 changes or what have you, it skyrocketed your ad spend and not necessarily giving you the return like you used to right. So monitoring your marketing and your advertising in your dues and subscriptions are huge. Ensuring that you are looking at all the expenses in your business and seeing where you can cut and where you don't necessarily have to cut rate meals and entertainment. Travel in group coaching, or these coaching programs are huge expenses for a lot of entrepreneurs. And you may need to look and see if that is really something that you can afford to carry. And then for product based businesses, it's really about, you know, ensuring that you have, you know, adequate inventory levels, that you're not overflowing with inventory, so much so that you're spending on at the beginning, and waiting for the cash come in later and struggling with that cash management balance.
Gabriel Flores 18:40
Yeah. And you know, you brought up a really valid point in the food in their team and cost for not only entrepreneurs but households, right individuals, you know, this this is all inclusive to everyone. In fact, me my wife just recently went over our last year's financing, you know, tax seasons coming up. So like, well, let's see how much we spent on our food and entertainment for last year so we can try to be mindful. I'm not going to tell you the number folks but let me tell you, my jaw dropped and I mean, I eat no more. No more. I gotta stop eating out now what
Melissa Houston 19:11
exactly especially with the food delivery now to
Gabriel Flores 19:13
man, you know, it's kind of funny, you you buy a $10 meal that's going to cost you $30 to be delivered.
Melissa Houston 19:18
Mostly and it's such an money suck, but it's so easy to do. I am victim of that too. And I have to stop doing it. Right. It's just a convenience.
Gabriel Flores 19:26
The convenience, like like, like valet parking. I don't valet parking, but I'll spend $10 just to cool. Go park my car, man, that's fine.
Melissa Houston 19:36
I'll pay for exactly. I know we have to stop that. Yes.
Gabriel Flores 19:39
One of the things you mentioned too, is as is one of those expenses is advertising. Now how do you as a CPA, how do you advertise yourself?
Melissa Houston 19:48
I do a lot of organic advertising. So you know just getting out there and networking. Right. Networking is key for me and getting referrals in the door and doing affiliate projects and such So that's really how I pull my clients in is just organic. I don't pay for advertising.
Gabriel Flores 20:05
That's, that's very smart. And I've kind of tell folks to, you know, that's kind of the way we've been building the shades of entrepreneurship very organically, I'll take quotes from some of our speakers. I'll throw memes on Instagram to bring in folks. But really, this is all word of mouth. And we're, we're continuously growing every day, which is, which is really cool. You know, as one former guests, a builders build kind of thing. And that's kind of where we're at. So how do we, you know, as entrepreneurs, how do we forgive ourselves to build a better tomorrow?
Melissa Houston 20:34
Yeah, that's just such a good question. I love that because, you know, part of business is making mistakes. Right? When, especially when we're starting it, we make tons of mistakes, and to sit there and blame ourselves and say, Oh, we could have done this better. Or if I had only known I, you know, blah, blah, blah, whatever, whatever stories, you're telling yourself, you need to forgive yourself for mistakes, because through mistakes is learning, right? If you're walking away with that valuable lesson, that mistake is worth it as far as I'm concerned. So being educated knowing, you know, like, for example, now, knowing that 80% of businesses fail due to financial mismanagement, that should be key to educate yourself. On business finance, right. So now you know better you're gonna do better, but to have been in a situation where maybe you have lost a deal, lost some money along the way, lost, you know, made a wrong choice, whatever, you have to just forgive yourself, get up during the lesson and keep going, because resiliency is such a key for entrepreneurs. Definitely.
Gabriel Flores 21:37
And now, what about your career? Have you ever had a moment of self doubt?
Melissa Houston 21:41
Oh, for sure. Where do I begin? Well, I'll tell you a story of recent actually, because I recently just got a book deal. Nice. And yeah, yeah, I'm super excited about it. But along the way, I kept hearing your audiences too small, you won't get a book deal. Publishers are looking for big audiences, big platforms, the whole stuff. So of course, I was filled with the self doubt, right? But I'm like, I am going to try anyway. And what's the worst that can happen? They're just gonna say no, and I won't get a book deal. But I got the book deals. So you know, I feel it. But I just keep going.
Gabriel Flores 22:19
I love it. Let's, let's talk about the book. What? What is it coming out? What's the title?
Melissa Houston 22:24
So the title right now is cash confident and entrepreneurs guide to financial management. Now, that could change depending on you know, the process for the book, but it should be coming in mid 2023.
Gabriel Flores 22:36
Nice. Can I get a signed copy? Got it. I gotta ask. So how did you how did how did the book come about? How did you get to that point?
Melissa Houston 22:47
Well, because like, I'm so Okay, first of all, I love writing, like I write for entrepreneur, and Forbes and other large publications. And I think writing is another great way to get the message out there to entrepreneurs, because I believe that, you know, financial management and your business is so important. It's such valuable information, but not a lot of people are talking about it. So I just wanted another way to reach people. And I thought traditional publishing, where it's going to be on bookshelves and bookstores and you know, around the world is a great way to get people's attention. And get them interested in learning more about finances.
Gabriel Flores 23:24
And what does the book kind of cover just to kind of go just like a quick overview of how to be successful financially.
Melissa Houston 23:31
It was through a lot of what I discussed with my programs and such, and, you know, a lot of case studies, a lot of a lot of stories so that people can relate and understand the importance of the messages that I'm trying to get out there.
Gabriel Flores 23:44
Nice. So as a CPA, what keeps you up at night? What's that thing that you always thinking about for either for your clients or for yourself? What's that one thing that kind of keeps you up at night? Maybe it's not one thing? Maybe it's multiple things?
Melissa Houston 23:57
Yeah, that's a really good question. Because, you know, I think the thing that keeps me going mostly is ensuring that I can help as many people as I can possibly help, right? So how am I going to get a further reach? How am I going to, you know, just reach the people who really need this advice, right? Because there's so many different ways you can consume the content because there's tons of content out there. You know, so whether you're you're reading the free content, or you're signing up for coaching or you want fractional CFO services doesn't matter to me, what matters to me is that people understand how important it is and how much better their business will be when they manage their finances.
Gabriel Flores 24:37
Very, very true. So if folks want to get in contact with you, they're interested in learning more about Melissa Houston, how do they find you social media webpage? How do they how do they look you up?
Melissa Houston 24:47
Yeah, so my main website is Melissa Houston. cpa.com. And if you go there, one of the first things you'll see is the ability to download the five step roadmap to biz finance freedom, and that outlines my five step for work for entrepreneurs and then on social media. I'm on Facebook and on LinkedIn and Instagram at Melissa Houston, CPA.
Gabriel Flores 25:08
Nice. So folks, you heard it here, Melissa Houston. cpa.com there is a free book waiting for you online. And then next year 2023 A new book coming out very excited, Melissa, thank you so much. I'm so excited. I think we're gonna have a lot more discussion after this as well. I'm very excited. I'm really excited for your book as well because as I mentioned, I'm not a financial guru. I just pretend to be one. And again, folks, I am not a financial advisor. Please, please, please do some research on financial gains and profitability revenue. Making sure you're maxing out those IRAs. You know, just think always think if you're giving away 50% of your money to the IRS, then something's wrong. We got to figure it out. Well, listen, thank you again, so much for being on the show today. I really do
Melissa Houston 25:54
appreciate so much for having me. This has been such a fun conversation. This was
Gabriel Flores 25:58
great. Thank you so much. I'm again, I'm excited for your book. For those folks at home. You can visit me on LinkedIn, Twitter, Facebook or Instagram and have a great night.