E155: Matt Remuzzi

Richard Hill [00:00:02]:

Hi, and welcome to another episode of eCom@One. Today's guest, Matt Remuzzi, owner at CapForge. How are you doing, Matt? Good. Thanks for having me. No problem at all. Well, I am actually mega excited for this one because this is a topic that doesn't get spoken about too much on eCom podcasts, let alone, well, you know, in in the industry, too much, I don't think. So, gonna be covering all things sort of accounting, you know, the dreaded t word, the tax word, I'm sure we're gonna we're gonna jump in there and have a look at that, but obviously, as eCom store owners listening in, you know, you you've all got an accountant, I'm sure. So I'm excited to we should have

Matt Remuzzi [00:00:43]:

Wow.

Richard Hill [00:00:45]:

Yeah. He's the guy who should be paying very handsomely. That's what I say. And I I know you're like, I mean, you're prying me to say but, you know, I know the more I'm paying my accountant, the better I'm doing normally. So, okay, and the tax man. But, so, yeah, I think it'd be great to to jump in, Matt, introduce yourself to the guys, and tells how you got into the world of accounting and e commerce.

Matt Remuzzi [00:01:07]:

Yeah. Well, no, again, thanks for having me. I I'm happy to be here, Matt Ramuzzi, the founder of CapForge, started it back in 2000. and You know, it it was something where I was doing various odd jobs. I worked in a lot of restaurants before college during after college. but knew I always wanted to get into business. That was where my passion lied being an entrepreneur. so I went back to school, got my MBA, and then Got a very short time consulting job and then got laid off from there and decided, well, I could still do consulting while I look for a real job. 23 years later, haven't found a real job yet, but turned my my, you know, temporary gig into a a full time business And now we've got, you know, over 70 employees, well over a 1000 clients. you know, we've really grown into a a pretty good size success in in our specialty little area here at eCom, but, it's been a great ride, and it's allowed me to really spend my days with entrepreneurs who are, you know, kind of my favorite people. They're exciting. They're doing new things. They're they're breaking new ground, challenging themselves and ways. And, and I just love that I get to hang out with them all the time. And I know, you know, as soon as you say, especially at a party who I do accounting, you know, both. Yeah. People snooze that offer. Yeah. I believe but I promise and I know I get it. Bookkeeping is not sexy, but profits are sexy. So and the way you know if you're making it and and if you can grow them and do well is by keeping track of this stuff. So I get it. You know, it's not everybody's favorite topic and and I don't want you to tune out immediately when you hear that this is what we're gonna talk about. But at a higher level, without going into the weeds, you know, it really is something that's important for all business owners to have a handle on. You don't be an accountant or an expert, but you have to have a handle on it. And, really, it helps you in the long run do much better if you have just a little bit of understanding on this. So that's what I like to try and share with people that just a little bit of knowledge here can be really powerful and really helpful for your us. Yeah. And that's brilliant. So I think we'll we'll get into some of the the accounting specifics. But, obviously, you've run your business,

Richard Hill [00:03:23]:

for whatever 20 years now, you know, I think you said that. what would you say, you know, has been one of the or the hardest moment in sort of relatable to sort of the e commerce side of you know, your accounting business. It's what's sort of been in the hardest moments. I think it's good to talk about, you know, some good good things, but obviously the reality is that everyone listening in is running or a senior in an in an eCom business. So not every day is, you know, is, is up there, is it? So you can't as we go through certain things in our businesses, you know, absolutely.

Matt Remuzzi [00:03:53]:

my hands up. What would you say has been one of the hardest moments you've had to to manage and navigate over the last 20 years? Well, I I mean, in recent memory, one of the hardest times that that I can think of was, you know, sort of end of March beginning of April in 2020. Right? COVID just really shut everything down. And I think a lot of us were kind of panicking, not knowing what this was gonna turn into. Right? The kids couldn't go to school. Yeah. Adults couldn't go to work. What was gonna happen in the world? And that was a very unsettling time. Because up until then, we've been running along full steam, hiring, everything with I had just literally bought the office building that we're in you know, with the idea, I bought a much bigger space because we had been growing so fast and bringing more people on. And now all of a sudden, by government decree. Right? No one can come to the office. Oh my god. Yeah. That was a panicky time Now in hindsight, of course, it worked out really well for a lot of folks who were in the e commerce space because people couldn't go and shop. but they could still get packages delivered to the door. So for a lot of our eCom clients, it worked it out well. Some of them know in the, you know, in depending what category of products they were selling, they they had a really hard time. You know, certain categories of products were not in domain and because they're related to things people couldn't do anymore. So it was a turbulent time, and it was a a challenging time to try and figure out what the world is gonna look like. How do we move forward? What does this mean for my business? you know, all of a sudden, government programs started popping up to help support, but some of, you know, again, navigating that and a lot of people turned to us as accounting for will What do I do? How do I get this? Can I apply? Do I qualify? And so that became the focus of really just I'm not sure what's gonna happen with our business. but let's just help as many people as we can get through it as best we can, and then we'll just see where where things land. So and I think the bigger lesson is it's you know, no matter how big your business is or how smooth things may be, hurdles can come up out of nowhere and the best you can do is just tackle them one at a time, take a day at a time, and figure out where you go from there. And and, hopefully, it works out. for the most part, but that in recent times for me was was a really challenging, yeah, worrying time to see what is going to happen

Richard Hill [00:06:24]:

here. think there was so much change, isn't there? In a in a matter of a day, there could be 2 or 3, you know, announcements about this and this and obviously, depending on where you're listening to this episode, different countries where, obviously, have very different, Right. Funding available maybe for small businesses and different, incentives for things and relief for things and whether we're talking about business rates or, you know, funding free money in some cases from from, you know, in the UK councils and governments and, you know, and then in others, not. And then the next day it changes, and then you can go in the office. You can't go in the office. And then there's the whole sort of, you know, crosses over a little bit into the HR side. A lot. I hate, you know, if we were talking HR, which we're not, but, you know, HR, accounting, most people listening have you know, both those people or companies they work with that help them with those side of things. Massive change in HR, you know, contacts of employment, you know, that impact, you know, people redundancies and things like that, which again, is go and HR, but then that's an accounting thing with the finance side. And, yeah, a lot of change, a lot of daily change,

Matt Remuzzi [00:07:29]:

but I'm not sure. And right. And and just on the personal side, right, people had parents and grandparents and folk that were getting sick. They were in the hospital. You couldn't visit what was gonna happen. It was just a a challenging time, you know, across the board for all kinds of reasons. So, you know, as a business owner, you know, there was just a lot to think about a lot to worry about in that time. Unfortunately, you know, I think we've come out the other side -- Yeah. -- fairly well, but, if, you know, a hard time in 20 years boy, that pops, right, to my mind?

Richard Hill [00:08:02]:

Hard hard in in the in the depths of it, but I think, correct me if I'm wrong, but actually quite a good time. commercially for eCom and accountancy practices because obviously more and more businesses need to you know, they're they're maybe doing, you know, both ends of the scale. Obviously, not every eCom store was doing well because, you know, some obviously didn't do well. Couldn't get a stock or, you know, for various reasons, whatever that might be, you know, sold out, you know, or, you know, have bigger challenges, but a lot of eCom stores obviously a broad stroke, but it did very, very well in especially in that that sort of probably 18 month period, maybe. Obviously, there's a few gaps in there depending on which country you're listening to in terms of when you're shops were open or closed and whatnot. But, you know, I'm I just know, you know, the various accountants that I'm aware of and and work with, and, you know, I think they did very well during time, but very, very, you know, deservedly because it was a very, you know, intense period of change, where they helped a lot of people. You know? So, yeah, But, yeah, okay. So, obviously, now, you know, that's a a challenging time, was a challenging time, but now here we are, you know, sort of I guess, almost 3 years later, 3 and a bit years later from the from the start was March, wasn't it March time, mid March? Right. And now we have, you know, different challenges now and, sort of, buying behavior. And, I hate to use the, sort of, the r word, the recession word, too much in the pet podcast. but, you know, there's, you know, you know, you know, how do you think sort of the cost of living crisis will or is affecting sort of consumer behavior right now in terms of sort of in the e commerce space?

Matt Remuzzi [00:09:41]:

I think it it definitely, you know, has made people more price conscious, obviously, but I think still there's, you know, people focus on value and and what it makes I think the challenge it creates for people in ecommerce, and we've seen this for our clients as well as if you had a product that was sort of only marginal. It didn't have any real competitive advantage. It wasn't the least cost, and it wasn't particularly better than anything else. I think those are the folks that are struggling the most. If you have a a product that, you know, you can get at the lowest price, it probably because you're the manufacturer. That's who you usually see able to sell at the lowest price. That's that's a tough place to be for most eCom sellers who to manufacturer, they're importing. Then the other end of it is you have to have a product that is really it you understand who your customer is, and you've developed something that is their primary choice. And because people, even in a session, even in tougher times, they'll still spend money on their hobbies. Right? If somebody's passionate about trout fishing, right, they'll still spend money on fishing gear even if they have to cut back some other places. So if you've got the best product for Trout fisherman, you probably are still able to do alright. If you've got sort of a middle of the road generic fishing product, nobody's passionate about your product, and they're looking for places to cut money or cut spending, you know, you may have a harder time. So I think it it's one of those things where, the cream rises to the top when things get tough. the people who are sort of getting by when everybody had plenty of money to spend and weren't as picky,

Richard Hill [00:11:23]:

that's when you have a harder time when when people do get picky and there's just less money to go around. I think the same one of one of the sayings with the sticks in my mind is we find out who's swimming naked when the tide goes So I think -- Exactly. Exactly.

Matt Remuzzi [00:11:37]:

That that's exactly the point I'm making. And I think, you know, this hopefully doesn't last long if it if it really materializes. And I think things are trending to be better. At least here in the US, I know again, you know, regionally, it's things are different, I think inflation in the UK is a little higher than we're having here on the on the other hand, inflation in Turkey, I think is right, you know, through the roof or what they're they're having you know, so it it depends where you're listing, where you're where you're located, but, hopefully, things are are on track to get

Richard Hill [00:12:11]:

you know, better from here or at least not get worse. So having that sort of commercial advantage with your margin, obviously, margin when we can, you know, depending on how you are looking margin or, you know, profit depends how you how you look at things, but, you know, on individual items, you know, we There's just so much talk about sort of turnover and robots and things like that in in the marketing space and in the eCom space. But the reality is, you know, go back old school. You know, if it costs you a pound and you sell it for £1 10, that's not the best business model, is it? If you're man, that's tough. Yeah. If you're man, which a lot of people, you know, after we see it all the time. you know, I used to stay used it previously. I used to sell computer components. So that is a tough game. Margins on electronics and but on PC components, when I was doing it, it still is. I know there's not very many independent PC stores now. that made money from selling the thing. They made the money from servicing and, you know, and business servicing and having a service department and you know, that side of things and and and business to business services, but very low margin, you know, it was 3 or 4% on things back back in the day, but you're talking 1,000,000 of pounds with the turnover, but still a lot of risk for $30 or whatever it is. You know? So But, yeah, those products that our listeners should have that are, you know, you're buying a pound and you're selling for 5 or £10, you know, you know, do you have any? Well, maybe not. So how are we gonna get them? Where are they? How are you gonna figure that out? Are they certain? You know, it's not as easy to me saying that. It's not that it's not that straightforward, but relationships have we got with manufacturers as a, you know, through that supply line where or actual factories as as opposed to it's been passed four times before you're getting access to it and then having, it's not just working with the factories, it's then having a damn good relationship with those factories. When's the last time you went out to your factory in wherever it may be, you know, China's an obvious option, but, you know, when's the last time you went out there and made sure that, you know, I know when I went out to China for the first time, I saved about $200 a year from that visit. you know, because, you know, we thought we were getting a good deal where we weren't, you know, we were making good margin and the difference that made to my business, you know, having a having a, what's the word I'm looking for? I, IPO International Purchasing Office in China. I had, probably 15 years ago. had somebody on the ground out there, you know, that was going into our going into factories every day or work every week and, you know, the difference between buying something for £50 on it for £600, which is what we were doing. You know, it didn't last too long because every, you know, when there's a lot of margin at play, you know, people jump on don't make, but, it lasted a while. That was did that was digital photo frames that if you remember those back in the day about 5 probably 10, 12 years ago, Yeah.

Matt Remuzzi [00:14:56]:

Yeah. I think it's, it it really is like old school business. You know, if if you put in the effort, if you make the effort to figure out how to make your product the best in its category. If you take the time to get to know your suppliers, shop around. Don't take the first price, the first person who offers you an MoQ that you can live with, you know, but really understand the supply chain. Shop around. Get to know your manufacturer and really understand it, put the effort in, you can do very well. If you're just hoping to sit at home with a laptop and buy some cheap from Alibaba and flip it around on Amazon and make a nice spread. Yeah. You know, that that's the that's not going to last. It it worked somewhat 10 years ago just because Amazon was still a wide open space in a lot of product categories. This hadn't been filled yet, so you could be number 1. But now things have changed. There's, you know, everybody knows about ecommerce. Everybody knows how to set up a store and sell things. So you have to have something unique, something special, some reason for a customer to pick your product over the 700 other choices that they have, and still at a price that allows you a margin to be profitable and operate. So it's back to really business 101. Good product. Know your customer. Work the supply chain. get the margins to be there. Know what your margins are. It's funny how many people I talk to say, you know, Matt, we're we're selling about a $1,000,000 a year a $1,000,000 a year of turnover. I'm not sure if I'm making money or not. Oh. That's so common. You have to know that.

Richard Hill [00:16:30]:

Yeah. Vegas of belief, you know, then. So, okay, so guys that are listening now, you know, I would say that majority of our listeners are running multimillion dollar you know, sites, businesses, you know, with multiple employees, locat physical locations, you know, staff. not everybody, you know, but that's you know, the, you know, obviously, we've got a good feel for who's listening in. but in terms of, you know, those guys, when it comes to costs and savings, what what advice would you give them around cutting costs? You know, it's not always about cutting costs, but I think let's just take take that that it is right now. You know, we wanna Well, I'll list this to be able to sort of, pause the tape if you will and go, right. Okay. That's a very actionable cost exercise. What would you say to that?

Matt Remuzzi [00:17:16]:

Right. I mean, and I just recently, we did a YouTube video on this of 6 ways to cut costs just on your cost of goods sold. And, obviously, the cost of goods sold, like we've just been saying, know, that's often the single biggest cost that your business has. Right? Aside from potentially Amazon fees, if you're doing fulfillment by Amazon, right, that could be 40 percent or more of of every dollar that, you know, of revenue, but the single biggest controllable cost that you generally have is your cost of sold. So I always suggest that's the place to start. That's where you're gonna see the biggest savings. If you were able to save 20% on your cost of goods sold. Let's say you're buying a product for $5. Now you figure out how you can get it for 4, that's gonna have a tremendous impact on your bottom line. And there and there's so many different things you can look at. You can look at packaging. Right? Maybe you you spend a lot on packaging, but, really, people would be happy with a poly bag. Right? They don't care. Yeah. Or, you know, you haven't again tried different sources. Maybe the material in the product or maybe the size and weight could be altered. So you get into a or shipping category. Yeah. Maybe there's a way to bundle things, you know, and and adjust. Right? So you sell 1, at at a double markup, but if you bundle 3 together, people might be willing, you know, so playing with that kind of stuff, all those different levers can pull on cost of goods sold. It really can have a big impact. And then the other big place that people, you know, have potential for savings is in their ad spend. We see a lot of wasted ad spend. A lot of people bidding top dollar on their own brand name when organic searches would have brought them you know, the same traffic or or ad spend, you know, spending literally 1000 of dollars never had a single click on that keyword. Yeah. Okay. Let me cut that out. So I think there's frequently room there to save on ad spend and cost of goods sold. The those 2 are great. And if you've got those

Richard Hill [00:19:13]:

dialed in and perfect, then you can look at some of the other marketing and insurance and overhead and VAs. But the the cost savings for the effort there generally doesn't pay nearly as well. Yeah. It's just getting your cost of goods sold down and your ad spent. Yeah. 1000 of dollars a month for, yeah, I see. Yeah. And as you say, you've got that, you know, the typical bills that every business has, you know, like you say, you know, the insurance, the list of that, the, you know, the but I think what I also, I think, you know, the amount of sort subscriptions that firms generally have that they haven't maybe logged in to for 6 months, doing a subscriptions audit, especially in the eCom space. because we all try. I'll just try that for 14 days. Oh, I forgot. My credit card was in that one at $9997. Fast forward a year. You've got 5 of them. One of them is $400 a month. you're doing $10 a year on things you've never logged into, you know, and then, you know, you can obviously get, you know, if the things you do use and you you've you've committed to them, you can usually shave 20, 30, 40% off if you if you pay for a year upfront type thing and a Black Friday deal. You know, it's all it's all small change in a way, but it's surprising, I think. You do do you find when you're sort of you take an eye on your client you know, you can go, oh, god. Yeah. They're paying for that. They're paying for that. They'd probably never use that. I never use that.

Matt Remuzzi [00:20:30]:

Yes. We do we definitely see that subscription bloat for sure. Yeah. And and another place we see is a lot of people sign up for, you know, various gurus and forums and mass your minds and so on. And you see $500 a month, 9.97 a month, 25100 a month. And they go, oh, I haven't been in that group in 6 months. Well, you gave him $12,000. It's maybe time to cancel.

Richard Hill [00:20:57]:

Yeah. There's a couple of quid, isn't it? Yeah. I mean, There's so many shiny objects out there, isn't there in terms of, like you say, the different courses, the masterminds, etcetera. yeah. Yeah. Okay. So, okay. So, obviously, dealing with a lot of eCom stores, you know, what would you say are the are the usual things that you see around, growth, you know, the challenges they have around growth. So, obviously, you you take a store on, you know, there's usually art where I think you tell me if I'm wrong or you is differing. but, you know, there's like these plateaus, you know, we need to get to that 1,000,000, right? We've got up to a 1,000,000. Now we need to get to the there's 2 or 5 you know, an operator business that's doing, you know, a few $100 to operate a in a business that's doing 10 mil. There's a lot of different things that need to be in place. You know, what are some of the biggest challenges you see your clients, and your experience, what they're facing around grow that growth piece.

Matt Remuzzi [00:21:52]:

Oh, a lot of the a lot of the people who struggle with growth. One of the areas that I see them having questions around is is they look at well, maybe we need to expand to different platforms. Right? Maybe they're primarily Amazon, and they think, well, what if we go to Walmart or what if we go to Shopify, direct to to consumer play, or what if we're, you know, we're predominantly, let's say, US Should we start selling in the UK and the EU? And I think sometimes that can work if you've got the right product and you've got the right strategy there. But a lot of times, I think they imagine that, well, you know, the EU, there's another 300,000,000 people there. Let's just turn on the EU market. Well, those consumers are not the same as the US consumers. 1, the not every US consumer is the same, but the EU is that times a 100, right, because there's they're all different countries, different cultures, different languages, you know, different preferences and things. And to imagine that you just send a bunch of inventory over to the EU and suddenly, you know, double your sales from the US. It just doesn't happen that way. Yeah. And there's, you know, things like that that, you know, they take some thinking. Well, I have to consider my pricing strategy because that comes out of the price instead of sales tax here in the US where we added on. So it's just I I think a lot of people will hit that plateau. Like you said, a 1,000,002,000,000, and then they they look around and go, oh, well, we could sell here. We could sell there. We could have this platform. Yeah. It's it that's not really, how it how it works. I think the better strategy for growth is to look at what products are you selling, what customers are buying those, and then how do you build out that ecosystem If you're selling a kitchen knife and that's doing well for you, then maybe instead of trying to sell the knife in the EU, you look at a cutting board or, you know, other kitchen utensils and you build a brand where you can cross sell and where people now are searching for your brand and finding, oh, they have not just knives, but they have this and that. And the other thing that's all sort of in the same family, and I'm the kind of customer that you know, wants a high end knife set, but I also want a high end cutting board and a high end, whatever. Yeah. It's understanding the customer and then adding on to what they're already happy to buy from you in a in a successful way, but also making very sure that each product that you add to the mix stands on its own. Right? One of the other things I see is people adding all kinds of extra SKUs, but those SKUs actually end up costing them either because they sell so slowly or they have to sell them at a price that doesn't make sense. And they'll have a 100 SKUs, but only three that make them any money. But now they've tied up all kinds of inventory,

Richard Hill [00:24:42]:

and capital in products that aren't really moving. So -- Yeah. -- those are the growth challenges that I frequently see. 1 is what, where do we go to sell more? Yeah.
Matt Remuzzi [00:25:32]:

Yeah. I was just gonna say, that you know, I think figuring out what platforms to sell on is a challenge and has to be carefully thought through strategy. Don't just throw money into various platforms or various markets, assuming it'll work the same as the current. And then the better strategy is to really think about who your customer is and let them help drive the decision on what products you add to your mix -- Yeah. -- because they're already buying something from you. that's the place to kind of build from. Yeah.

Richard Hill [00:26:06]:

No. I I completely completely agree. I think you're differentiating on you as well. You know, you're you're becoming a sort of, potentially a category of 1 or you're, you know, you're you know, there's box shifting, you're building the brand, you're building the loyalty, the average customer value, the lifetime, you know, the the returns, the record, the return of customers, the the reputation, the, recommendation, the lifetime value, you know, all the C VO elements, you know, and they're not just buying that cheap set of knives to come into you because you've got a better brand, ideally, a better quality. You know, it's a lot of things there. but in theory a lot more margin, and they're coming in black. Yeah. That that brand piece. I think it just get I do think a lot of sites, they sort of you know, they're, they spend all that focus on sort of just buying a lot of boxes, if you like. and and they're, you know, and they might not spend the $5 that's needed to actually spend some money on design and brand and all the whatever, you know, whatever scale you're at, 5, 10, 20 grand on. you know, the the copywriting, the brand story, the the quality packaging, the experience, you know, the customized packaging, the you know, the customized packaging that changes on every order based on where you are in the loyalty program type thing. Yeah. Rather than the boxes. So I guess there's a lot of things we could cover on this one, but I'm really keen, you know, so, okay, we we've we've talked about things around sort of, saving cut cutting costs. Sorry. But, you know, I've been I've run a business all my life. Never had a job, apart from, like, as a kid sort of thing, you know, well, worked, putting jamming doughnuts when I was about 16. Right? So I said, I worked for a Chinese takeaway when I was seventeen. That was fantastic. Actually, for Chinese for 2 years. But, you know, I've run a business for quite some time. Most of my friends run businesses and, some key key things and key levers, I think, in in running a business, in my opinion, but I'm gonna get your take on it. So profit, you know, money in the bank you know, you're dealing with all these eCom stores and, profit you know, is, is quite a keyword, you know, in in any business, you know, and the profit, cash flow, obviously, very different things, but ultimately, So what would you say to all this is about profit, you know, profit in your business, you know, and and having good profits in in a business? What are something that, you know, talk step us through that?

Matt Remuzzi [00:28:57]:

Yeah. I I mean, to me, the profitability of your business, the margin that you can achieve with it, is the single most important thing to focus on because a good profit margin covers a lot of sins. Right? You can make a lot of mistakes. You can try a lot of different things. You can you can, you know, last through a lot of down cycles if you've got a good margin. And on the flip side, if you're somebody doing 10,000,000 or $50,000,000 in revenue, but only with 2 or 3% margins, it only takes 1 bad cycle, 1 few, you know, a few bad months to turn that entire thing upside down and really you know, potentially threaten the the existence of the business. So to me, you know, I would much rather have a business with a $1,000,000 in revenue and 20 percent profit margin than a $10,000,000 business with 2% profit margin. It's the same dollars but I just have so much more cushion and and room to maneuver if I'm making a better margin. And so step 1 is know what your margin is. Right? And, again, I I'm constantly surprised talking to people who are sellers in the 7 figure range, and I even even run into a couple 8 figure sellers who really weren't clear what their margin was, what their numbers were, and it just mind boggling to me that you wouldn't know that. But, a, know what that is. Track it monthly and then make sure that you at least maintain it if not constantly work to keep growing it because, believe me, every other force in the world is working to shrink. So if you're not working to grow it, it will on its own shrink to 0 before you know it. So, you know, know what it is. Keep an eye on it and then work to continually if nothing else maintain it. But ideally continue to grow it. What can we add? How do we bundle? How do we re price? How do we market so that we can get more for each product that we sell? not competing on, well, that guy lowered his price. And now we've gotta lower our price. So then another guy came in with an even lower price, and here we go. And pretty soon. We're making 5¢ per product, and it it doesn't it doesn't work. So profit to me all else being equal profit is the key differentiator between a successful long term growing business and the opposite of that.

Richard Hill [00:31:29]:

So you've got a good profit in your business. In theory, then you've got cash in your business. What advice would you give to our listeners about? What to do with that cash? Now it's a quite broad question, so maybe tying up a little bit. you know, you've got a nice, you know, you know, a few $100 or more, you know, maybe a 1,000,000 or a few 100 k in the bank as a as a listener. you know, is there advice around divvying that money into various parts maybe, or or and various things that you would do with that? know, what would you say to, obviously, you're dealing without literally thousands of eCom stores and and customers and clients, you know, obviously, some will have no money, you know. Right. That's that's some will have, you know, as we've said, 100 and that a 1,000,000 in the bank sort of thing. What advice would you give where should our car our listeners be trying to get to with that cash?

Matt Remuzzi [00:32:21]:

Right. I I mean, I would say there's there's 2 key buckets that you wanna keep some money in both at all times. One is your sort of safety backup rainy day fund. Right? You wanna be able to have some spare in the event something happens. We had a client a few years ago who ordered, I forget, 20,030,000 units, some huge number for some big launch they were doing, and it turned out it was as a product that plugged into the wall. And somehow at the factory, they had installed every single plug backwards so it wouldn't work when you plugged it in. So they had to literally have a team of people open every box, open every product, take it out, pull it out, turn it around, put it back in. Otherwise, if if they hadn't done that, literally the entire batch of inventory would just go to the dump. So, you know, if you didn't if you were down to your last $10, betting everything on the success of that launch and something like that happened. Now you've lost everything. So having a a reserve fund and emergency fund is really critical to being able to avoid those kinds of disasters. And then on the other end, I think any smart business owner always has some money set aside for testing the next thing. Whether it's a a different ad campaign, a new product, you know, whatever it is, even diversifying into another product line, a different brand, you always have to be kind of thinking about growth and the next step because what you build today Again, it it's always sort of like a a boat with a hole in it. Right? It's always slowly sinking. So you gotta be bailing it out, building a bigger boat, continuing to grow because, you know, just on inflation, right, things go up between 2% 8% every year. All the costs. So if you're not selling more just to keep up. You're not even standing still. You're going backwards. Yeah. So an emergency fund on the one hand and an investment in future growth on the other hand. Yeah. And and then the middle part, you know, occasionally take a day off and enjoy life Right? There's gotta have a little work life balance. you know, do do some fun stuff outside of business, but you sort of advise,

Richard Hill [00:34:38]:

your clients to have, like, separate various bank accounts where percentages are going in, you know, like the profit first sort of, framework if you like where you're putting, you know, with tax bill come, there's not a surprise because you've got the money sitting in another account on an automatic basis. You know, in the UK, you've got obviously, there's corporation tax, there's VAT, obviously, depending on where you're listing different taxes, 2 different accounts, maybe where you put in your 2% of turnover on automatic direct debit for your VAT or, obviously, that's 20%. But, you know, you're gonna be buying things as well, should be claiming some back. But, you know, tax account, bad account, you know, corporation tax, sorry, bad account. savings account, as you said, you know, tested accounts. I'm gonna 3, 4 accounts. Is that something you sort of are you an advocate of that?

Matt Remuzzi [00:35:24]:

It it depends on the individual, really. Some people, you know, if you've got your your numbers together, your bookkeeping is solid. You're a numbers kind of person, then you may not need that extra help. Right? because you've just got a good eye on it. You know, what you should have and what you can spend and what you can't. Other people are not as disciplined and they kind of, you know, they'll tell me very honestly. Look, if it's in the checking I'm gonna spend it for those folks. Absolutely. Break it out. You might just have an automatic transfer automatic debt, but that way you don't get to its tax day or this due is due or that's due. And I have, you know, I'm out. So It it depends on, you know yeah. Right. Know yourself. If you know that you're not good with that kind of thing, then absolutely setting up a few extra accounts is a brilliant idea. if you're but if you don't need that kind of discipline, you've already got it, then that's sort of a crutch that, you know, it doesn't hurt, but you don't probably need to do it. It just depends on the person. Yeah. I I I am. I'm thinking of all sorts of people that I know now, and if some people have the tendency to wake up in the morning, lay open there

Richard Hill [00:36:31]:

at, you know, banking app. Oh, we got, you know, arbitrary number, 100 k, whatever it is in the current. Cool. We've got a hundred grand. no. No. No. No. You were you owe 85. You owe the tax man 20 and you got 15 for this and new wages are due in 3 days. You know, hang on a minute. You're actually -40.

Matt Remuzzi [00:36:50]:

Yeah.

Richard Hill [00:36:52]:

Yeah. Right. Yeah. So, okay, brilliant. Now I think the top I'm really keen to just touch on beef, as as we come into a class would be, you know, what really what is your sort of experience at the moment in the appetite for of exits in the e commerce space. You know, there'll be a lot of people that may have thought about exiting and selling their eCom business. you know, it's not something, we've spoken about on the on the podcast before specifically. You know, I've sold a few businesses or a couple of 2 businesses over the years. some time ago now, you know, there's different schools of thought, and, you know, we can talk could do probably 2 episodes on it alone, but What's the appetite? What's your sort of senses at the moment around the appetite for it? and any advice you would give to the listeners around, you know, if they're what, if they want to prepare for exiting?

Matt Remuzzi [00:37:39]:

Yeah. So, I mean, we've done it about 400 exits with our clients over the last 3 years. So it's a space we're very familiar with. Yeah. And it it's definitely tightened up in the last year, 18 months because of the, you know, in the early days, aggregators are buying a lot. They basically you know, take a very cursory look at the business and throw out a very generous offer. And the people who sold then, I think, for the most part, did pretty well. that environment has changed a lot because a lot of those aggregators find out what they bought was really just sort of a commodity business. Nothing special going on, and and sales declined over time. They had no way to fix that. There are still lots and lots of buyers out there that are looking for business, but what they're looking for is like we've been talking out the whole hour here is something that's differentiated. It has some brand strength. It has some some reason for customers to come back to it. So My advice to somebody who's thinking about an exit is, 1, again, make sure your books are in order. If your financials don't make the case that the business is profitable and successful, you're not gonna get nearly as good of a price as if you could show that with accurate accrual based financials. But to work on the business itself. Right? Get rid of those underperforming skews or money losing skews. Clean up those ad campaigns. Do the best you can to optimize your cost of goods sold and really streamline the organization. Make it something that it seems like a buyer would have an easy time to take over. if you run the business, like, kind of, you know, every day is a new day kind of fire drill environment, buyers get nervous and they say, well, there's a lot of chaos here, and I don't I don't trust what the future would hold for this. So -- Yeah. -- they wanna they wanna feel confident taking over a well oiled machine So make it a well oiled machine, and you'll have a much, you know, there there's always buyers for quality business no matter what the, you know, economy is doing, things are up, things are down, there's always buyers for a quality business. So you just wanna make sure your business falls into quality business category. And if you have questions about specifically, what should I do? What does that look like for me? I'm happy to have those individual conversations, but Yeah. It it there's definitely buyers out there, but you have to have something they wanna buy.

Richard Hill [00:40:01]:

So I think, you know, you're giving about 15, 20 ideas through the last sort of circa 45, 50 minutes and all those things will improve your valuation is the is the is the obviously, we won't get we won't get into the sort of EBITDA on the multipliers, but all those things, you know, ultimately, they're gonna improve those numbers, aren't they? You know, you're gonna be more profitable and more attractive to me, to potential buyers. Yeah. Okay. Well, Matt, it's been an absolute pleasure having you on the show. for I always like to finish every episode with a book recommendation. Do you have a book to recommend to our listeners?

Matt Remuzzi [00:40:36]:

Yeah. It and oldie, but goodie, you've probably heard it before, but I am a big believer in the e myth book, by Michael Gerber. Yeah. it's a little outdated at this point, the examples are a little, you know, silly, but the underlying fundamentals of create processes for your business, run your business via a set of systems. Yeah. And then continuously look at them and continuously improve them, I think, is fantastic stick advice. Most of us come into entrepreneurship without a business background, without any prior experience. and it's easy to fall into a certain amount of chaos and just sort of feeling overwhelmed. And I don't know what to do. The whole E myth idea is that you start from the beginning and just document. This is how we do this. This is how we do that. Set up a system. The beauty of that is then you can delegate to a VA or an employee, expect consistent results, set performance metrics for them, monitor it, And have your business again run like a well oiled machine instead of if you're the only one that knows how to do a lot of the key functions as the owner, and then you're out sick or you wanna take a vacation, you know, you can imagine the problems that ensue. What you wanna be is somebody that is able to delegate all those things. and still get the results you would have gotten if you'd done it yourself. That's what that book is about, and I think it just helps with the mindset of setting up process and systems in your business and the benefits that come from taking the the time to do that.

Richard Hill [00:42:10]:

Just think about, you know, if you want to take a month off work right now, could you do that? And we'll leave you with thought. So thanks for coming on the show. for those who wanna find out more about, yourself, Matt, and CapForge, what's the best way to do that?

Matt Remuzzi [00:42:25]:

Sure. So the best way to find us is just go right to the website capforge.com. It's got all the information about us, the team, the services we offer things that we can help with. There's also a ton of good information on our blog and our YouTube channel, instagram, all that good stuff, but you can find all that from the website. And, you know, that's what I would recommend people go. And then if you wanna get in touch, you can use the contact form or just give us call at the office. We're here. So, and I would encourage anybody to, you know, reach out or happy to have a conversation with anybody just to kinda see if we're we're even somebody that they may wanna benefit from. Yep. That's fantastic. We'll we'll we'll link all those,

Richard Hill [00:43:06]:

places up as well. Well, thanks for coming on the show, and I'll speak to you again another day. Yeah. Thanks for having me. Take care. Bye bye. Bye.