Optimizing Small Business Finances with Melissa Broughton
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Effective financial management can be a game-changer for businesses of any size, especially small ones. In 2017, Melissa Broughton founded Busy Bee Advisors and the innovative 1-Hour Bookkeeper course to make bookkeeping, accounting, and tax services accessible and manageable for entrepreneurs.
With her new book, The 4-Hour Bookkeeper, Melissa shares practical strategies to help business owners optimize their financial processes — in four hours or less.
In this interview, Melissa discusses the mission behind her services, the tools and insights that set her approach apart, and valuable advice for small business owners striving for financial stability and growth.
In this article
Mission and vision
Joy Wallet: Can you explain the core mission of Busy Bee Advisors and how it guides your daily operations?
Melissa: The mission of Busy Bee Advisors is to create an easy and accessible way for small businesses to have clean and clear financials. Our daily operations involve data entry and connecting with clients to ensure the service we provide is the most helpful and efficient as it can be.
Filling a market need
Joy Wallet: What motivated you to launch the 1-Hour Bookkeeper, and what gaps in the market does it aim to fill?
Melissa: We started Busy Bee Advisors in 2017, and we experienced crazy growth. People will say, "Wow, that's a tough problem to have." It was, though, because we were committed to our clients, and we wanted to have the time to meet with each of them. We didn't want to be a one-size-fits-all kind of bookkeeping firm.
The biggest challenge that I faced was when we started trying to scale and go big. At one point, before the pandemic, we had, I think, 27 bookkeepers working for us, and when you have so many bookkeepers, you need somebody to manage all of them. When I started to look around at the scale for us to grow our firm, we had two challenges. There were two choices. We could continue looking for that management person and hire new bookkeepers or open additional locations, even if that looked like franchising.
We did look into the franchising model — it's quite expensive and litigious, and I'm incredibly impatient. Getting everything started and running would have meant that I had to step away from our firm, so I was still in the same position of having to find one or, most likely, two managers to replace me. Also, it was estimated it'd take about two years just to get everything documented and have it reviewed by attorneys.
When we looked at the cost, we were looking at about $250,000 that we would have to invest. I love that you hear that number and think, "We have $250,000; I'll just look on the couch," but that's a lot of money. We have an older son who is in the Marine Corps and will, at some point, be getting out, and we want to be as financially supportive of him as possible. I'm assuming that there'll be a wedding or something in the future that we would like to be able to cover the cost of. We also have a younger son who's still in high school and has college plans. There are scholarships available to him, but college is expensive. So, all these not-so-distant future things will potentially cost a significant amount of money. That's why we didn't want that large sum tied up into something that could fall flat on its face.
My team and I spent a lot of time investigating whether other firms were doing this. There's no other chain of franchise-based bookkeeping firms out there, at least not in the United States. I would love it if I were the most brilliant person in the room to come up with this new idea that nobody's ever thought about. However, one of the things that the franchise attorney I was working with warned me about is that once you start being a disruptor in an industry, you have to hit it and hit it fast. I wasn't able to do that. What happens if nobody comes?
However, we still needed bookkeepers, no matter the situation. That was back in 2018, so pre-pandemic. We had probably 50 to 75 inquiries in a month from clients looking for bookkeeping services. Every time I would put the requests for new bookkeepers or post jobs, I got people who were stay-at-home moms or dads or military personnel.
I guess that pulled on my heart. My son's a military member and a service person. It's really hard not to think of him as this little boy in his little military Halloween costume that I have a picture of in my office. I feel for these people who put their lives on the line for our country. In many cases, when they get out, unless they decide to go back to school, they're limited to working at a retail store or another job where they won't make any progress.
We were training probably five to seven bookkeepers a month at that time, and we developed an automated training program to show them our process. Then, I thought, "What if I could help them to turn this into a business?" I wanted to be able to give back and help people. That's why we started the 1-Hour Bookkeeper course. It took a few years to put everything down, and there were lots of starts and stops because, at the same time, we were still running a very busy bookkeeping and tax firm.
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Customized bookkeeping
Joy Wallet: How do you tailor your bookkeeping services to meet the unique needs of different small businesses?
Melissa: That's a good question. So, although we don't attempt to be a one-size-fits-all bookkeeping firm, I will say this — money is money. I get a lot of pushback on this. I've got some haters out there who are in the bookkeeping or financial services space and get angry when I say this, but money is money. Income comes in, and expenses go out, and it's a matter of capturing the money from all of the different sources it comes in and goes out from and turning that into clear and easy-to-comprehend financial data for your clients.
In one way, yes, we do understand that everybody's business is unique, but in truth, bookkeeping is always bookkeeping, and it really does become a one-size-fits-all situation — you go through the process and do the same thing for every client. One client may have 25 transactions in a month, and another may have 25,000 transactions in a month, but the process doesn't change. So, as far as tailoring our process on the backend, we don't change what we do. It's just a matter of allowing enough time for the volume of transactions.
Avoiding pitfalls
Joy Wallet: What are the most common financial pitfalls you see small businesses encounter, and how do you help them avoid these?
Melissa: I love this question, and it's kind of a two-parter.
Our firm learned through the pandemic that the difference between a company surviving and a company having to close their doors was them not only knowing their financials but being able to adjust and adjust quickly. Unless you've got some seriously deep pockets, you don't get to wait six months to look at your numbers and realize your pricing, processes, or business model is not working. That's just not a luxury that most business owners have. We saw with our clients during the pandemic that by having accurate financials, they could look at their numbers in a relatively quick turnaround time, make decisions based on that data, and focus their attention on the products or services that are making them money. That's in the day-to-day operations.
In the bigger-picture thinking, if we talk about taxes, every business owner wants to know if they will have a huge tax bill or have one coming up. Your tax professionals are only as good as the financial information you provide them. So, if you reach out to your tax professional two days before the tax deadline and your books are a disaster, you won't get the best work out of them.
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Financial health impact
Joy Wallet: In your experience, how does accurate bookkeeping influence a small business’s overall financial health?
Melissa: This ties in with the previous question. It's how business owners can make informed decisions for their business.
Let's say we have a client who's in the remodel industry. They have houses purchased for short-term rentals, and their overhead is very low. They also have houses that they buy and flip. In their mind, they're making more money from the houses that they're flipping. Well, they're not. They actually make more of a profit on the houses that they're renting out. There's no overhead, and there are no constant repairs, as well as parts and supplies that need to be ordered. When they decide to grow their business, if they don't see the numbers, they may be more inclined to jump into the part they think is getting them larger dollar checks (selling the properties) vs. the rentals, which are a far more profitable side of the business.
If you don't have the numbers, it becomes gut feelings, and we really shouldn't be making decisions based on our emotions. My grandma used to say, "Don't make a decision when you're mad." You have to make sure you have the facts to back it up, and we give business owners the facts to back it up.
Tools of the trade
Joy Wallet: Can you describe the technology and tools you utilize in your bookkeeping and tax services?
Melissa: We rely heavily on Monday, which is a project management tool that helps assign tasks to our staff, creates an easy place to communicate, and keeps everyone on track. The software accounting program we use and love is QuickBooks Online. QuickBooks allows our clients and us to be in on their accounts at the same time, making it easy for us to have real-time access for both our clients and us during meetings. The third we use is a cloud-based storage system like Dropbox. It's excellent for when you're smaller. If you grow, there are certainly other ones out there, but they come with a price tag.
Initial consultations
Joy Wallet: How do you approach the initial consultation with a new client? What key information do you seek?
Melissa: We were big game changers in bookkeeping, which I did not set out to be. If we're providing financial services that affect a company's finances, I didn't want to have to bill clients hourly. I also didn't want to be penalized if I or my team became faster at doing their job. The first month with a client, it takes you maybe five hours to do their books, but the second month, it takes you two hours. Well, you've just lost three hours of income. So why am I penalized financially for becoming better at my job? If you embrace technology, you become even faster at doing your job.
With those two things in mind, I didn't want to trade time for money and deal with hourly billing. Now, we do have things that we bill hourly for, but for the majority of things, I didn't want that. I wanted to set up a flat-rate pricing. The easiest way I came up with, which is still working for us today, was to be able to base the pricing on something. So, what could we base it on? What worked for us was basing it on the number of financial-related accounts that clients use for their business (checking, savings, credit cards).
When we have an initial consultation with our clients, we ask them how many accounts they have for their business. As soon as they tell us, we'll ask one more question — how do they track their financial data? Do they use QuickBooks online, a spreadsheet, or even nothing?
When they use QuickBooks, it's fabulous because that's the program we use. Once you connect those financial accounts, everything is downloaded automatically. When people use an Excel spreadsheet, there's so much time manually spent re-entering the information month after month. The "nothing" answer is always interesting because it makes me feel bad for them since preparing for their taxes has to be horrible.
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Client education
Joy Wallet: What role does client education play in your services, and how do you implement it?
Melissa: When I started my business, I thought I would be teaching more to clients than I actually do. I felt like I would have these great conversations with clients every month to review their books with them, and what I can tell you is that does not happen. Most clients are so busy with their businesses that they don't have time for those monthly calls, even if they are interested in their financials. Now, some clients can take at least an hour of time every month, and we enjoy having those conversations with them and helping them understand each aspect of their finances. We compare their budget to their spending (which is what larger companies do).
Our objective is to keep working behind the scenes, collect those statements every month, do the reconciliations, and provide financial reports to the clients. Then, when they get a chance to review their financials, they can schedule a call with us to review them, where we explain what the different things mean. I think a profit-loss for most people is pretty straightforward — income is on the top, and expenses are on the bottom. What takes a little bit more time to explain to clients is the balance sheet, what that means, and how that affects a business.
Foundational insights
Joy Wallet: How has your background influenced your approach to bookkeeping and tax strategy?
Melissa: Bookkeeping is in my genes! I come from a long line of bookkeepers. My mom was a bookkeeper for a bank back in the day when everything was manual. I remember sitting under her desk (I must've been sick or had a holiday from school, and I had to be young because I fit under her desk), and all that paper tape was flowing down from the calculators. It was a magical experience. God, those are some of my favorite memories! Now, I don't know that everybody feels that way about it, but that was my first exposure to bookkeeping.
I later realized that being able to understand numbers, explain them to less number-savvy people, and help them understand is like my superpower.
Debunking tax myths
Joy Wallet: What are some common misconceptions small business owners have about taxes?
Melissa: There are quite a few, but I think the biggest one is thinking there's absolutely nothing you can do to influence your taxes.
A lot of what I have been talking about is bookkeeping, but there are two sides to our firm. I happen to be lucky enough to have the best partner in the world — my husband, Eric. He runs the tax side of our business, and I run the bookkeeping and the bookkeeping team's side of our business. I have people asking how it is to work with my husband. I think it's a gift. We've been happily married for over 20 years. We raise kids and run a household together. It's a pretty beautiful thing. Why not run a business together? However, we are two very strong personalities. One of the things that we realized when he left nursing to come to work with me was that there needed to be a little bit of a separation of church and state because there are occasionally times when we don't agree. How boring would life be if we just agreed on everything?
Back to the point — as a small business owner, you have some impact on your taxes, and the biggest thing you can do to affect that is to work with a tax professional you feel comfortable talking to. As women, especially, we're used to financial professionals who pat us on our heads and say, "You're so cute. You've got this cute little business. Don't ask too many questions. Just trust the guys on this." That certainly didn't work for me, definitely didn't work for my mom, and definitely didn't work for my grandmother (again, there's this long line of strong women that I come from). We understand that the tax system is a little bit broken. I can go off on a tangent about that, but that'll take us down a rabbit hole. But I will say this — we are different in how we approach taxes, just like we're different in how we approach bookkeeping.
When we decided to start the tax part of our practice, we wanted to be able to work with our clients throughout the year. That means that most tax professionals meet with their clients after the year has passed. However, we believe in working with our clients throughout the year so that we can advise them how they can do what they want to do but with the most positive tax impact possible. Some of my favorite phone calls are when clients reach out to us and ask us how to do something to benefit their business and reduce their tax liability.
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Starting off right
Joy Wallet: How do you assess a business’s financial needs during the incorporation process?
Melissa: I think this is where the cookie-cutter side of things comes into place. If I have a prospective client who wants reconciliations every quarter or once or twice a year, I'll generally say that they're not a good fit for us. That's not our model. So, at the most basic level, we make the assumption for the client that we know best and that we know that they need financials on a monthly basis. We explain to them why we believe that. When there is pushback from prospective clients, it's usually because they're slightly intimidated because they don't know how to read or interpret financials. That's where the training comes into play, and there's some reassurance that we will walk them through the process so that they understand exactly what they're looking at.
Monitoring financial health
Joy Wallet: What are some key financial indicators that business owners should regularly monitor?
Melissa: Every business owner should have a budget. In business, a budget is not approached the same way as in personal finances.
For your personal finances, most people will put a budget together, and they think of a budget like a diet — it's to restrict your spending.
I think of a business budget as more of intentional spending. If I know what I want to get to, I need to figure out where I am at and then plan out a roadmap to how to get there. We've used that budget tactic to help growth. I think the highest level of growth I saw in a year was close to 80%. This was the case of an auto mechanic who looked at what was and what wasn't working in his business and removed the latter from his business altogether. It made more sense for him to stop offering something that took his guys an hour and focus on something else that took the same amount of time but had a 10 times larger profit margin. It made sense to him to refer those services he no longer offered to someone who did, and, in turn, they would recommend him for his specialty services.
Still, with the budget, if you don't have anything to compare it to, you're staring at a piece of paper, and that's an incomplete picture. You also want to look at a monthly profit and loss and a year-to-date profit and loss to see how it compares to your budget each month.
There are days when our businesses kick our butts. There are days when it's hard. There are days when I think even the most successful business owner starts to feel a little bit beaten up. Having that budget in place helps keep us on track and keeps the motivation going.
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Streamlining finances
Joy Wallet: What advice do you have for small business owners looking to streamline their financial management processes?
Melissa: If you feel you can dedicate about four hours a month to your bookkeeping, go for it. Reach out to us, and we'd be happy to train you. I've got a great book I released last year called The 4-Hour Bookkeeper, and it's all about teaching small business owners how to do their bookkeeping every month in about four hours, sometimes less.
But if you're honest with yourself and feel your time could be better spent doing other things, or if bookkeeping is just too overwhelming, I highly recommend reaching out and finding a good bookkeeper to handle your company's finances.
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