2X eCommerce Podcast

[00:00:00] A lot of our clients faced, a good issue, right? They were growing rapidly, right? And they had to keep up with growth. Then you saw 2022 interest rates are climbing, consumer spend declining I think, which is a big contributor to the downturn, in e coms.

So you're seeing, through COVID there's this peak and then there's a plateau and a slowdown with expected to slow down, hopefully later this year, I think that will potentially open up people's wallets a little bit more. Consumer spend might go up, 24, it's, it's anyone's guess, I would expect maybe a modest growth year, maybe a flat year.

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Yeah, no, it's great. I talked to a lot of fractional CFOs in the space. They're doing work with a lot of interesting companies. From my view, it's always good to get a different perspective on the business, right? Have an outsider come in, understand the business, even if it's working in a limited capacity, you get a, different viewpoint.

Just turnover just natural progression of a, of an accounting manager, a senior accountant, a controller leaving the business.

So [00:01:00] on today's episode, you're going to find out the impact of accounting and financing on e commerce funding. It's a great episode. You don't want to miss it. Do stay tuned. This is the 2x e commerce podcast. Hosted by Kunle Campbell. So welcome. Welcome to the 2x e commerce podcast show. I'm your host Kunle Campbell, and this is the podcast dedicated to rapid growth in online retail.

On today's episode, we're going to be talking about finance, capital raising, and e commerce funding. Simple. And who I brought on the show is a partner at Withem. His name is Loonie Bloom. And essentially. With them is a top 25 accounting firm in North America, and they tend to serve e commerce businesses that are raising capital.

I've raised capital from venture capital and have essentially very ambitious [00:02:00] targets in terms of markets, market share in whatever industries or niches or verticals they're operating in. The bits about loony is a partner, as I said, and he's a leading figure in their technology and emerging growth services in the group.

He has deep expertise in technology. and has been instrumental in advising some of the most notable names in the ad tech, digital media services, and e commerce and SaaS space. He's got extensive experience in compassing, tackling complex equity transactions, mastering revenue recognition issues, including nuance of ASC 606, and offering strategic insights on stock based compensation and software capitalization.

On this podcast, we talk about what your staff should look like from a people's standpoint from a process's standpoint and from a system standpoint, or with regards to [00:03:00] finance and capital raising, so from a people's standpoint, auditors, financial controllers from processes standpoint, how do you do your bookkeeping from a system standpoint?

What kind of software should you have to support it? What should you be doing pre seed? If you're raising capital pre seed, what should investors or VC investors expect from you financially? If if you want to raise money, you should essentially be, have certain things in stock, which we're going to talk about in this, in this episode.

So if you want to prepare yourself financially for a capital raise, it's not a two week thing. It's not a three week thing. Neither is it a three month thing. It's anything from six months to one year. And In this episode, you're going to learn how to prepare yourself six, 12 months in advance for that capital raise.

Right now, there's not much activity going on, in, in [00:04:00] finance, that there is activity, but not as it used to be. So now's the time to really prepare. And that's why this episode is, would be very ideal for you. So I should leave you here. And. Enjoy the episode, but before you go, you're listening to this podcast on some sort of platform.

It might be Apple podcast, it might be Spotify, it might be iHeartRadio, but whichever platform you're listening to this podcast, I ask you to do one thing. Just hit the follow button. Why? Because it increases our reach. The more followers we have on this podcast, the more you. the platforms serve or recommend it to other users like yourself.

And the more we can serve more people, the better guests we get. So please do that for now. Enjoy this episode with learning. I thoroughly enjoyed it. And I came out smarter from a capital raising standpoint, and I will be implementing some of his tips and strategies into what [00:05:00] we're doing at Octillion.

So I shall leave you now to enjoy this conversation. Cheers.

Hey Lonnie, welcome to the 2X eCommerce podcast. I've been looking forward to this conversation. Great for yeah, thanks for having me. I'm really excited to to join the podcast. Okay. So you're really deep into auditing. You're with a top 10 accounting firm in the States. And. Very specifically, you work with technology companies, DTC, e commerce brands.

Do you want to just give us your backstory up until now, how did you come to where you are now? Yeah, it's a good question. So yeah, I'm an audit partner at Witham, I've been with Witham for about 13 years. I'm a member of our technology emerging growth practice. And I co lead our e commerce sector.

I think I found accounting, at an early age, I really was interested in business. My first job in high school, I was a assistant bookkeeper at the Staten Island Yankees. If anyone's a New Yorker you might know the Staten Island Yankees also had a paper [00:06:00] route. My first experience teaching me, about client service was that, that first that paper route, that first paper route.

Work experience told me a lot about diligence and work ethic and, working as a bookkeeper for a number of years. It got me excited about learning the ins and outs of the business and accounting was pitched to me as, it's the backbone of a business, right?

You learn how a business operates, how a business makes money and what they're interested in from a financial perspective. So that's how I started found with them, right out of school, right out of college and kept finding reasons to stick around.

It gave me a lot of opportunities to to travel, work with different clients. And then eventually I found technology joined our technology emerging growth group, moved to New York from New Jersey and found e commerce from there. So e commerce sits under a technology umbrella. And it e commerce came naturally to me.

I was working on a lot of e commerce clients I found interest in working with clients where I was also a customer, which was, great. And I understood the [00:07:00] nuances around inventory, revenue recognition, some of the nuances that e coms face today from an accounting perspective.

What kind of e commerce brands work with them? Yeah, it's a good question. We work with, anywhere from, pre revenue small companies to large public companies. So we have a kind of run the full gamut. Our, I would say our bread and butter is around this series A, series B, 30 to 50 million top line revenue D to C or B to B, depending on the business and what the product is. But not only just true, e commerce of business selling products to customers. We also work with e comm enabling enablement companies. Think software SAS companies that, operate in the backend to support e commerce businesses.

So we run through, wide array of different clients that are in this space and interested in the topics that in the industry and what's happening in the industry. Okay. That's really smart. So it's the entire ecosystem the demand side and supply side in terms of the people who sell us the tools [00:08:00] and also actually do the work and build the brand from what I picked up from what you just said.

You, you're servicing funded companies, companies that are quite ambitious they're, they've done their seed round, they're going through their series A and series B and they need accountants. We'll jump into those specific needs, but With the economic downturn what's been the lay of the land from your perspective with them?

Because you're seeing the numbers, and as you said, that your accountant is the backbone. So what does the backbone look like right now in 2024? Yeah, it's interesting, post COVID, COVID really changed consumer behavior, right? I think going back to mid 2020 through the end of 2021, there were incredible peaks from an e commerce business perspective, right?

There was this huge surge. Consumers were stuck at home sitting on their couch, a little more disposable income because they're not, traveling, not going out. They're buying [00:09:00] goods online, right? A lot of our clients faced, a good issue, right?

They were growing rapidly, right? And they had to keep up with growth. Then you saw 2022 interest rates are climbing, consumer spend declining I think, which is a big contributor to the downturn, in e coms. So you're seeing, through COVID, there's this peak and then there's a plateau and a slowdown, right?

I think with. expected to slow down, hopefully later this year, I think that will potentially open up people's wallets a little bit more. Consumer spend might go up, 24, it's, it's anyone's guess, I would expect maybe a modest growth year, maybe a flat year, but we're seeing those macro trends or e coms are facing challenges, right?

And I think from a consumer perspective, expectations are higher, right? The through COVID, a lot of different brands came out and really thrived, right? So consumers are, or these brands are facing expectations that Amazon built, right? Consumers expecting same day delivery, free shipping, [00:10:00] personalization sustainability You name it.

So it's it's really competitive out there. And that's what kind of retailers have to do to, make sure they're touching on all those points to, to stay competitive and have the accounting needs change from the Covid peak in 21, 22 to now in 24. What sort of financial needs to, are they coming to you for restructures?

Yeah. When you're growing rapidly, you're probably getting more capital infusion. More investors, more mature investors. And when you have more mature investors and, banks, if you're raising debt, debt financing more people are looking at your financial statements, and if you two X or three X or even 10 X your, financial has become a bigger topic of conversation. So accounting needs, there's always tax compliance, even, early stage companies, you need to be compliant. Sales tax, that, that's a big hot [00:11:00] topic, making sure you're compliant.

Companies went from being a small e commerce company to then overnight selling in 50 states, and to be compliant from a sales tax perspective there's this idea of nexus of, having presence in, in different states not only physical presence. But if you're, doing business in those states even remotely, or if you have an employee in the state, so there's different rules in different states that require compliance from a sales tax perspective and also a corporate tax perspective.

So understanding the needs around that, with these companies that grow overnight it's a lot of catch up, right? A lot of catching up to make sure they have the right advisors in place, right? So the right software. And that's where, we come into play, right? We help with you getting tax compliant, corporate taxes, sales tax.

We help with, understanding your financial statements, consulting on a number of accounting issues and helping you prepare financial statements if you're going to need to, need an audit. And an audit requirement could come from the bank, could come [00:12:00] from investors. So it really depends on the size and complexity of the company.

We're going to speak about audits a little while. Cause we're having conversations in our companies about, in our company about audits. Digging deep into your portfolio of clients and you don't need to mention names. What, Are thriving clients doing well, what are you seeing? Because you're privy to a lot of data.

Why do you think e commerce companies now in 2024 that are doing well are performing the way they're doing in comparison to the rest? Yeah, it's it's interesting. We see a lot of different brands, right? We see brands struggle. We see brands. Thrive and be successful, even in economic downturn.

A lot of it is the product. What is the product and how are product market fit, right? How are you delivering that product to the consumer? There's certain industries that, can sustain economic [00:13:00] downturn, we see a lot with, baby products, or, post COVID, beauty is a good industry that we see success in. It's, I think it's the, you have the right advisors, you have the right strategy and you are speaking to your consumer, right? You're not just trying to grow the business from a top line perspective.

It's. Understanding the consumer, making sure you're, addressing those expectations, right? Customization, personalization, a lot of our clients are utilizing softwares to use data analytics and AI to enhance that personalized shopping experience implementing customer loyalty programs, right?

Being creative to, to offer that, personalized content. And knowing how to, sell to their customers. And then once you obtain the customers, cost of acquiring a customer, that it could be a high cost, right? But how do you keep them, right? How do you keep those customers and, how do you treat those customers throughout your life cycle?

Through, through the last couple of years, you've seen, some shrinkage from [00:14:00] e commerce companies where they plateaued right after COVID, after the growth years. So we're seeing a lot of lean and mean teams maybe that are cutting back on costs from a personnel perspective and shifting focus to profitability.

So it's a number of things of, making sure you're gearing your product and your efforts towards your consumer and then making sure you're, to be financially successful, making sure you're spending your money in the right, right places. Yeah. And I have to say that AI hasn't has been perfect timing.

Sorry, people have, lost their jobs. But when you streamline, you find that AI can actually improve the productivity of, who whoever is left. So take say an email team, for instance, and, just. Crafting of email flows or your customer service team, having an AI assistant, help with crafting emails in real time.

So you just put the intention, on there, this is how you want to respond. I'm just doing that in seconds. So you [00:15:00] going through so many tickets very quickly and. It's great timing. I can't, deny that, so with regards to clients of yours again, another question has to do with like capital raising.

Did every one of your clients intentionally get into business with a view that, okay, we want to build something really huge here, really impactful rather. And so we're going to need capital to to grow this. Or did some customers initially start out in the bootstrap sort of route and realize, okay this is a really big problem.

And so we will, eventually need to realize we need. I'm a capital, we need to get into the capital markets to raise what's been the journey of Yeah, for our client base, it's, a lot of VC backed companies PE backed or raising debt financing. That's typically when they need to upgrade their You know advisors to a level of [00:16:00] sophistication that, they may need an audit.

They may need to do more tax compliance. So most of our clients are the venture capital backs raising a series B. But certainly there's a case for bootstrapping, right? Bootstrapping allows you to maintain control, right? Hold more equity of the company. Allows you to encourage growth or sweat equity.

E commerce business, I would say it's probably pretty challenging to bootstrap typically requires a lot of infrastructure. Inventory, if you're, if you have a model where you're holding a lot of inventory, it's costly. You need a warehouse you, you need personnel. And if you want to grow quickly, fundraising is almost always necessary.

I would say, things move pretty quickly, especially in the last few years, you'll, we've seen companies two X, three X, or, 10 X overnight. So you need capital to support that. There's certainly businesses maybe that have a drop ship model, maybe, aren't necessarily pre paying for inventory that could survive with less capital.

But, we've typically seen. Through a [00:17:00] couple of years back, growing top line revenue was the primary focus, right? Growing quickly, raising capital to grow quickly. That sort of is shifting in the last couple of, last year or so with the shift towards profitability bootstrapping is possible, I think it's, I think it's challenging for e coms.

It makes a lot of sense. What's been the capital raising challenges, with these businesses now given all that that, that's, transpired particularly with rising interest rates? Yeah. That customer expectations are higher, right? There's also investor expectations are higher.

There's increased competition for e commerce in general. The whole landscape is crowded. It makes it challenging to stand out as an e commerce business as a brand, right? You have to differentiate yourself through some sort of value prop. By doing that, you have to speak to the consumer, right?

What does the consumer want? How can you gain traction from the consumer? But it's costly to acquire customers. So the, the, some of the challenges are just customer acquisition costs. It's really [00:18:00] hard to really expensive to market and to acquire new customers.

If you're going on Facebook and Tik TOK and, social media. So balancing the acquisition costs of the customer with. Customer lifetime value is crucial customer lifetime value being, the longevity of a customer, how long are your customers actually sticking with you, right?

And that again depends on the profit or the product, right? So we have subscription, we have a lot of clients that do subscription based models and reoccurring revenue, but how often do you have consumers canceling subscriptions, right? Capital is challenging given the increased competition the harder to, it's harder to become profitable if it's, customer acquisition costs are high and then there's supply chain disruptions, right?

There's always, understanding your supply chain where you're sourcing your inventory, shipping delays and actually. Satisfying customer needs on time. I think that's always a challenge. So there's a big, it's a big web of, logistics and understanding your customer and I [00:19:00] think all of that competition just makes it harder to raise capital.

And yeah, there's dry powder out there. There's investors looking to invest, but you need, as a founder, you need to go in with a you have to be profitable or have a really defined path to profitability. So you can't, you can't just show up and say, we're growing, year over year and we, we want a new round.

It's, I think it's getting a little bit more. A little more stringent with the requirements for investors. Let's take a short pause to hear from our sponsors and we'll be right back. Hey, Commerce Trailblazers, ready for a game changer in your podcast lineup? I've got just the thing.

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What's the appetite for investors now is more debts coming through versus equity is, what's a debt to equity landscape now? Yeah, we're seeing a lot of bridge rounds from an equity perspective, you have companies that don't necessarily want to go to, the next round just yet.

They want to wait until maybe valuations could come up. So we're seeing a lot of bridge financing and companies exploring other debt vehicles rather than raising a new equity round which would bring on, potentially new investors investors that might want more, bigger piece of the pie.

So I think, rather than giving away some equity, we're seeing sort of the shift to maybe some non traditional debt financing and getting creative with how they're going to sustain, and continue growing, but also sustain. It's a combination of doing bridge financing, bridge round from existing investors exploring some debt vehicles.

And and cutting costs, [00:22:00] right? So we have some plenty of clients going through reduction forces and looking for areas to cut costs and and continue their path to profitability. Interesting. Is the bridge financing coming from their existing investors from the VC funds or are they looking, for bridge financing elsewhere?

Yeah, it's typically from existing investors, extensions of old rounds. Interesting. Rather than going out new investors typically it would, want to do a valuation, understand, do a little bit more diligence likely. They're considering scalability of the company, competitive positioning and the technology that these companies have.

And, existing investors are typically, aware of all that, they're aware. They sit on the board or they're close to the financial statements and the operation of a business. Not to say it's, new investors can't come in and and invest in a company and do a smaller round.

We are seeing a lot of bridge rounds with our existing investors. Yes. And I guess it also secures their position until, the market ease [00:23:00] off, a bit, longer term. Exactly. Okay. Okay. Okay. On the flip side you mentioned the e commerce enablement, space how does that compare?

How, what's the activity? In the e commerce enablement space, that's e commerce SaaS space versus consumer brand. Yeah, it's a good question. I've seen a lot of talk about e com enablement. I talked to some, research analysts in the space and we're seeing a lot of discussion around that from, the back end or front end of a, e commerce business.

And yeah, I think there's going to be a lot of investment in e commerce enablement because it just further pushes that, growth. mentality for an e commerce business. They need software, they need technology, right? They need to be on the forefront of technology to support their business.

When you think of an e commerce business from a consumer's perspective, you think of I click a couple buttons and I get a product shipped to my doorstep, but you don't realize the amount of technology that goes behind the scenes from, order placement from a [00:24:00] website to where's that being sourced from sourcing.

There's softwares just to project inventory at a skew level. There, there's softwares to just help navigate this sort of omni channel approach to selling, right? You're in retail locations, you're, online DTC, you're fulfilled by Amazon. There's multi, multiple levels, behind the scenes to get the product to the consumer.

So I, I definitely see a, a conversation of enablement technology. It's pretty prevalent and yeah, I'm excited to see what, what we see next in that there's a lot of technology out there and disruptors. There's a lot of disruptors in this space.

Really excited to see what's coming. Super. Same here. I found that a lot of the e commerce SaaS founders, that have come on this show, at least I've spoken to have been operators themselves. So they know the pain points. They understand what it feels like.

To be an operator, what the challenges are and their bets, their best place, particularly if they [00:25:00] know the technology, or at least they have the team to execute on the technology that they're able to roll out really nifty solutions. So it's an exciting time, nonetheless, cause I'm still seeing raises, in, in that in, in that space.

So we'll watch and see. Okay. So for listeners who are building, Companies, but impactful companies and looking to raise, further might not be now, it might be in a year's time when the market, has more, much more activity, why is there a need for them to get audited?

Yeah. An audit of finance statement is effect, it's a third party independent CPA firm, reviewing, auditing your company, right? Auditing the financial statement. So what we do is we look at a company's financial statements. We take a risk based approach and we take a deep dive on some of the significant areas of your financial statement.

So when you think about an e commerce company, we spend a lot of time with inventory. We spend a lot of time with [00:26:00] revenue, understanding revenue. We spend a lot of time with equity. If there's a complex. Cap table structure, capitalized software. If you're, capitalizing any website development or any software you're utilizing internally.

From a fundraising perspective, companies are out there fundraising all the time, right? And if you want to raise that next round of financing, we typically see an audit requirement around the series A, series B or with venture debt. So if you're, raising a debt round banks will say, Hey, we're okay with lending you this, 10 million, but we want to see audit financial statements, right?

So you want to be proactive there, right? Companies Yeah. Plenty of times have come to us and say, Hey, we need an audit because our bank told us and it's due in 30 days. And, if you don't know what an audit is, it doesn't take 30 days. It certainly can be done if, all the resources, are there, but we're scheduling audits out six months in advance.

And a first year audit could take, six to 10 weeks plus depending on how clean and, clean the books and [00:27:00] records are. So yeah, from a founder perspective, from management perspective of a company being proactive, understanding what your, next one to five years will look like.

And then, reaching out and getting the right advisors in your corner early on. Cause there's a lot of complexities, you think you have your financials in order, when you get to the third party looking and poking around you're going to find that there, there might be some skeletons hiding and that's what we do.

We help our clients get to a point where they could raise capital and hit their next level of financing. So we're not just we're doing compliance, but we're also, advisors to our clients. so we could see what your prognosis is. Since we work from early stage, the growth, we see what your life cycle is what your plan is, what your exit strategy is, and we set you up for success.

So if you plan to go public, if you plan to get acquired, we're making sure that, if you're going to go through a diligence round with a potential investor that you're checking all the boxes from a risk and exposure perspective. And [00:28:00] from a. From selection perspective, how should e commerce businesses navigate because there's sometimes you say, okay, you're just starting out, you raise some seed, money you've seen traction, you've got your first say.

10, 000 customers revenues is say 2, 3, 4 million and you approach some firm saying, look, we want to get audited because we're looking to to make some subsequent to go for some subsequent rounds, further on and looking at your revenue and that initial conversation is you're not really in our revenue threshold, but obviously you're ambitious and you know where you want to go.

How do you select a, given the fact that the switching costs, both from. a time and let's forget the financial, just switching from firm to firm is just a headache. You've, you said already you're planning six months in advance. What is the conundrum here? How should we, as e commerce operators, navigate that, that pathway?

[00:29:00] Yeah, I would say doing it in steps, right? You don't necessarily need to jump into an audit right away. If you're planning to raise financing, if you're planning to write a seed round, you don't typically see an audit requirement during a seed round. If you're planning to raise an A, next year, I would say start talking to people and start talking to your advisors now.

Getting compliant from a tax perspective, I say would be, your first priority, making sure you're filing. Taxes in the right jurisdictions sales tax compliance, you're selling products that are likely taxable, right? Making sure you're filing in the right states.

Doing that exposure analysis because then, with an audit is required to, raise capital potentially sales tax and tax compliance is necessary at any stage, right? As you're growing, I would say, Do that first, right? Get compliant there from an accounting perspective.

You could build up toward towards an audit, right? First step is making sure you're doing your bookkeeping correctly, right? Are you outsourcing it or do you have someone internal do [00:30:00] you have a team that is working on it? If you're a seed company, you're probably, it's probably, outsourcing, or you have a one person show internally which is fine.

But when you get to a point where, when you're being audited we've worked with plenty of outsourced accounting firms through an audit process. But there's only so much they know, right? They don't, they're not, day in the operations of business. So they're typically, there's headaches involved with that, right?

Stepping up to an audit, so getting the bookkeeper, getting a key hire, maybe a controller or, accounting manager early on. And then you don't necessarily need to jump into an audit right away. You could do a reviewed financial statement, which is a step down from an audit.

So think the minor leagues versus the big leagues. So you warm up to it, right? And a review is primarily inquiries and analytics. You're not doing like audit test work. But the end product is similar. It's a financial statement full set of disclosures.

Our opinion would just change. It's not an audit opinion. It's just an accountant's conclusion providing limited assurance rather than, You know reasonable assurance on the financial statements. Mason Got it. Got [00:31:00] it. Okay. Okay. Reviewed financial statements. Okay. Makes sense.

Makes sense. Makes sense. And yeah, a financial controller is really important because I think that is the personnel you'd be liaising with as a as an auditor, you'd be working closely with the fund. You don't want to work with a founder. Do you want to work with a with someone who has financial acumen?

Exactly. And a founder shouldn't be the point person for an audit, right? This is, the founder should be focused on the operations, growing the business. And, if a founder has ever looked into an audit to, to an extent where it's, a second job and. Yeah, there's probably a problem, an issue there.

So when's the perfect time to get a financial controller in? It depends on the business, depends on, how complex the company is. I have some clients who are smaller, drop ship, not a lot of complexity around inventory. Yeah. Not a lot of complex about revenue around revenue and they, operate with a, with an accounting manager and an outsource bookkeeper and this, series a company, but I would say typically [00:32:00] around, when you're ramping up to a series a you want to have that more sophisticated key hire from the accounting finance perspective even prior to that, so they could have time to learn the business, understand the business, understand the nuances.

Okay. Because when you start raising rounds with sophisticated investors, they're going to be poking around a little bit more and maybe potentially asking for an audit. And when it, when you get to an audit and you definitely want to have a key hire to run that process.

And then what are your thoughts on fractional financial control? It's become a thing now in e commerce, I think since COVID, a lot of fractional CFOs e commerce that is propped out offering their services. Yeah, no, it's great. I talked to a lot of fractional CFOs in the space that are doing work with a lot of interesting companies, from my view, it's always good to get a different perspective on the business, right? Have an outsider come in, understand the business, even if it's working in a limited capacity, you get a, different viewpoint. And [00:33:00] sometimes you are almost forced into it, Oftentimes controllers, at a company for a year and a half, two years, and then, leave and end up, the company's then in a pinch to, to find a new, find a replacement.

So fractional CFOs, likely get a lot of work through just turnover just natural progression of a, of an accounting manager, a senior accountant, a controller, leaving the business. I think it's always good to get a fresh set of eyes and you never know some, you've seen fractional CFOs go into a role, really like it, really enjoy the company and stick around for longer than, expected and become a full time employee.

I've seen that plenty of times. So for listeners who are. I'm working on the capital raise now, I'm thinking about capital raise now. What do you think are the key pieces for the financial stack, for the capital raising financial stack? Yeah. So financial stack, so from a software perspective, the financial stack, I would say, you definitely want to have an accounting software, right?

An [00:34:00] ERP that can handle your. level of activity. So if you're selling, a high volume of transactions, low dollar value there's only so much you could do out of, Excel spreadsheets. So you want to have an ERP that can handle, the level of activity. So I think of it, if you get to a 10 million in top line revenue, high level of transactions probably need to upgrade your ERP to something that, is a little more sophisticated inventory management having a software in place to manage the inventory management and forecasting, at a skew level, at a level where you have your founders asking questions, are we going to run out of this product or do we need to procure more in real time, right? That data should be available in real time theoretically, right? And, smaller companies struggle with that.

Having key softwares in place is great to support the financial stack. And then, you're probably working with credit card processors, you're working with different different sort of ways to fulfill, your A [00:35:00] sale. So shippers and so there's a lot of different sort of this is spiderweb, right?

So there's a lot of different elements, but and there's softwares that sort of each component. Prioritizing that, right? What is most important getting a product to the customer? What software do I need to, in my, tech stack? What do I need to get that product to the end user?

Super important. And then how does it roll up into the financial statements? Having that ERP in place to to manage that level of activity. So you get real time financial data and you're giving it to the right people, controller, CFO. How does that roll up to the founders and, the, and management?

So we had a lot of layers involved, but think if you prioritize and, start from the top you'll get there eventually. What about cadence on financial reporting? When is it too late? When is it just in time? From a monthly perspective most businesses are, doing monthly financial reports, just checking in and trying to make decisions.

You need a [00:36:00] dashboard. When is, what is an optimal time from the end of the month to to know your numbers? Yeah, I mean I would say most of our clients are closing their books monthly Within, five to 10 business days, sometimes less, if you're more sophisticated, you could close in two or three days.

If it hinders your ability to make business decisions, to move operations and to move the needle, if you're running into issues where, inventory is, a mess and you can't fulfill orders because you don't have the right data and you're not right, making the right decisions.

That's when you know there's something, there's a kink in, in the armor, and you have to dig into it. So monthly closes are important and then doing an annual, from an inventory perspective, if you're doing, if you're maintaining inventory in a warehouse that's owned and operated, or is it a third party a 3PL, third party logistics provider doing a full inventory count annually, I think that's important as well to make sure you're where inventory is to make [00:37:00] sure nothing's damaged, or, you have a visibility into that.

So you can either do an annual physical or you can do cycle counts throughout the year. So there's a you know the product getting to the end customer right knowing that where the the issues lie and and then having that data available timely, like you said, monthly where it's not hindering operations, I think is key.

So on, on a final note what are your predictions and thoughts for the rest of 2024? Yeah. I think. I think, interest rates might might get cut by the Fed later this year. If they do, potentially consumer spend, increases. But I don't think it will necessarily be a high growth year.

I think it's a sort of a modest growth year for e coms. E commerce is not going away by any means. There's physical big box stores that, have a need to be online, being online retailer. And then there's online [00:38:00] retailers that primarily sell online that had never had a physical presence, but are now finding a need to have a physical presence right now.

Now more people are out and consumers want to see and feel your product depending on what the product is. So I think you'll see maybe more businesses that are primarily online. start to open up some retail locations or, make sure you're in those big box stores through a wholesale arrangements.

I think from a growth perspective, really depends on consumer spend and where that goes, anything can happen as we've learned in the last few years that, there's I think, things could happen in our, outside of our control. I would probably predict a modest growth year with higher growth potential moving into 2025 and beyond that.

But yeah, I'm looking forward to seeing what the future lies for us. Yeah. We'll touch base again in 2025 and check on those predictions. Yeah, but. But yeah it's been I've certainly left this conversation spot in, in finance, particularly in relation to, to, to capital [00:39:00] raising, what investors want to see, what the landscape is particularly at this point in time and how companies who are.

Essentially who have raised successful in the past are bridging their way through to, to to, to a more buoyant capital markets, in probably in 2025, as you said it's been an absolute pleasure having you Lonnie for those who want to find out more about with them, it's w i t h u m.

com. Are you active on any social media channels? Where should we follow the conversation from here? Yeah, absolutely. LinkedIn, I think is probably the best. I do some interviews too with some founders. Always good to check out some content and I think LinkedIn, just feel free to reach out and yeah, couldn't like, thank you for having me really appreciate it.

A pleasure. Pleasure. And you do host events, right? And with the, We're a New York based but that's the New York metro area. We're active in the market, going to events or [00:40:00] hosting events. So I'm always looking to find, new partners and people that are interested in the space and industry just to chat with.

Yeah, good. So I had to hear any feedback. We'll link to, to, to all of the resources and the show notes. Lonnie, it's been an absolute pleasure having you on the 2X eCommerce podcast. Thanks, Colin. Cheers.