The CFO Corner

The Importance of Financial Literacy for Small Business Owners -- Melissa Leon, Owner of Two Sense Consulting

Season 1 Episode 7

Melissa Leon is an author and co-owner of Two Sense Consulting. With over 20 years of experience in corporate finance, Melissa is passionate about helping other ambitious women with financial literacy and time management. As a mother of three and small business owner, she has firsthand experience balancing various responsibilities and is skilled at guiding others in doing the same.

In this podcast interview, Melissa talks about her mission to help small business owners with financial literacy. Her company offers services such as bookkeeping and teaching owners how to read and interpret financial reports like balance sheets and cash flow statements. Melissa also discusses her passion for financial literacy and shares her latest book, which focuses on simplifying tasks for a more efficient life. She also shares her love for Amazon Alexa and the exciting new advancements in automation for finance and accounting, where systems can categorize incoming emails. 

00:00:08.129 --> 00:00:13.259
Welcome to the CFO Corner. I'm your host, Nick Ezzo. In the CFO Corner, we sit down with CFOs 

00:00:13.259 --> 00:00:17.499
and corporate finance professionals to hear about the innovative approaches and technology they use 

00:00:17.499 --> 00:00:22.539
to scale and grow their organizations. They share challenges they're facing with mundane 

00:00:22.539 --> 00:00:26.299
repetitive tasks, and they give their takes on what they'd like to see in the corporate 

00:00:26.299 --> 00:00:31.739
finance function that can help CFOs achieve a stress-free working life. With me today is 

00:00:31.739 --> 00:00:36.699
Melissa Leon, author and co-owner of Two Sense Consulting. As a business accounting professional, 

00:00:36.699 --> 00:00:41.179
Melissa helps businesses achieve maximum productivity with minimum wasted effort or 

00:00:41.179 --> 00:00:45.947
expense. She's an author and a public speaker for women aspiring to have a career and a family. 

00:00:46.154 --> 00:00:49.499
Welcome, Melissa. <br>

00:00:46.154 --> 00:00:49.499
Hi, thank you so much. I'm happy to be here. 

00:00:50.268 --> 00:00:54.939
So while we get started here, can you tell me a little about Two Sense Consulting and your role 

00:00:54.939 --> 00:01:00.779
and what your mission is there? Yeah, I'd love to. So Two Cents Consulting was formed during the 

00:01:00.779 --> 00:01:06.939
pandemic, you know, we filed for an LLC March 23rd, 2020, little did we know what was about to 

00:01:06.939 --> 00:01:12.859
happen. But what actually ended up happening was a lot of small business owners who needed to file 

00:01:12.859 --> 00:01:18.699
for PPP loans and EDIL loans, and they had no idea what they were doing. They'd never seen a 

00:01:18.699 --> 00:01:25.579
financial report. So my partner and I decided to start helping people for free. We were trying to 

00:01:25.579 --> 00:01:31.659
help make good on a bad situation. And it turned out to be a niche that we haven't really expected 

00:01:31.659 --> 00:01:36.918
to fall into, that we support small business owners. And what I mean by small business owners is. 

00:01:37.359 --> 00:01:43.739
One employee, two employees, 10 employees, usually we don't go larger than 50. And it's our space 

00:01:43.739 --> 00:01:49.579
that has worked beautifully for us. And our main mission is to improve financial literacy for small 

00:01:49.579 --> 00:01:53.419
business owners. It's one thing when you're passionate and you have an exciting business 

00:01:53.419 --> 00:01:57.259
that you want to bring into the world, but we help teach them how to read their balance sheet, how to 

00:01:57.259 --> 00:02:02.779
read their P&amp;L, help them create a cash flow statement. Budgets, forecasts are obviously 

00:02:02.779 --> 00:02:08.930
big this time of year. So it's been really rewarding, really fulfilling and the ride of, 

00:02:09.259 --> 00:02:14.299
a lifetime for sure. You told me earlier that instead of just doing the books for these companies, 

00:02:14.299 --> 00:02:18.299
your role is to really kind of teach those business owners who are kind of their own 

00:02:18.299 --> 00:02:22.757
CEO in a way. How do you use these reports to kind of guide their business? 

00:02:23.235 --> 00:02:27.179
That's exactly right. I mean, we do start with bookkeeping most of the time. Most of the time, 

00:02:27.457 --> 00:02:29.860
we find these small business owners who are trying to do it themselves. You know, 

00:02:29.979 --> 00:02:34.539
they've been sold some golden ticket from Intuit that QuickBooks is going to save their life, 

00:02:34.539 --> 00:02:39.899
and they can do it all by themselves and what we find out is that they end up 

00:02:38.890 --> 00:02:44.500
$80,000 debit on their liability section on the balance sheet and they don't know why it says 

00:02:44.500 --> 00:02:50.020
negative and they can't figure out how to make the balance sheet look right. And it's all of that. 

00:02:50.908 --> 00:02:54.180
That doesn't make sense if you don't know how to use an accounting software. 

00:02:54.860 --> 00:02:59.220
So we end up typically coming into cleanup and then we end up setting things up for. 

00:03:00.819 --> 00:03:04.580
Success from a book perspective. And then we move into the financial literacy piece. It's 

00:03:04.580 --> 00:03:09.460
my favorite part. So we teach the small business owner how to read their balance sheet first. 

00:03:09.460 --> 00:03:13.780
We always tell them your balance sheet is the most important. And then we move into the profit and 

00:03:13.780 --> 00:03:19.540
loss. And I tell them the story of their business without ever having stepped foot in their business 

00:03:19.540 --> 00:03:25.380
most of the time. And we've got restaurants in Texas and Hawaii and website designers in Arizona, 

00:03:25.476 --> 00:03:30.180
and IT companies in Florida. I've never been in their office, but I can tell them the story of 

00:03:30.180 --> 00:03:35.620
how their operation is running. And once they start to absorb that and understand how the financial, 

00:03:35.892 --> 00:03:40.500
report tells that story, it's been amazing. We've seen a lot of growth from a lot of small companies 

00:03:40.500 --> 00:03:44.500
in a very short time. Yeah, it kind of reminds me of that expression and probably butchering it, 

00:03:44.500 --> 00:03:47.140
that you know, just because you have a box of watercolors doesn't make you Rembrandt. 

00:03:48.340 --> 00:03:54.100
You're teaching them to paint. So because you're a CFO, you're a fractional CFO for many different 

00:03:54.100 --> 00:03:59.700
companies and your experience throughout your career, how have you seen the role of the CFO 

00:03:59.700 --> 00:04:02.980
changed in the last five or 10 years and potentially where do you see it going in the future? 

00:04:03.835 --> 00:04:08.660
I mean, I spent 20 years in corporate world and moving into the small business space, 

00:04:08.660 --> 00:04:15.860
really what I have noticed the most over the last five years is, well, two things. It's cash. 

00:04:15.860 --> 00:04:20.660
Cash has been a big issue for a lot of people in a very short time and especially with the interest 

00:04:20.660 --> 00:04:24.580
rates changing the way that they have been, but also the real understanding of what the reports 

00:04:24.580 --> 00:04:29.540
mean. Even in my corporate space, there was an accounting team who did all the work, but the 

00:04:29.540 --> 00:04:31.661
operators never understood it. 

00:04:31.740 --> 00:04:35.740
They might provide some backup or they might provide some data input, 

00:04:35.740 --> 00:04:41.743
but they never were the ones analyzing, understanding, writing month-end comments, writing executive summaries. 

00:04:41.880 --> 00:04:46.056
And what I've really seen shift, at least what we're trying to really implement, 

00:04:46.128 --> 00:04:49.737
is that financial literacy from the actual operators themselves. 

00:04:52.375 --> 00:04:58.335
You can't run a business with any type of certainty and any type of longevity without, 

00:04:58.545 --> 00:05:03.825
really understanding the data. And that's where I hope we're headed. <br>

00:04:58.545 --> 00:05:03.825
Yeah. So speaking of the data, 

00:05:03.825 --> 00:05:07.905
I mean, how concerned are you about like errors lurking in your financial data? 

00:05:08.732 --> 00:05:13.985
Errors? Errors always exist. But for me, it's always going to be about is it is something 

00:05:13.985 --> 00:05:17.985
classified wrong? The balance sheet is the most important thing on my mind for small business 

00:05:17.985 --> 00:05:23.825
owners always, I spend 80% of my time teaching them the balance sheet and how it correlates 

00:05:23.825 --> 00:05:27.665
to the P&amp;L. Most of the time they want to jump right to the P&amp;L. They want to see how 

00:05:27.665 --> 00:05:31.465
much revenue they brought in. They want to see what their profit is. And I spend a lot 

00:05:31.465 --> 00:05:37.465
of my time educating on your P&amp;L only is right if your balance sheet is right. And we can 

00:05:37.465 --> 00:05:41.945
only make decisions on your cash if we understand what's in your bank account and what your 

00:05:41.945 --> 00:05:47.545
liabilities are. So really trying to shift the paradigm for them and help them understand.

00:05:47.545 --> 00:05:50.145
The other thing I spend a lot of time on is cost control.

00:05:50.145 --> 00:05:55.945
 And so I know with most of my clients, every penny of what's going into their costs, 

00:05:55.945 --> 00:05:59.064
whether it's a food cost or an operating cost, a fixed cost, 

00:05:59.425 --> 00:06:04.825
some type of variable, so that they can really understand cost control before they start to look at profit.

00:06:04.825 --> 00:06:09.858
 Because I'm a big believer, if you don't know what you're spending, you're never going to make any money. 

00:06:10.505 --> 00:06:14.005
Yeah, and that's the one side of the balance sheet you have almost entirely in your control, 

00:06:14.005 --> 00:06:15.905
is how much money is going to come out of what you're spending. 

00:06:15.905 --> 00:06:19.585
You can't always fill the money coming in. You know, we're gonna pay you when you're gonna pay it. 

00:06:19.585 --> 00:06:22.545
You can, you can hound them, you can call them, you can send them envelopes, 

00:06:22.545 --> 00:06:26.385
but the one thing you do have under your control is the cash going out. 

00:06:27.345 --> 00:06:32.665
And so, since you work with all these companies and you've got, you've seen a lot of different things, 

00:06:32.665 --> 00:06:36.785
if you could magically solve, you know, one problem, wave your magic wand, Melissa, 

00:06:36.785 --> 00:06:39.421
what would be the one problem in finance and accounting that you would solve? 

00:06:40.305 --> 00:06:48.865
Oh, that's such a good question. The problem that I see in finance and accounting typically relates to somebody not understanding 

00:06:48.865 --> 00:06:50.314
how they all tie together. 

00:06:50.505 --> 00:06:54.865
I find a lot of interface issues with user interface, really. 

00:06:54.865 --> 00:07:01.025
It's the problem exists between the keyboard and the chair most of the time. 

00:07:01.025 --> 00:07:06.545
But I think the one thing I would try to solve for is a little bit more understanding of 

00:07:06.545 --> 00:07:08.745
the connection between those things. 

00:07:08.745 --> 00:07:12.783
The terminology of debit and credit is very confusing for people, especially when you, 

00:07:13.125 --> 00:07:19.905
try to see the negative sign or the brackets around it. Trying to educate people on the terminology and the nomenclature can be challenging. 

00:07:19.905 --> 00:07:22.830
You talk to people all the time and they say, oh, it's a minus. 

00:07:23.190 --> 00:07:29.825
We don't have minuses in accounting. But I think if we can fix some of that, I think some of the rest of the information 

00:07:29.825 --> 00:07:36.305
would come together quite quickly for them. The other thing that's always top of mind for me is the accessibility to cash for small 

00:07:36.305 --> 00:07:37.819
business owners and t

00:07:38.404 --> 00:07:39.465
hem thinking about g

00:07:40.132 --> 00:07:45.129
etting a line of credit before they actually need it. Because when you need money, it is really, 

00:07:45.183 --> 00:07:50.222
hard to find. But when you don't need money, it's a great time to go get a line of credit and figure 

00:07:50.222 --> 00:07:56.862
out what your options are so that if something major breaks, so you need to buy new manufacturing 

00:07:56.862 --> 00:08:01.422
equipment or something like this, that you'll have the cash flow to do so. <br>

00:07:56.862 --> 00:08:01.422
<br>

00:07:56.862 --> 00:08:01.422
It sounds like 

00:08:02.542 --> 00:08:06.622
your magic wand wish, if you can solve one thing, it's just helping people become more educated about 

00:08:06.622 --> 00:08:11.662
like other business works from an economic perspective. <br>

00:08:06.622 --> 00:08:11.662
And I'm trying my hardest and I 

00:08:11.662 --> 00:08:16.302
we're making some great progress too. I don't even need a magic wand but it's amazing when people 

00:08:16.302 --> 00:08:20.542
really want to learn and I have clients that are like I don't want to learn it you just do it for 

00:08:20.542 --> 00:08:26.462
me and that's great I would be happy to but they don't see the same success as when they really 

00:08:26.462 --> 00:08:30.782
start to dig into the education of it and it does not happen quickly. I have a degree I've been doing 

00:08:30.782 --> 00:08:36.702
this for 20 years. You're not going to be able to learn it in two months or six months, but over 

00:08:36.702 --> 00:08:42.542
the course of 18 months, you're going to have a solid foundation of what it all means. And even 

00:08:42.542 --> 00:08:48.942
in the corporate world, I would say if our operators of these large corporations understood 

00:08:48.942 --> 00:08:53.262
the financial statements and it didn't just get pushed to the accounting team, I think we'd see. 

00:08:54.142 --> 00:08:56.382
Way healthier profit and loss statements across the board. 

00:08:57.291 --> 00:09:01.262
Yeah, I couldn't agree with you more. Now, you know, you've been doing this for a long time. 

00:09:01.262 --> 00:09:04.782
When you started out in the accounting world, there was, you know, probably, you know, 

00:09:04.943 --> 00:09:09.022
people were doing stuff on spreadsheets and maybe some of your clients were working with spreadsheets, 

00:09:09.822 --> 00:09:13.738
that evolved into, you know, accounting software and then cloud-based accounting software. And, 

00:09:13.902 --> 00:09:19.262
there's more, there's more automation and more, more things to help people get past the routine 

00:09:19.262 --> 00:09:25.262
mundane aspects of accounting and finance. How big of a problem do you think that is? 

00:09:25.262 --> 00:09:31.902
This kind of the repetitive nature of finance and does that lead to burnout among accounting professionals? 

00:09:32.868 --> 00:09:38.478
I think it can. I think if you look at a bank reconciliation as a pretty basic function of 

00:09:38.478 --> 00:09:44.958
an accounting person, that task in and of itself can be pretty boring and can be a little bit 

00:09:44.958 --> 00:09:51.598
mundane and lead some of that burnout. Yes, Green Bar Paper was a thing when I started 

00:09:51.598 --> 00:09:57.038
in accounting. It's true. And prior to my time in accounting, I was in banking. I was a bank teller 

00:09:57.038 --> 00:10:02.078
at 16 years old. So I've been in the money space for a very long time. I'm not super old. Like, 

00:10:02.078 --> 00:10:05.718
like, let's be real, but it's been more than 20 years. 

00:10:09.198 --> 00:10:13.598
The burnout is certainly impossible. I really lean into a lot of automation. 

00:10:13.598 --> 00:10:16.758
I really like things that can help me work faster and stronger. 

00:10:16.758 --> 00:10:21.678
I just wrote a book called Efficiency Bitch, and all I talk about is ways to get it all done 

00:10:21.678 --> 00:10:22.918
without doing it all. 

00:10:22.918 --> 00:10:30.752
And so finding ways, regardless if it's accounting or your home life, to make some of those redundant pieces, 

00:10:30.806 --> 00:10:33.598
a little bit faster and easier is the name of the game for me. 

00:10:33.948 --> 00:10:37.358
Well, can you give us an example of one of those tricks or, you know, life hacks? 

00:10:37.358 --> 00:10:44.085
I'm a mom of three. I have a seven, nine and 11 year old. And every morning and every night, 

00:10:44.247 --> 00:10:48.518
there's two things that happen and they go to bed and they wake up in the morning. And 

00:10:48.518 --> 00:10:53.078
a lot of people just use traditional alarm clocks. I am a big believer in Amazon Alexa 

00:10:53.078 --> 00:10:58.078
and any AI tool for that matter. I mean, it could be Google, but or Siri, but Amazon Alexa 

00:10:58.078 --> 00:11:05.358
happens to be the one I like. But I have a routine set in the AI that says at 7.45 kids, 

00:11:05.358 --> 00:11:09.758
it's time for bed, go get ready. And then at eight o'clock it's bedtime. And then at 

00:11:09.758 --> 00:11:14.260
6.30 in the morning, time to get up. And then at seven o'clock time to leave for school. 

00:11:14.478 --> 00:11:21.678
And what that does is they're not robots. My children are not robots. They hear the 

00:11:21.678 --> 00:11:26.978
prompt and they may or may not go listen to it. But what it's doing is it's helping me 

00:11:26.978 --> 00:11:32.418
not have to be the timekeeper on those things. And so anytime I can take a task like 

00:11:33.255 --> 00:11:38.425
keeping track of what time it is. And some automated system will tell me all the better, right? 

00:11:38.425 --> 00:11:40.305
I do the same thing on my Apple watch. 

00:11:40.305 --> 00:11:48.225
Using things like that to help take some of the mental burden off of something so simple of what time is it, 

00:11:48.225 --> 00:11:49.425
really helps quite a bit. 

00:11:49.425 --> 00:11:54.505
So there's four times a day that I don't have to worry about what time it is because an automated system 

00:11:54.505 --> 00:12:01.180
will speak it throughout the house and tell us in four rooms that it's time for bed. 

00:12:01.288 --> 00:12:05.345
So that's really helpful. I love that we're in Alexa household myself. 

00:12:05.555 --> 00:12:09.185
I said her name, hopefully she'll know. Mine's going to start talking too. 

00:12:09.185 --> 00:12:15.065
I found that it's extremely useful to be able to just say something and something happens. 

00:12:15.170 --> 00:12:20.105
We are literally living in the future that I dreamed of when I was a child. 

00:12:20.105 --> 00:12:24.825
I can tell the device to turn lights on inside, outside, turn the Christmas tree on, turn the Christmas tree off, 

00:12:24.825 --> 00:12:27.745
turn the heat up, turn the heat down, make a phone call to somebody. 

00:12:27.745 --> 00:12:31.705
And we all walk around with these devices in our pockets too, which we can talk to. 

00:12:31.705 --> 00:12:35.665
It understands quote unquote. And the cool thing about that is that there's 

00:12:35.665 --> 00:12:42.145
a whole new category of automation for finance and accounting where the system understands 

00:12:42.145 --> 00:12:44.175
an email that comes in, for example, and says, oh, this. 

00:12:44.385 --> 00:12:46.804
Is a vendor looking for a copy of an invoice. 

00:12:46.966 --> 00:12:51.985
And the automation will then reach into the ERP system, find the invoice, attach it to the email, and off it goes. 

00:12:51.985 --> 00:12:56.465
That would not be possible without the technology that you just talked about from our home devices, 

00:12:56.465 --> 00:13:00.745
whether it's from Google, Amazon, and others. 

00:13:00.745 --> 00:13:04.125
Very cool. Yeah, I agree. And things like optical character recognition 

00:13:04.125 --> 00:13:05.225
that have been around for some time, 

00:13:05.225 --> 00:13:08.785
most people it's not part of their vocabulary to know what OCR is, 

00:13:08.785 --> 00:13:13.345
but we've been dealing with that type of technology for 20 years at least. 

00:13:13.345 --> 00:13:18.985
I remember being a bank teller at 18 years old and taking a check and reading it through the feeder. 

00:13:18.985 --> 00:13:23.485
It's picking up characters and it's understanding what that means. 

00:13:23.485 --> 00:13:26.585
What bank account is that? What routing number is that? Those types of things. 

00:13:26.585 --> 00:13:30.105
And that software is getting stronger and faster and more helpful. 

00:13:30.105 --> 00:13:32.425
And for accounting professionals. 

00:13:33.516 --> 00:13:37.766
Yeah, so amazing. Yeah, that's a you know, I come from an IT background many, many years ago. So I 

00:13:37.766 --> 00:13:43.846
know OCR. They take OCR and they infuse it with artificial intelligence and it's called computer 

00:13:43.846 --> 00:13:48.966
vision. So it not only can read the characters on a check, but it can even understand the context of 

00:13:48.966 --> 00:13:53.952
what the what the check is for and categorize it appropriately. Now that's crazy. You know. 

00:13:54.246 --> 00:13:59.126
I just yesterday I scanned a check using my phone here and made a deposit. I don't think I've 

00:13:59.126 --> 00:14:04.166
actually been to a bank teller in five years. So that said, now we've been having this conversation 

00:14:04.166 --> 00:14:08.806
about automation accounting. Are robots going to take away accounting jobs? No, I think they're 

00:14:08.806 --> 00:14:16.376
just going to improve them. In fact, my last job, my last corporate job, I was in charge of a large, 

00:14:16.520 --> 00:14:23.526
global outsource firm. I was on the client side and I outsourced it and we not only went to outsource. 

00:14:23.704 --> 00:14:28.709
The human capital, but to outsource the technology of it as well. And what it ended up doing was not, 

00:14:28.806 --> 00:14:33.526
only saving us money and time, but we were able to keep our accounting professionals more engaged 

00:14:33.526 --> 00:14:40.726
because they were doing less of the redundant, boring matching and things like this. We ended 

00:14:40.726 --> 00:14:48.406
up losing a lot of the bench, if you will, so we didn't bring in a lot of entry-level positions. 

00:14:48.406 --> 00:14:52.806
We ended up hiring at a different level, but we had to, so we had to re-calibrate our training 

00:14:52.806 --> 00:14:58.806
programs a little bit. If you're hiring somebody at, you know, a level five where you used to hire 

00:14:58.806 --> 00:15:04.086
at a level one, you have to adjust in order to get them from a five to a ten in certain amount of 

00:15:04.086 --> 00:15:10.726
time. But that learning curve was incredible and I definitely credit that experience to a lot of 

00:15:10.726 --> 00:15:17.446
what I know about AI, about what I know about a lot of outsourcing and automation and I bring a 

00:15:17.446 --> 00:15:21.286
lot of that into the small business space. Excellent. Well, we're almost at time here. Any 

00:15:21.286 --> 00:15:23.846
final thoughts you want to share with our audience before we wrap it up? 

00:15:24.730 --> 00:15:29.286
Uh, I just launched a new book, so I'd love to plug that, but it's called Efficiency Bitch, 

00:15:29.286 --> 00:15:34.006
How Ambitious Women Can Have It All Without Doing It All. I talk a lot about money and I talk a lot 

00:15:34.006 --> 00:15:39.206
about automation. There you have it. There's your endorsement right there. I'd like to thank you, 

00:15:39.206 --> 00:15:44.006
Melissa Leone from Two Cents Consulting for spending some time with us today. With that, 

00:15:44.166 --> 00:15:47.011
My name is Nick Ezzo, the host of CFO Corner, and we'll see you next time. 


People on this episode