The CFO Corner
The CFO Corner
The Importance of Financial Literacy for Small Business Owners -- Melissa Leon, Owner of Two Sense Consulting
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.
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Welcome to the CFO Corner. I'm your host, Nick Ezzo. In the CFO Corner, we sit down with CFOs
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and corporate finance professionals to hear about the innovative approaches and technology they use
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to scale and grow their organizations. They share challenges they're facing with mundane
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repetitive tasks, and they give their takes on what they'd like to see in the corporate
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finance function that can help CFOs achieve a stress-free working life. With me today is
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Melissa Leon, author and co-owner of Two Sense Consulting. As a business accounting professional,
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Melissa helps businesses achieve maximum productivity with minimum wasted effort or
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expense. She's an author and a public speaker for women aspiring to have a career and a family.
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Welcome, Melissa. <br>
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Hi, thank you so much. I'm happy to be here.
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So while we get started here, can you tell me a little about Two Sense Consulting and your role
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and what your mission is there? Yeah, I'd love to. So Two Cents Consulting was formed during the
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pandemic, you know, we filed for an LLC March 23rd, 2020, little did we know what was about to
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happen. But what actually ended up happening was a lot of small business owners who needed to file
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for PPP loans and EDIL loans, and they had no idea what they were doing. They'd never seen a
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financial report. So my partner and I decided to start helping people for free. We were trying to
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help make good on a bad situation. And it turned out to be a niche that we haven't really expected
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to fall into, that we support small business owners. And what I mean by small business owners is.
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One employee, two employees, 10 employees, usually we don't go larger than 50. And it's our space
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that has worked beautifully for us. And our main mission is to improve financial literacy for small
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business owners. It's one thing when you're passionate and you have an exciting business
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that you want to bring into the world, but we help teach them how to read their balance sheet, how to
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read their P&L, help them create a cash flow statement. Budgets, forecasts are obviously
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big this time of year. So it's been really rewarding, really fulfilling and the ride of,
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a lifetime for sure. You told me earlier that instead of just doing the books for these companies,
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your role is to really kind of teach those business owners who are kind of their own
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CEO in a way. How do you use these reports to kind of guide their business?
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That's exactly right. I mean, we do start with bookkeeping most of the time. Most of the time,
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we find these small business owners who are trying to do it themselves. You know,
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they've been sold some golden ticket from Intuit that QuickBooks is going to save their life,
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and they can do it all by themselves and what we find out is that they end up
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$80,000 debit on their liability section on the balance sheet and they don't know why it says
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negative and they can't figure out how to make the balance sheet look right. And it's all of that.
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That doesn't make sense if you don't know how to use an accounting software.
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So we end up typically coming into cleanup and then we end up setting things up for.
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Success from a book perspective. And then we move into the financial literacy piece. It's
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my favorite part. So we teach the small business owner how to read their balance sheet first.
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We always tell them your balance sheet is the most important. And then we move into the profit and
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loss. And I tell them the story of their business without ever having stepped foot in their business
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most of the time. And we've got restaurants in Texas and Hawaii and website designers in Arizona,
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and IT companies in Florida. I've never been in their office, but I can tell them the story of
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how their operation is running. And once they start to absorb that and understand how the financial,
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report tells that story, it's been amazing. We've seen a lot of growth from a lot of small companies
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in a very short time. Yeah, it kind of reminds me of that expression and probably butchering it,
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that you know, just because you have a box of watercolors doesn't make you Rembrandt.
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You're teaching them to paint. So because you're a CFO, you're a fractional CFO for many different
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companies and your experience throughout your career, how have you seen the role of the CFO
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changed in the last five or 10 years and potentially where do you see it going in the future?
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I mean, I spent 20 years in corporate world and moving into the small business space,
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really what I have noticed the most over the last five years is, well, two things. It's cash.
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Cash has been a big issue for a lot of people in a very short time and especially with the interest
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rates changing the way that they have been, but also the real understanding of what the reports
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mean. Even in my corporate space, there was an accounting team who did all the work, but the
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operators never understood it.
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They might provide some backup or they might provide some data input,
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but they never were the ones analyzing, understanding, writing month-end comments, writing executive summaries.
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And what I've really seen shift, at least what we're trying to really implement,
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is that financial literacy from the actual operators themselves.
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You can't run a business with any type of certainty and any type of longevity without,
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really understanding the data. And that's where I hope we're headed. <br>
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Yeah. So speaking of the data,
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I mean, how concerned are you about like errors lurking in your financial data?
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Errors? Errors always exist. But for me, it's always going to be about is it is something
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classified wrong? The balance sheet is the most important thing on my mind for small business
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owners always, I spend 80% of my time teaching them the balance sheet and how it correlates
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to the P&L. Most of the time they want to jump right to the P&L. They want to see how
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much revenue they brought in. They want to see what their profit is. And I spend a lot
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of my time educating on your P&L only is right if your balance sheet is right. And we can
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only make decisions on your cash if we understand what's in your bank account and what your
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liabilities are. So really trying to shift the paradigm for them and help them understand.
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The other thing I spend a lot of time on is cost control.
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And so I know with most of my clients, every penny of what's going into their costs,
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whether it's a food cost or an operating cost, a fixed cost,
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some type of variable, so that they can really understand cost control before they start to look at profit.
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Because I'm a big believer, if you don't know what you're spending, you're never going to make any money.
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Yeah, and that's the one side of the balance sheet you have almost entirely in your control,
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is how much money is going to come out of what you're spending.
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You can't always fill the money coming in. You know, we're gonna pay you when you're gonna pay it.
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You can, you can hound them, you can call them, you can send them envelopes,
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but the one thing you do have under your control is the cash going out.
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And so, since you work with all these companies and you've got, you've seen a lot of different things,
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if you could magically solve, you know, one problem, wave your magic wand, Melissa,
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what would be the one problem in finance and accounting that you would solve?
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Oh, that's such a good question. The problem that I see in finance and accounting typically relates to somebody not understanding
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how they all tie together.
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I find a lot of interface issues with user interface, really.
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It's the problem exists between the keyboard and the chair most of the time.
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But I think the one thing I would try to solve for is a little bit more understanding of
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the connection between those things.
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The terminology of debit and credit is very confusing for people, especially when you,
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try to see the negative sign or the brackets around it. Trying to educate people on the terminology and the nomenclature can be challenging.
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You talk to people all the time and they say, oh, it's a minus.
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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
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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
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business owners and t
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hem thinking about g
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etting a line of credit before they actually need it. Because when you need money, it is really,
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hard to find. But when you don't need money, it's a great time to go get a line of credit and figure
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out what your options are so that if something major breaks, so you need to buy new manufacturing
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equipment or something like this, that you'll have the cash flow to do so. <br>
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<br>
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It sounds like
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your magic wand wish, if you can solve one thing, it's just helping people become more educated about
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like other business works from an economic perspective. <br>
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And I'm trying my hardest and I
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we're making some great progress too. I don't even need a magic wand but it's amazing when people
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really want to learn and I have clients that are like I don't want to learn it you just do it for
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me and that's great I would be happy to but they don't see the same success as when they really
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start to dig into the education of it and it does not happen quickly. I have a degree I've been doing
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this for 20 years. You're not going to be able to learn it in two months or six months, but over
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the course of 18 months, you're going to have a solid foundation of what it all means. And even
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in the corporate world, I would say if our operators of these large corporations understood
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the financial statements and it didn't just get pushed to the accounting team, I think we'd see.
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Way healthier profit and loss statements across the board.
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Yeah, I couldn't agree with you more. Now, you know, you've been doing this for a long time.
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When you started out in the accounting world, there was, you know, probably, you know,
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people were doing stuff on spreadsheets and maybe some of your clients were working with spreadsheets,
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that evolved into, you know, accounting software and then cloud-based accounting software. And,
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there's more, there's more automation and more, more things to help people get past the routine
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mundane aspects of accounting and finance. How big of a problem do you think that is?
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This kind of the repetitive nature of finance and does that lead to burnout among accounting professionals?
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I think it can. I think if you look at a bank reconciliation as a pretty basic function of
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an accounting person, that task in and of itself can be pretty boring and can be a little bit
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mundane and lead some of that burnout. Yes, Green Bar Paper was a thing when I started
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in accounting. It's true. And prior to my time in accounting, I was in banking. I was a bank teller
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at 16 years old. So I've been in the money space for a very long time. I'm not super old. Like,
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like, let's be real, but it's been more than 20 years.
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The burnout is certainly impossible. I really lean into a lot of automation.
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I really like things that can help me work faster and stronger.
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I just wrote a book called Efficiency Bitch, and all I talk about is ways to get it all done
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without doing it all.
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And so finding ways, regardless if it's accounting or your home life, to make some of those redundant pieces,
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a little bit faster and easier is the name of the game for me.
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Well, can you give us an example of one of those tricks or, you know, life hacks?
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I'm a mom of three. I have a seven, nine and 11 year old. And every morning and every night,
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there's two things that happen and they go to bed and they wake up in the morning. And
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a lot of people just use traditional alarm clocks. I am a big believer in Amazon Alexa
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and any AI tool for that matter. I mean, it could be Google, but or Siri, but Amazon Alexa
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happens to be the one I like. But I have a routine set in the AI that says at 7.45 kids,
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it's time for bed, go get ready. And then at eight o'clock it's bedtime. And then at
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6.30 in the morning, time to get up. And then at seven o'clock time to leave for school.
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And what that does is they're not robots. My children are not robots. They hear the
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prompt and they may or may not go listen to it. But what it's doing is it's helping me
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not have to be the timekeeper on those things. And so anytime I can take a task like
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keeping track of what time it is. And some automated system will tell me all the better, right?
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I do the same thing on my Apple watch.
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Using things like that to help take some of the mental burden off of something so simple of what time is it,
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really helps quite a bit.
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So there's four times a day that I don't have to worry about what time it is because an automated system
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will speak it throughout the house and tell us in four rooms that it's time for bed.
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So that's really helpful. I love that we're in Alexa household myself.
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I said her name, hopefully she'll know. Mine's going to start talking too.
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I found that it's extremely useful to be able to just say something and something happens.
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We are literally living in the future that I dreamed of when I was a child.
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I can tell the device to turn lights on inside, outside, turn the Christmas tree on, turn the Christmas tree off,
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turn the heat up, turn the heat down, make a phone call to somebody.
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And we all walk around with these devices in our pockets too, which we can talk to.
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It understands quote unquote. And the cool thing about that is that there's
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a whole new category of automation for finance and accounting where the system understands
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an email that comes in, for example, and says, oh, this.
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Is a vendor looking for a copy of an invoice.
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And the automation will then reach into the ERP system, find the invoice, attach it to the email, and off it goes.
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That would not be possible without the technology that you just talked about from our home devices,
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whether it's from Google, Amazon, and others.
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Very cool. Yeah, I agree. And things like optical character recognition
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that have been around for some time,
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most people it's not part of their vocabulary to know what OCR is,
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but we've been dealing with that type of technology for 20 years at least.
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I remember being a bank teller at 18 years old and taking a check and reading it through the feeder.
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It's picking up characters and it's understanding what that means.
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What bank account is that? What routing number is that? Those types of things.
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And that software is getting stronger and faster and more helpful.
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And for accounting professionals.
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Yeah, so amazing. Yeah, that's a you know, I come from an IT background many, many years ago. So I
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know OCR. They take OCR and they infuse it with artificial intelligence and it's called computer
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vision. So it not only can read the characters on a check, but it can even understand the context of
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what the what the check is for and categorize it appropriately. Now that's crazy. You know.
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I just yesterday I scanned a check using my phone here and made a deposit. I don't think I've
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actually been to a bank teller in five years. So that said, now we've been having this conversation
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about automation accounting. Are robots going to take away accounting jobs? No, I think they're
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just going to improve them. In fact, my last job, my last corporate job, I was in charge of a large,
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global outsource firm. I was on the client side and I outsourced it and we not only went to outsource.
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The human capital, but to outsource the technology of it as well. And what it ended up doing was not,
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only saving us money and time, but we were able to keep our accounting professionals more engaged
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because they were doing less of the redundant, boring matching and things like this. We ended
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up losing a lot of the bench, if you will, so we didn't bring in a lot of entry-level positions.
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We ended up hiring at a different level, but we had to, so we had to re-calibrate our training
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programs a little bit. If you're hiring somebody at, you know, a level five where you used to hire
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at a level one, you have to adjust in order to get them from a five to a ten in certain amount of
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time. But that learning curve was incredible and I definitely credit that experience to a lot of
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what I know about AI, about what I know about a lot of outsourcing and automation and I bring a
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lot of that into the small business space. Excellent. Well, we're almost at time here. Any
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final thoughts you want to share with our audience before we wrap it up?
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Uh, I just launched a new book, so I'd love to plug that, but it's called Efficiency Bitch,
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How Ambitious Women Can Have It All Without Doing It All. I talk a lot about money and I talk a lot
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about automation. There you have it. There's your endorsement right there. I'd like to thank you,
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Melissa Leone from Two Cents Consulting for spending some time with us today. With that,
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My name is Nick Ezzo, the host of CFO Corner, and we'll see you next time.
