Bill is a 4x founder, a serial entrepreneur, and currently the VP of Corporate Development at FoodScience, LLC, a leading provider of science-based wellness solutions for both humans and pets. With a strong focus on quality, innovation, and trust, FoodScience has been quietly building and acquiring some of the most exciting wellness brands in the market today.

> Here’s a glimpse of what you would learn….

In this episode of the Ecomm Breakthrough Podcast, host Josh Hadley interviews Bill D’Alessandro, VP of Corporate Development at Food Science and a seasoned e-commerce entrepreneur. Bill shares insights from building and selling the Natural Dog Company, discusses common financial pitfalls in e-commerce, and stresses the importance of clean accounting, cash flow forecasting, and management-level talent. He also explores strategic uses of AI, long-term financial planning, and team building for scaling businesses. The episode offers actionable advice for founders on profitability, financial literacy, and preparing for sustainable growth or acquisition, with a special focus on the pet wellness industry.

Here are the 3 action items that Josh identified from this episode:

Special Mention(s):

Related Episode(s):

This episode is brought to you by eComm Breakthrough Consulting where I help seven-figure e-commerce owners grow to eight figures.

I started Hadley Designs in 2015 and grew it to an eight-figure brand in seven years.

I made mistakes along the way that made the path to eight figures longer. At times I doubted whether our business could even survive and become a real brand. I wish I would have had a guide to help me grow faster and avoid the stumbling blocks.

If you’ve hit a plateau and want to know the next steps to take your business to the next level, then go to www.EcommBreakthrough.com (that’s Ecomm with two M’s) to learn more.

Bill D’Alessandro 00:00:00  A lot of brands aren’t thinking about it that way. And then they’re also not really disciplined around looking at their PNL with a contribution margin and then kind of a fixed cost section. And like trusting their numbers when they get their QuickBooks file at the end of the month, that that number in the QuickBooks file actually represents how they did, and they feel confident in that number, and they manage the business according to that number. That is like less than 10% of brands. So that’s actually a lot of what I do.

MC 00:00:32  Welcome to the Ecomm Breakthrough podcast. Are you ready to unlock the full potential and growth in your business? You’ve already crossed seven figures in sales, but the challenge is knowing how to take your business to the next level.

Josh Hadley 00:00:46  Ever wonder why you don’t have enough money in your bank account, or wondering why you have to continue to take out loans on an ongoing basis? Today’s guest is going to teach you why and how to see it coming in advance. Vance, welcome to the Ecomm Breakthrough Podcast.

Josh Hadley 00:01:00  I’m your host, Josh Hadley. I scaled my own brand from 0 to 8 figures in sales, and now my mission is to take it to over nine figures on my journey to nine figures, I bring you unfiltered conversations with the smartest minds in eCommerce. Past guests include Kevin King, Michael E Gerber, author of the E! Myth, and Brandon Young. Today, I am giving you the real strategies and systems we I am well, I’m pleased to welcome a powerhouse in the CPG and wellness space. Bill D’Alessandro. Bill is a four time founder and serial entrepreneur, and currently the VP of Corporate Development at Food Science, a leading provider of science based wellness solutions for both humans and pets. With a strong focus on quality, innovation and trust, food science has been quietly building and acquiring some of the most exciting wellness brands on the market today. So if you are thinking about acquiring brands or preparing your own for exit, or you just want to get your finances in place and understand how you can put more money in your bank account.

Josh Hadley 00:02:02  This conversation is going to be packed with insights that you don’t want to miss. Welcome to the show, Bill.

Bill D’Alessandro 00:02:07  Wow, that’s one heck of an intro. I’m happy to be here. Josh. Good to see you, man.

Josh Hadley 00:02:11  Hey, Bill. Easy to, you know, tout somebody else’s, you know, accomplishments. Go through your LinkedIn profile. You and I have talked lots of times, so you’ve got a lot of, good accomplishments. So it’s easy to put something like that together for you.

Bill D’Alessandro 00:02:26  Thanks, man. I’ve been looking forward to this. I mean, Josh, if you’re a listener, Josh is like, the most organized podcast host I’ve ever been. I’ve ever been on. Like, I was invited, you know, several months in advance. and like whole pre pre questionnaire, it’s like we are ready. This is going to be a good conversation. So I’m happy to be here man. Good to see you.

Josh Hadley 00:02:42  Well Bill so for those that don’t know you I know you’ve kind of run the circuit.

Josh Hadley 00:02:47  You’ve been on a lot of different podcasts as well, and you’re involved in a lot of ecommerce communities. But for those that don’t know you. You’re kind of a coach and consultant. You work with other people, other e-commerce brands. You are running your own brand that just recently was acquired, and now you’re kind of looking at acquiring other brands. So why don’t you give the listeners a quick little breakdown of your your recent exit that you went through and what you’re doing right now?

Bill D’Alessandro 00:03:15  Yeah, sure. So I’ve been in e-commerce since 2010, when I quit my job to start my first e-com business. To make a very complicated long story, very short. We acquired eight different businesses over eight years. The last one was a business called Natural Dog Company, which made supplements and grooming products. You know, hip and joint chews, salmon oil, topical balm, shampoos, wipes, things like that. All kinds of consumables for dogs, everything except food. We bought that brand in 2018, and that brand really took off during Covid.

Bill D’Alessandro 00:03:47  And then in 2021, 2022, we sold the other seven brands in the portfolio to go all in on National Dog Company. Scaled that business well into the eight figures. And then earlier this year in April 2025 sold that business to Food Science. Josh, as you mentioned in the intro, and food science is a really interesting business. They are owned by Morgan Stanley Capital Partners, the private equity arm of the huge financial services company everyone has heard of. But Food Science is the operating company that acquired my business, Natural Dog. and I can we can talk a lot more about kind of how we got to that point, because that’s kind of what everybody wants to do is get acquired by a strategic. so I can talk a little bit about how to kind of prepare your business for that, what they’re going to look at, you know, the uncomfortable questions they’re going to ask you so you can get ahead of them. and now I work for food science and my role is VP of corporate development.

Bill D’Alessandro 00:04:41  No one knows what the heck that means. What that really means is I buy other businesses. So my job all day, every day is to go find other pet supplements and treats brands and buy them and introduce them to food science and, you know, work on putting them together with our business. Because Morgan Stanley has dedicated nine figures of capital to put behind this business to to do a roll up in the pet space. So I’m in charge of making that happen. So that’s sort of how I ended up in the chair here. So I’ve been in e-commerce for 15 years at this point, which is wild to say. I have a background in investment banking and private equity before that. So it’s kind of full circle of being out for me now, being on the buy side again. So that’s that’s the brief history.

Josh Hadley 00:05:26  I love it. Well, you you’ve got a wealth of experience. And I think one of the other most important things to call out is that you’ve been looking under the hood of a lot of like seven, eight figure businesses, those that you’ve been able to coach or consult with.

Josh Hadley 00:05:43  And even as you’re looking at acquiring other brands, like you’re able to actually look and see, like what’s actually going on in a lot of these e-commerce brands and build my kind of hypothesis. You tell me if I’m wrong. I think there’s a lot, maybe 50%. I’d be curious to hear your number. 50% of the brands probably like the revenue metrics that they’re throwing out. They can tout their revenue, but like profitability is extremely low, if not nonexistent. and I think you get to see that and we’re going to dive into a lot of those topics today. But give me your take. What percentage of ecommerce brands do you feel like are they’re going to spout out some big, maybe top line numbers? Hey yeah I hit eight figures. And it’s like, well, show me how much profit you’re bringing in. What are your thoughts?

Bill D’Alessandro 00:06:29  Well, it’s so hard now. I mean, with there’s so much platform power between Amazon and Meta and Google, you know, they’re just siphoned huge portions of the PNL off.

Bill D’Alessandro 00:06:38  And you really have got to be a really sharp operator now because tacks are so high, you’re competing against a whole bunch of sophisticated operators. So that ads line item kind of expands to eat your whole PNL and your profit if you’re not really careful. And a lot of the businesses I see, unfortunately Josh, don’t really have very much visibility into how much profit they’re actually making. You know, they might be thinking, oh, I have a 2.8 x Roas, or I have a 1.7 x Roas 01.7 x Roz is good. I must be profitable, but they don’t really go any further than that. And you go, well, at 1.7 x revenue Roas is a way to think about it. All those metrics are revenue rose. Well, you still got to take out of that cost to make the product that costs the ship, the product, the cost to process the credit card, you know, all that stuff. And you realize that, you know, 1.7 realize you probably lose them. And a lot of brands aren’t thinking about it that way.

Bill D’Alessandro 00:07:30  And then they’re also not really disciplined around looking at their PNL with a contribution margin and then kind of a fixed cost section and like trusting their numbers. So when they get their QuickBooks file at the end of the month, that that number in the QuickBooks file actually represents how they did, and they feel confident in that number, and they manage the business according to that number. That is like less than 10% of brands. So that’s actually a lot of what I do. Yeah, that’s a lot of what I do with with consulting clients is try to get people to a place where they can trust their QuickBooks, right, where their their business is spitting out numbers quickly that they can trust and use to run their business. I mean, it’s so complicated, as you know, like the inventory accounting, the Cogs accounting, you know, the timing, the accrual, you know, get it. But if you don’t have it right, it’s like driving with a blacked out windshield, you know, and blacked out rear views, like you don’t know what happened.

Bill D’Alessandro 00:08:25  so that’s, I think, really important. And so to answer your question, I think less than 50% of brands definitely are making more than 10% in that margin. And I think less than 10% of the brands I run into, maybe less than 20, actually have clean accounting.

Josh Hadley 00:08:43  Okay. well, you heard it from the, the master himself. So I think that that is such a critical pain point in businesses. And one of the interesting things here, Bill, when you go to these e-commerce conferences, it’s all about the latest and shiniest, like marketing hacks. It seems like, oh, hey, you can go spin up this. You can go generate money over here or over there. But the fundamental basics of the business accounting and getting clean books and smart tactics of how to reconcile your books. I don’t think I’ve ever seen one of those ever, in any of the e-commerce conferences I’ve been to. But what you’re just saying is that 90% of entrepreneurs do not have clean books and actual accounting statements that they could rely on to be able to make business decisions for the future growth or success of their business.

Josh Hadley 00:09:38  So, Bill, I would I’m curious, like, as people come to you and they’re there looking for help. What do you see is like one of the red flags and the number one problem that you’re helping them with right off the bat.

Bill D’Alessandro 00:09:52  Yeah. So and I think, you know, the reason you say that Josh is like accounting doesn’t seem sexy, right? It’s not it doesn’t seem like it’s going to help you grow your business. And also, I think a lot of founders go, oh, I’m not an accountant. Like, oh, that’s too technical for me. I’m going to hire an accounting firm and or I’m going to hire a fractional CFO, and I’m just going to kind of trust the reports that come out of that. And I think kind of founders use that as an excuse to not become financially literate. But the fact of the matter is, accounting is the language of business, right? It all your whole business runs on accounting. It would be like trying to say you could be an author without knowing English.

Bill D’Alessandro 00:10:32  Like it? Fundamentally, you can’t do it. Everything is built on accounting. And so what I open with people is I go, you as the founder need to be accounting literate. You don’t have to be accounting fluent, but you need to be accounting literate. And you need to understand what’s going on under the hood. You can’t just get the reports from your accountant. And here’s the first test. If you get a report from your accountant and you look at the bottom line net income number, and you don’t feel in your bones like that reflects the actual performance of the business last month, you have a problem. Because if you don’t feel in your bones that reflects the business, you’re not going to make decisions based on that number, right? That’s sum total. The bottom is the sum of everything else up the page. Which means if you don’t trust the bottom line, you certainly don’t trust all the things that are adding up into it. So that would be the first challenge I would say for everybody that is listening all of your QuickBooks look at look at last month, I know we’ve kind of just come through Black Friday and we’re looking at, you know, next year.

Bill D’Alessandro 00:11:35  Look at the bottom line number for last month, not even last year, just last month. And the reason I picked month is because that introduces all kinds of timing, things like what happened last month, what happened this month, etc. and if you don’t feel like the number at the bottom of the page for last month accurately reflects how much money you made last month, we’ve got work to do.

Josh Hadley 00:11:55  Yeah, I think it’s so important and it’s it’s frankly scary if if you are in this seat, those listeners that are like, I think that’s me. I think one of the most important things that you can do right now is like, truly take this to heart, because I love your analogy right there. Think of becoming an author but not knowing the English language, right? It’s like, how in the world do you think you’re actually gonna write a book that other people would want to to buy? Well, likewise, how can you run a business without understanding the basic fundamentals that go into that business, such as the contribution margins, your ROAS, right, your turns on inventory? And if we’re speaking a foreign language to you right there, like we need to do some some deeper dives into this.

Josh Hadley 00:12:42  So I guess my question would be for you, Bill, if somebody is like, yeah, hey, that’s me, I have some issues. I can’t see the real profitability of my business. I don’t know that I trust my accounting statements. What’s your first recommendation for them to get that corrected?

Bill D’Alessandro 00:13:00  Yeah. So a couple common things I see that introduce error into people’s financial statements or variability or confusion to where they don’t feel like the month to month results that you kind of reflect how their business is doing. The number one biggest thing is around cost of goods sold and inventory accounting because for for two reasons. One, this is probably one of your biggest line items, right. It’s you know, 2,030% of sales probably. Right. And so that’s a big number. It’s probably the biggest single number besides advertising. Advertising is pretty easy to do accounting for because they charge a credit card and they charge it pretty quickly, which means that credit card charge probably hits in the month that you spend the ads.

Bill D’Alessandro 00:13:42  inventory. Totally different. Right. You might buy a whole bunch of inventory in February, and then you drip it out over five, six, or seven months as you sell all the different SKUs. Right. And I see first, the first major error I see is people on cash basis for inventory, which means that if you buy, you coming up here in January, you buy $100,000 worth of inventory. They just put $100,000 in Cogs right there in January and then no cogs in February. If you were doing that cash basis, your financial statements will never make any sense because January looks terrible, in February look great. And Marshall looked great. And so you’ve got this huge lumpiness in the Cogs line. So that would be called cash basis accounting. Right. When the cash goes out the door that’s when it hits the piano. You can’t be doing that if you’re if you’re a serious business. We got to grow up past cash accounting. Like, it might be fine if you’re a service business, but in e-commerce, we’re all inventory businesses.

Bill D’Alessandro 00:14:40  You know, a huge portion of your balance sheet and your net worth is sitting on the shelf of your three PL. And if you’re not accounting for that properly, you’re flying completely blind. So if you are not on a real accrual basis for accounting or for cost of goods, you got to get there right away. What the hell is accrual accounting? That’s it. Like, I’ve run into a lot of people that kind of don’t know what that is. And in short, accrual accounting means you match the timing of revenue and the costs associated with generating that revenue. So if you buy a whole bunch of inventory in January and you don’t sell it all in January, you don’t want to recognize the expense of all that inventory in January. You want to only recognize expense for what you sell in January, in January, and then later in February when you sell some more stuff, you want to recognize the expense of some more stuff and so on and so forth. You can see how this gets really complicated, because you got to keep track of the cost of everything you bought, and when you sold it and when you sold, each thing cannot be done by hand.

Bill D’Alessandro 00:15:45  You need integration. So we can come to that in a little bit. But broadly you got to be on accrual. So when you buy something you got to capitalize it on the balance sheet and then drip, drip, drip it onto your PNL over time as you sell it. So that’s that’s the first place if you’re not on accrual you got to get on accrual.

Josh Hadley 00:16:02  Yeah. And Bill, we’re going to talk even further into this. But my favorite thing is we actually run two sets of books in parallel. So we have the cash basis accounting. And then we have the accrual basis of accounting. So like at the end of every month I’m getting two different reports ones on the cash basis, side ones on the accrual basis side. And again the cash basis side because I want to know how much cash actually is coming into the business and you could do a cash flow statement. But for me, I like running it. There’s also some tax advantages. You’re you’re kicking the can down the road, but you could make a massive, especially with the new, big beautiful bill that came out.

Josh Hadley 00:16:43  You could purchase a lot of inventory at the end of December. Put that on your expense on your on your PNL for this current year. And even though you’re not going to be selling that inventory into further into the following year, you’re essentially kicking that can down the road. But for us, we utilize both of them. And you’re right, I think the accrual books allow me to know the true health of my business. Am I profitable with the way I’m currently, what I sold this month, the cost for those items and how much I spent on marketing. Whereas on the cash flow or the cash basis side of things, I’m just seeing a lot of lumpiness. And again, it’s more for tax planning purposes for me and how we’re able to kind of like show a bigger, decrease or expenses that allow us to reduce profit, but allows us to start the next year more aggressively. So with that being said, I am curious, Bill. Do you recommend people have build their own in-house accounting team, or do you recommend they outsource it to an agency? Do you have agency partners that you would recommend? Because I, I’ve also heard horror stories of certain accounting firms that are out there in the e-commerce space that do a terrible job with this Cogs accounting principle.

Josh Hadley 00:18:05  because they’re they’re not actually keeping track of Cogs. They’re not expensing them correctly. They’re not, they’re not adding the inventory to the balance sheet and then bringing it down at the end of each month. So give me your time.

Bill D’Alessandro 00:18:18  It’s hard. It’s so hard. Right. Like it’s a lot of work and so and it’s complicated. And getting it right is difficult. So yes I see this. If you’re doing this, I also see it being done wrong a lot. so one thing. So I recommend, if you’re seven figures, you probably need to be using like an outsourced bookkeeping firm, but you have to be really overseeing them. Once you’re kind of pushing towards eight figures, it can be time to start bringing an accountant in-house. then you kind of move towards having a control or an accounting team over time. One of the things that drives accounting complexity is, AR and AP accounts receivable and accounts payable. If you have a lot of accounts receivable, many usually if you’re like selling to retailers, that tends to drive the need for in-house accounting a little bit sooner.

Bill D’Alessandro 00:19:06  from a revenue scale point of view, if you are just like purely D to see, you can get well into the eight figures without having that complicated accounting. but similarly, if you have a very complicated supply chain where you’re purchasing from a lot of different vendors and then like combining things together or cutting things together or making light manufacturing things together. And you’re dealing with all the payables and and the combining the inventory values of things. That tends to drive in-house accounting complexity a little sooner. But like the best business in the world is like 100% DTC single product. $30 million E-com business, right? That business probably doesn’t need in-house account, right? The the worst version of this is like 5 million all retail super complicated supply chain. You might start wishing you had in-house accounting. so that’s sort of the how I weigh those things as far as complexity. does that make sense?

Josh Hadley 00:20:04  Yeah. No, that makes a lot of sense. Are there partners that, like, is there anybody you would recommend or we can we can not recommend anybody.

Josh Hadley 00:20:11  But like where would you point people towards. Because I think like truly like somebody listening to this like I have a finance background. That’s what I did in college. Right? So like to me, a lot of these numbers, like they come naturally to me and like I enjoy looking over the PNL statement every single month. Right. Because it dictates the future business decisions that I’m making. But I think, as you pointed out, like 90% of them have no idea. So maybe or maybe there’s like, is there a course? Like where do they get their crash course in understanding all of this for, for e-commerce or a good partner or agency to work with that will help explain it to them. You know that they’re also doing a good job with them.

Bill D’Alessandro 00:20:54  So maybe I should make that course because I have not run into that course. Maybe I should buckle down and do it. Let me first sort of say before I, I do have one firm that I have worked with a couple of times.

Bill D’Alessandro 00:21:04  They don’t pay me, you know, this is not a paid sponsorship for them. But before I get to that, even if you hire a bookkeeping firm, it does not absolve you, the founder, from understanding accounting, right? This is not just something you can like delegate. because ultimately, like, you’re on the hook. You’re the one who’s going to run out of cash and not be able to make payroll. so you have got to understand what they are doing. so I want to talk a little bit about also like how to evaluate a good accounting partner. So if you’re listening and you probably have outsourced bookkeeping already, in your heart, you probably know if you’re satisfied with them or not already. but a couple kind of litmus tests. as I mentioned earlier, this stuff has to be automated. You cannot be like, they can’t be like pulling a report at the end of the month and like, making a whole bunch of journal entries. They need to be using something like a tool which automatically hooks up to Shopify and Amazon and is like making these entries on a daily basis.

Bill D’Alessandro 00:22:03  And they need to be using something like finale inventory, right? Or there’s a ton of these inventory programs. I’m a little agnostic on which tech platforms they use, but I am not agnostic that they must be using some, so I would absolutely be kind of like first. Bah! You want your bookkeeping, your outsource accounting bookkeeping firm to be tech fluent. They should not be brute forcing this, right? They should be using technology to make their job easier, and should be dialing in how to use these tools to make all the data flow, so that the output of all the flowing data is accurate. Books and their kind of work, their elbow grease, should go into just the things that cannot be automated, like handling all the bills. Okay. Periodically we got to count the inventory just to make sure, like we haven’t lost some, some got damaged. There’s always a little slippage, right? They should be plugging the gaps in the automated systems and, you know, doing strategy with you but leaning heavily into tech.

Bill D’Alessandro 00:23:01  So if your guys are not doing that you probably need new guys. that’s that’s a really good litmus test. So the guys I have worked with are called ecom CPA. it’s their website, ecom CPA. I’ve I sent a couple people to them. I’ve worked with them. They’re very solid. They’re great for like, seven and low eight figure e-com brands. Obviously it’s all they do. E-com CPI. so I’ve sent people to them. They’ve done a pretty good job. I’ve never had anybody come back not happy. They’re very tech forward. You know they understand the inventory base. That’s that’s fine too. If you get an accountant like your brother’s accountant or whatever, not your brother, your metaphorical brother, nothing. Is your brother, judge, but, your metaphorical brother’s accountant, you know, and they don’t understand all the intricacies of of E-com and Amazon. Like, the Amazon settlement is so complicated. I’ll see accountants just clear that. Net deposit from Amazon. I’ll see them clear that right to revenue.

Bill D’Alessandro 00:23:59  Well, that’s not revenue at all, right? Because as we know, if you saw on Amazon there’s all these the FBA fees, the commission like the this and that. And Jeff Bezos steals a couple percent for his new yacht, you know, etc. in in that statement you need to be booking it up to gross revenue. And now again, Awacs or tools like this do this automatically, but you should get good granularity on your PNL. So you kind of see where all that money is going. so those those are a few things that I think about with outsourced accounting partners.

Josh Hadley 00:24:26  Yeah. I think you hit the nail right on the head there. you definitely want somebody that understands the inventory. Like, that’s a really good question to ask is like, how do you do the accounting for your inventory? How do you reconcile inventory at the end of every month? Are you doing first in first out? Are you doing your average cost of goods? is it LIFO or Fifo? Right. Like those are some of the questions you should be asking your accountant.

Josh Hadley 00:24:53  See what they’re see how they’re they’re doing that. And then you’re right. Whether you’re using a tool or like my books to settle your Amazon accounts or even Walmart, all of those things, you need to have that automated because it it is a whole ball of wax. And I think the final thing that you mentioned here, Bill, that I think we should really call out is people oftentimes will say, well, my wife is an accountant or my cousin’s an accountant. And so surely they could run my books. And it’s like, but what if all of their experiences doing books for a service based business, it is a totally different ballgame. And I think, like having e-commerce expertise is essential when you’re working with an accountant. Otherwise, like you’re just going to go months or even years putting things in the wrong, in the wrong place. And you’re going to be either more profitable than you thought you were or more likely than not, you’re going to be actually less profitable than you think you actually are.

Josh Hadley 00:25:55  and Bill, I think this like, leads into a really good segue, which I think one of the best reports that will also allow you to understand whether you are succeeding or losing in the game of margin for e-commerce is your cash flow forecasting, because you’re easily going to be able to see, like when the money’s coming in, how big those deposits are and how much money is coming out. And when that money is coming out so that you can see, like, is your bank account like continuing to grow or is it continually shrinking? give me your thoughts on that. And cash flow forecasting. I know that’s something that you you do a lot of work with a lot of your e-commerce clients.

Bill D’Alessandro 00:26:40  Yeah. So that’s like level two. So like level one, we need our books to reflect what’s actually going on. Right. And the reason you got to put that foundation in place is the next thing that you absolutely have to do is forecast your books into the future. And the easiest way to forecast your books in the future is to look at your books in the past and just draw a line, right? Just sort of extend the line.

Bill D’Alessandro 00:27:00  but if the the rear view doesn’t make any sense, good luck forecasting. you’re doing a forecast based on what you want to do, not what you think, not what plausibly might happen. Oh, I hope we’re going to grow 25% this year, right? And then when you grow 10%. Oops. I’m out of cash. and, you know, you build your whole expense structure to to open a dream. So we don’t want to do that. but if you’re listening, I wonder how many people listening have ever had the experience of. You think you’re running a profitable business? You feel like you’re Rojas. Feels pretty good. it feels business feels profitable to you. However, you might define that. And then you realize you’ve got to buy more inventory and you kind of do your regular analysis. You go, okay, I got to buy. I got to buy $200,000 of inventory. And then you look in the bank account and there’s $180,000 in the bank account, and you go, oh, I know I got to buy this inventory now.

Bill D’Alessandro 00:27:52  but, you know, my business is profitable. I think we must, you know, we’re building inventory, or we just might have a little bit of a cash crunch. I need to go just borrow some money, you know, for this pile. Just to kind of bridge me until we sell it. So does that sound like anybody listening? If this sounds like you, you need better accounting, right? And you need better cash flow forecasting because that is a huge red flag, because what people tend to do in that scenario is they go to one of these merchant cash advance lenders, the Shopify capital, the Clear coat, the wave flyer, you know, whatever. And they press the button. And once you press that button and you’re like, okay, well, I put my Po in. But now you never asked themselves a question. Why did I not have the cash to pay for that Po? Why was that? And they kind of hand wave like, oh, it was a rough patch or this is a bigger Po than normal or whatever, and they end up fixing a margin problem with debt, which basically, to put a bluntly point on it, you are borrowing to finance losses, right? Which is obviously bad when you put it that way.

Bill D’Alessandro 00:28:59  Right? Unless you were like deep in the middle of a turnaround that you were very confident or going to work. But if you’re just kind of ho hum running your business and you are borrowing, the first thing you should ask yourself is, why is my business not generating the cash flows to refill its own inventory? Blinking warning light? Right. Like my business seems to not be generating the cash just objectively because I can’t pay for my expo seems to not be generating the cash to refill its own inventory coffers. Something is wrong. So either you already knew that, and you’re. And you already knew you had a distressed business. But more likely, you probably didn’t know that because you don’t have any good accounting to be telling you that you’ve been losing money for six months, right? Because probably your accounting is wrong. so that is a common, such a common situation that I see ecomm businesses run into. And the way you fix it is first, you’ve got to get your accounting right so you can look in the rear view and go, I’m making your losing money.

Bill D’Alessandro 00:29:58  Then you’ve got to forecast that out. So you forecast out your PNL, your income statement, and you go, okay. I think this business is going to make $50,000 a month for the next couple of months. And then let’s say you’re perfectly right. You could still end up with less cash in your bank account. Well, how did I make $50,000 a month? But somehow I don’t have any more cash. Well, the way that happens is you probably had to buy more inventory. You probably have 150 examples. You’re in times three months, you made $150,000. Maybe you also have now $150,000 more inventory. You are inventory rich. I used to joke when I own the laundry detergent business that most of my net worth is in soap. You know, sitting on the shelf in the in my three pile. Right. Like, it’s there’s probably more cash on the shelf at your three PL than there is in your bank account. And so you’ve got to forecast out not only the PNL, but also forecast out all of the inventory buys that are implied by that PNL.

Bill D’Alessandro 00:30:57  Like if you’re growing, you’re going to need to plow a lot of cash in inventory. If you’re flat, you’re probably going to keep a lot of that cash. If you’re shrinking, it’ll probably throw off even more cash because you’re not buying any inventory at all as you sell down your inventory balance. So forecasting both your PNL, but also your purchase orders and your inventory balance will allow you to forecast then the balance in your bank account, which ultimately is the thing we all care about and the puts and takes, obviously, our PNL, the profit of the business, but also how much of that you are investing or not reinvesting in inventory. Until you can forecast both of those things, you’re going to find it very challenging to forecast the balance of your bank account, which puts you at risk for for the oh crap, I need to place a Po and I don’t have any money.

Josh Hadley 00:31:43  Yeah, I love that. I think it’s a great summary. And again, it goes back to like, do you have good accounting? Because if you were to if you were to plot things down on like a cash flow statement in the easiest terms, what you would need to do is like on a week over week basis.

Josh Hadley 00:31:59  Say, how much money do you expect to be coming in to the business right from Shopify deposits, Amazon deposits, whatever marketplace it is? Okay. What deposits coming in, and then what are all the expenses that are truly leaving your bank account this week? And then that needs to be forecasted out for the next, like arguably you want at least three months worth of visibility. Six months is even better. we currently like to focus on nine months for our brand, but like, I want to be able to see when when my big cash deposits are coming in. And, you know, I think, Bill, most people will understand this, especially with like Q4, typically in January, they have a lot of money sitting in their bank account, but they they spend a lot of that money. It has to leave their bank account in June, July when they’re placing these big POS for their inventory. It’s like it goes out the door and it doesn’t come back in until January, which then as we go down a further rabbit hole, Bill is like, what are your payment terms with your manufacturer? Right.

Josh Hadley 00:33:10  And I think that’s one of the most important things that this cash flow forecasting can like outline to you. Maybe if you have $180,000 in your bank account and you have a $200,000 Po, and you know you’re going to get another $50,000 deposit from Amazon and from Shopify or whatever in the next couple of weeks. So technically you will have that money, but if you had a little bit better payment terms, right. What if you had an extra 30 days? You actually don’t have to take out that loan because you also talked about this bill. When you take out a loan and because you don’t have enough money in your bank account, you’re fixing a margin problem with debt. So guess what you’re doing to your margin problem. You are compounding the problem and making it worse. Because guess what? If you take a cash advance from Shopify or from Amazon, it’s like those I call them predatory lenders because I think that’s exactly what they are. They’re like 20% plus April’s. they’re gonna they’re taking 20%. So if I would have got 50,000.

Josh Hadley 00:34:20  Great. Now you’re down to 40,000. Congratulations. Because you couldn’t wait two weeks or one month. You now lost $10,000 and paid that to a predatory lender to give you that cash advance. So I think that’s the way people need to look at this. I would recommend, Bill, for all of our listeners. If you have to take out a loan and you have to dip into any of these cash advance providers, something is wrong in your business. And on the flip side, I would say if you have the cash flow forecasting in and you’re accounting done. It’s not that loans are always bad, right? Debt can be good. You just have to have it modeled out to say, like, I’m placing a massive Po because we’re going into all these different new channels or whatever your strategy is, but you need to have a when do I get this paid back? And ideally, the best use of capital is going to be just kind of a line of credit, right. That it’s like it’s a temporary it’s at your lowest cost of capital, arguably.

Josh Hadley 00:35:21  and you utilize that instead of a 20% cash advance. So I know that was a mouthful. But Bill, what are your thoughts on that?

Bill D’Alessandro 00:35:30  I could not agree more. Like if you’re if your mouse is hovering over that merchant cash advance button and you are not holding in your hand a detailed Excel model that you are confident in, that explains both how you got to the point where you need this loan, and then also how it’s going to be paid back, while how you’re in a service loan, while also servicing all the other cash flow needs of your business, right? Your fixed overhead and your inventory growth. You should not click that button. And furthermore, as a really broad rule of thumb, if your business is not growing at least 25% year over year and you think you need a loan, you don’t. You have a margin problem. Because if a business is not growing, at least and you know this rule of thumb, but if you’re not growing more than 25% a year, your inventory balance is probably not growing so fast that your business shouldn’t be able to sell.

Bill D’Alessandro 00:36:23  Finance the inventory growth. When you think about it, you know, at low rates of growth, you should be throwing off enough profit that you can reinvest a fraction or even up to all of it in more inventory to support the next leg of relatively slow growth. The times in which debt is justified to buy inventory are only in times of high growth, because in times of high growth, you need to buy the next six months of inventory right now. And if that ramp is very steep, the next six months of inventory are a lot more inventory than you’ve ever bought before. And it’s reasonable that that might not be able to be financed by your trailing six months of profit. That makes sense. So a very steep growth curve. It’s reasonable that you might need debt on a very flat growth curve. You shouldn’t. And if you do, your margins are probably worse than you think they are.

Josh Hadley 00:37:16  I love it. I love that rule of thumb that if you’re not growing over 25% year over year and you’re having to take out a loan, you should definitely be pausing because you’re fine.

Josh Hadley 00:37:26  Yeah, you have a margin problem. Or and I’m curious if you see this as well, because I’ve seen this a few times. People are just siphoning money out of their bank account, putting it into their own pocket, and then wondering why they have to continue to take out loans. Right? There’s a few people that have like, oh yeah, I went and bought a new Airbnb or whatever, right? I bought a new house or property and I’m like. Then why do you have a loan on your books? Like, if you just bought a nice million dollar property. Why in the world do you have these loans that you perpetually have to dip into and then come to find out, it’s like, well, you took, you know, 300, $400,000 out of the business in order to go do this. And now it’s like that, that house or whatever you just did became really expensive.

Bill D’Alessandro 00:38:16  I mean, house is financed with a merchant cash advance loan financing a house with a cash advance loan.

Bill D’Alessandro 00:38:21  Not a good idea. Yeah. Get a mortgage. Right. I have seen that a lot less. The good news is that’s easy to fix. what you should tell them to do is. Hey, you’re just going to have to write those checks back in, right? You should be funding the business back from your own balance sheet. You shouldn’t be taking this cash out, putting it in illiquid things and then borrowing. And that is another thing that you should just broadly never do. Anytime you borrow the collateral of the borrowing should match the use of the funds. And that’s a fancy way of saying if you buy a house, get debt that is secured by the house, right? If you buy a business, get debt that is secured by the business. Don’t take a second mortgage on your home to buy a business, right? It’s generally don’t mix collaterals. If you’re borrowing money to buy inventory. That loan should be paid back by selling the inventory that you have borrowed to buy. Take out a mortgage.

Bill D’Alessandro 00:39:18  The mortgage should be covered by the rent from the property, right? The matching of the of the debt to the collateral and the cash flow is really important. When you start mixing things, you’re probably making that decision.

Josh Hadley 00:39:30  So on that note, I love that bill. While we’re talking about quick like a line of credit, here’s one of the things that I have, been doing that’s been kind of the most exciting. So there’s the infinite banking concept. Right. That it’s like the whole life insurance policy, blah blah blah. Like do with it what you will with that. However, there are certain like life insurance policies that if you do want to take out capital and also be able to build up your own personal assets. Right. I think one of the better places, if you’re going to say, I’m going to de-risk myself, I am taking chips off the table. Not 100% of my funds are going straight into the business. I’m going to take some of that, and I’m going to go invest it into a, a life insurance policy.

Josh Hadley 00:40:17  Then you can loan against your life insurance policy. So what my favorite strategy is, is if you build that life insurance policy up over time and it continues to grow, then you could then loan against it and you want to know what your lowest cost of capital will be, is, is going to be that right? Even better than a line of credit like you become your own line of credit. Now, this is not something that you can turn on overnight. This is a long term strategy, something that we’ve been building for a decade. So because of that, like we have funds to dip into when there is a shortage for a month or two or a high growth rate, I get to and guess what? I get to be my own bank. So that’s kind of one of the other like ninja hacks, I think. I think there’s two ninja hacks, that I would say in the e-commerce space, bill, as it relates to accounting and finance, the best e-commerce businesses, I think, have both of these.

Josh Hadley 00:41:14  Number one, they have really good payment terms. Okay. And the cash conversion cycle and the reason why Amazon was able to grow the way they did, it was negative cash conversion cycle okay. Which means you get money in before you ever have to pay money for that inventory or whatever that is. Right? Amazon’s really good at this, right? There’s a reason why Amazon just recently updated even the old legacy accounts. They said, hey I know you’ve been getting your daily payouts. Yeah. No we’re changing that. You can get it every two weeks. Do you know why Amazon does that? Because they are doing this cash flow forecasting and they’re like, hey, if we could actually sit on this money for two more weeks at x percent of interest, this is in their scale probably millions of dollars. so I think that’s an important thing to look at is your payment terms. If you can get closer to a negative cash conversion cycle with your payment terms, you’ve got an infinite ability to to scale your e-commerce brand.

Josh Hadley 00:42:20  And then secondly, if you are able to loan against yourself by being being able to have a, a life insurance policy that you could loan against that still continues to grow, but it’s protected from the business and the assets of the business. you don’t have to dip into those, predatory cash advance loans or anything from from Amazon or from Shopify. Instead, you could loan against yourself. That’s going to be your lowest cost of capital. Bill, anything else you would add to the accounting or cash flow forecasting topic there.

Bill D’Alessandro 00:42:54  So. Well, so I’m not I’m not deep on the life insurance. Maybe you and I should. You can teach me about that offline. That’s not something I’ve pursued mostly just out of ignorance. But I would view that’s that’s just another way of financing, you know, putting your own money back into the business functionally. Right. Because that policy is financed by cash that you took out of the business before and now is in a tax advantaged structure that you can put back into the business.

Bill D’Alessandro 00:43:18  And a slightly different it’s a more complicated and probably better optimized way to just put money back into the business if you need it. Is that a fair characterization?

Josh Hadley 00:43:26  100%. It’s just a yes to all those points. It has its tax advantages. Secondly, it’s able to grow right? And there’s certain policies like it’s a whole can of worms. So I’ve actually got an episode coming out in just a couple of weeks with somebody that I’ve been working with personally, that that’s built this specific for the e-commerce space, that it’s pretty game changing in my opinion. But you’re right, I think it’s a better way to a you’re taking chips off the table and if you need to dip back into it, it’s not something that we do on a regular basis, but it’s a safety net. If I do need it, it’s there. But if I don’t need it, then great. It’s it’s also my retirement at the end of the day as well.

Bill D’Alessandro 00:44:10  Right, right. And I think, this question is more of a philosophical one.

Bill D’Alessandro 00:44:16  I don’t think there are right answers to this question because I’ve met entrepreneurs who feel different flavors of this. You seem to be comfortable. And what many people are, you’ve taken money out of the business, occasionally putting some money back into the business, which, you know, you’re you’re convicted. You hope the business is going to pay it back like you are you personally. Josh himself is becoming the lender to the business, right? Which does mean you are taking credit risk. And now you feel like it’s a good credit risk because you know the CEO pretty well because he’s also you, you know, and you trust him, but you’re still taking a credit risk. my personal I started off doing that a lot. and that the positive thing about this is you can be a little bit more aggressive, taking capital out, knowing that you’re willing to put it back in, and you have kind of a blurrier line. I in recent years sort of flipped how I felt about that. And I philosophically built a little bit more of a firewall between the businesses finances and my personal finances.

Bill D’Alessandro 00:45:16  because, and that was actually a product of hitting a rough patch and having to write a check back into the business when I didn’t want to or wasn’t ready to. And I did bet on myself, but I was very nervous about the credit risk on that loan at the time. and what I realized is, if you are the business’s bank, the bank of first resort, you might be feeling compelled to put money in your business at a time when you feel as though it is the worst investment. Right. Because the your business, your personal balance sheet, the equity of your business is probably one of your largest assets. Not you, but anybody listening. Right. And we all hope to turn that equity into liquid cash someday by selling the business. But if the business is in trouble or not even in trouble, if the business needs cash, the time at which the business needs cash is probably the time where that equity value is most in jeopardy, right? Or most impaired. So you will probably be feeling the most poor at the time that you need to put more money into the business.

Bill D’Alessandro 00:46:18  And that can make for a very harrowing experience. And take that from somebody who has been there. And so I, you know, and some people are comfortable with it. And so I’m not if you’re comfortable with it, like, that’s fine. and it’s also I think magnitude matters if you’re putting a small amount of your net worth back in or a large amount of your net worth back in, you know, you will pucker significantly differently, depending on the magnitude. But I think it is you can always be the bank of last resort, the lender of last resort to your business. I would encourage people to cultivate lenders of first resort, who know your business. Perhaps a business line of credit, right? That is maybe not personally guaranteed. If you can, I would also convince or really encourage people to put that in place. Now, when you don’t need the money and the financials of your business are healthy. because if you can get a business line of credit in place, that is, you know, they underwrite it to the business, hopefully it’s maybe not even personally guaranteed.

Bill D’Alessandro 00:47:18  Then you can try to have other money of first resort, go into the business when the business needs it, and you can be the lender of last resort. You can always jump them in line if you go. This is a very safe investment. I’d like to not draw my line of credit, and I’d like to invest out of my life insurance policy or whatever. That’s your prerogative. But it’s always nice to have cultivated a lender first resort before you need it, in case you don’t feel like being the lender when the rubber meets the road.

Josh Hadley 00:47:46  I love that, and I have had similar experiences to yourself where, you know, you do have to take your own personal funds and put them back into the business. And I would argue, Bill, like even for me, it doesn’t matter the amount, just the act of saying like my business is operating is not operating well enough that I have to dip in to my own personal bank account to fund payroll or whatever it is.

Bill D’Alessandro 00:48:12  That’s not great.

Bill D’Alessandro 00:48:13  Hurts.

Josh Hadley 00:48:14  It hurts, it hurts. So you’re right. and that’s a that’s a whole other conversation that we could go down. But I love your recommendation. Like, right now is a great time to go secure those lines of credit. You may never need it. And that’s great. And we do the same thing. I also have a line of credit. We also have our life insurance policy. So I have the crapper to hit the fan. I know the places I could go to. Right. Because when things drop right, what do you think closes up really quick? The lenders get a lot more strict. So don’t think like, oh, if there’s a big economic recession, I’ll just go to the bank. It’s like, no, no, no. The bank says, no, you’re not getting any money at this time. It’s too late. So now is the best time to go secure those.

Bill D’Alessandro 00:48:59  Yeah, exactly.

Josh Hadley 00:49:01  Bill, as we kind of, begin to wrap things up, there’s one other topic that I think is worth mentioning that you work with other entrepreneurs on, which is having the right butts in the right seats, driving the drive in your ecommerce brand.

Josh Hadley 00:49:17  What has been what are some of the biggest mistakes that you’ve seen people make when it comes to hiring? And what are your recommendations? Knowing that you’ve been able to grow a successful brand into well-established eight figures. Been able to exit that business? And I would argue you were able to do that because you had really, really smart operators on your team. It wasn’t because you were this wicked smart genius man. No offense to you, but like, you didn’t do it all by yourself. And so I think it’s that team. And it’s even for myself, it’s the team that makes the magic happen right now. So what mistakes do you see people making from hiring management and having the right people in the right seats?

Bill D’Alessandro 00:49:58  Yeah, yeah. It’s so hard but so important. And I would say as much as anything else, this is the hardest part of going from 7 to 8 figures. so I heard somewhere that every time your business doubles, all your systems break. And of course, that’s not some law of gravity, but it’s a really useful axiom, which is every time you double in revenue, all of your systems break.

Bill D’Alessandro 00:50:22  but also all of your people break almost always. And if you are scaling through the seven figures and starting to push into eight figures, you are probably noticing that many of your people are breaking. You know they were great before, and maybe you have a lot of loyalty to them, but you’re also starting to realize that what got you here isn’t going to get you there. On both the people and some of them will grow with you, but a lot of them probably won’t. You know, a lot of people got to move from individual contributors to managers, and maybe they never manage anybody before. And managing is a talent. It’s a skill. And some people are good at it and some people are not. It can be learned, but unless you’re putting in a whole lot of effort to get good at that and not everybody will, you’re going to struggle in management. So you’ll start to feel a lot of people breaking. And one of the tough things is that as founders, all of us can be very loyal to the people that got on the boat with us very early and trying to grapple with somebody who you like personally, who has been there for you in the early days, but is now not scaling or stepping up into a leadership role and is holding the org back.

Bill D’Alessandro 00:51:31  That is one of the most painful things to go through as an entrepreneur. And I see it. I think almost every company has it. and I call it the Untouchable. Almost every company has an untouchable person who has been there forever. and other employees of your company would probably be able to point at the untouchable almost right away they go, oh, yeah, that person. They’ve been with Bill forever. And, you know, they have influence with Bill, and they’re kind of in their position because they one of the early employees, I would think real hard, whoever you’re untouchable is, think real hard about if you went out to market and hired again from scratch, whether you would hire that untouchable for the role they are in right now. and if you would not, you have some hard decisions to make, right? I’m not saying you got to manage them out of your organization, but I had to have several tough conversations with untouchables wherein I move them into a different seat. And I said, hey, look, I value your contributions.

Bill D’Alessandro 00:52:29  I want you to be here for a long time. But I, as a CEO, need to make a tough decision about how we build this team. And I think we’ve got to import some outside talent. And I change people’s job descriptions I hired above them, and those are not fun conversations. But if you don’t have them, your business is being held back until you do.

Josh Hadley 00:52:47  I think it’s well said. I mean, we have seen that evidently. and I also think to Bill, it also comes from like the expectations that you set with the team if the business is doubling. Right. I think the bar needs to get higher and the expectations need to increase. And so I think it’s also some people want those they want to step up, they want to grow. And so I think it comes down to having do you have performance reviews with your team members on a regular basis to say, look, we’re going to this next level. It’s also going to require you stepping up to the next level, because there are a number of people that honestly like they’re good people, but they don’t want the added stress of going to that next level or growing or stepping outside their comfort zone.

Josh Hadley 00:53:35  They’re just good with, like, I have my zone of genius and I just want to punch it out every single day. And it’s like, that’s great what you guys are doing. But we’ve also seen that as we raise our expectations in the performance, standards get even higher. You also have people that volunteer to get off the bus because they’re like, yeah, like I just I would love to just stay in my day to day stuff that I’ve been doing. And it’s like, no, that, that day to day stuff needs to go right, or it needs to be automated and we can no longer do that anymore. It was cute when we first started, but it’s no longer the needs. Do you also see that that works in terms of like being able to have people self-select out instead of always having to have like. It’s not like you’re saying, hey, go fire everybody. It’s. No, you got to start leveling up where you’re going and bringing on even better team members, setting a new standard.

Josh Hadley 00:54:28  Give me your thoughts on that.

Bill D’Alessandro 00:54:29  I mean, yeah. So I’ve had those conversations too. So and and it’s not necessarily up or out. I’ve had a couple of people who are really great contributors, and I tried to push them up into a management seat. And after like three months of doing it, they were like, I don’t like this. Can I go back to, you know, build websites or and I said, okay, that’s totally fine. You were good at building websites. Just know that means we’re going to hire above. You said, okay, just know that. And they were like, that’s totally fine. I’m a craftsman. I want to do my thing. You know, I just want to do accounting forever or, you know, and as long as you’re on the same page and they’re not culturally toxic. So we’re kind of assuming they’re not culturally toxic. But like, if they’re a team player and they just don’t want to climb the org. That can be fine.

Bill D’Alessandro 00:55:15  It’s semi rare to find. It’s a very specific personality type that is more of a craftsman that doesn’t want to do that, but like they exist. Like Google created a whole program for this, for engineers who just don’t want to be in management but just want to be individual contributors. I think it’s called like, I forget what it’s called. It’s called like Google philosophers or Google scholars or something, and there’s this whole individual contributor or career track that they can do and never manage anybody. But they also don’t get to do like a lot of strategy. You know, it’s like you hone your craft, but you don’t become executive management. And that’s fine for some people. But a lot of people do want career progression. And you as the CEO, it’s not about how can I bend the organization to make the career career progression that this person wants happen? The organization needs to be staffed in a certain way for the where you are and where you’re going, and we can try to make them fit into that.

Bill D’Alessandro 00:56:10  but you’re not going to. You can’t handicap the whole organization just to try to grow with one person. And I know that sounds really, really cold, but that was something I sort of had to learn the hard way. I was trying to contort my org at various times to allow someone some career development into a senior role, and it just created friction, and it wasn’t the where the org needed to go. And then it was even more painful to kind of back it out, move on from that, because at that point you’ve promoted them past kind of where they’re good and they’re failing and like you’re getting misaligned and that they definitely have to go. And that is very painful for the org as well. So don’t make that mistake. Yeah.

Josh Hadley 00:56:56  Bill really well said. We could spend a whole nother podcast episode just focused on that and Culture Index and how you hire and identify the right people and setting up KPIs to to track their performance. But I think, suffice it to say, like the team members that you have in specific roles make a massive difference in your business.

Josh Hadley 00:57:18  So, Bill, as we wrap things up, I’d love to leave the audience with three actionable takeaways from every episode. Here are the three actionable takeaways that I noted. You let me know if I’m missing something. Number one, make sure that you have accounting books completed at the end of every single month, and you should be getting those within ten days after that month end closes. And here’s what I would say if you’re like, oh yeah, check. I’ve already got that. If you as the CEO are not reviewing those books line item by line item and actually having like a management level meeting and spending a couple hours getting into the details, checking each of the line items just to like pass the sniff test. Yeah, things are categorized correctly. I recognize this big shipping expense that we paid for. If you’re not doing that, that’s your number one thing that you need to go implement in your business today is on a monthly basis. You need to be reviewing the financials. And it’s not just hey, look and see if you made profit.

Josh Hadley 00:58:19  It’s see what the top line numbers were. See what your contribution margin was. How much were you spending on ads and then what’s in your DNA? Your your general administrative expenses account. Right. Like what’s happening there? Are you losing a lot of money to software that nobody’s using, or are you paying a lot for masterminds and you don’t even have enough money for that. Like, there’s a lot of things you can die with a thousand little paper cuts. in the e-commerce game. So make sure that you do that. That’s action item number one, action item number two. If you’re like check, check. I review this on a monthly basis. I have my accounting books. I have somebody that I trust that spits out good numbers at the end of every month. Great. The next thing to implement is going to be a cash flow Low forecasting statement. This is separate from the cash flow kind of statement that you’re going to get from your month end closed, right. What has your balance sheet? Cash flow statement and profit and loss statement.

Josh Hadley 00:59:20  This is a separate forward looking thing that is projecting. How much money are you going to have in your bank account at the end of every week for the next nine months? That is a separate document, and that is honestly something I look at in the business on a daily basis. As we’re adding in new POS, as we’re bringing in different containers, whatever’s adding, we’re adding into the team. Whether it’s a new team member, we got to go update that cash flow forecasting spreadsheet because that’s pulling money out or we’re adding more money. So that’s action item number two in action. Item number three is make sure that you have management level staff on your business. In your business? I think too often, Bill, we go to these conferences and everybody’s touting their Vas that they got overseas for 2 or $3 an hour and they’re like, oh, they they do everything for me. It’s 2 or 3 bucks an hour. And I, I look at that and I’m like, I would argue if you picked up somebody for 2 or 3 bucks an hour.

Josh Hadley 01:00:23  I, I don’t think they’re a strategic contributor to your business. There can be some wicked smart, strategic people that you can bring over from overseas, but, like, it’s finding a needle in a haystack. You’ve got to go. You got to have thousands of applicants in order to find those type of individuals. So that’s what I would say is like e-commerce, the successful e-commerce brands aren’t scaling because they have a thousand Vas at 2 or $3 an hour. They have management teams that they pay significant money to to be able to build the business alongside them. So those are my three action items. Bill. Anything you think I missed here?

Bill D’Alessandro 01:01:02  Nope. I agree with that. It just. You cannot. Your main action item is if you are the CEO of an e-commerce brand, you are running an inventory heavy business which requires you to be good at cashflow forecasting. This is table stakes. You don’t get to opt out of it. If you opt out of it, you’re going to hit the wall.

Bill D’Alessandro 01:01:19  So you gotta learn, just like you gotta learn Facebook ads or you can’t have an e-commerce business. You got to learn cashflow forecasting or you’re going to hit the wall.

Josh Hadley 01:01:28  Love it. Well said. Bill, what’s been your favorite book that you’ve read and why?

Bill D’Alessandro 01:01:34  So favorite? I think you framed those most influential, most.

Josh Hadley 01:01:38  Influential.

Bill D’Alessandro 01:01:38  On the show and the show prep. So I’m going to recommend one that is very underrated, which is called the which is called Plain Talk by Ken Iverson. No one has ever heard of this book. So plain talk Ken Iverson is was he’s passed away now. He is the was the CEO of Nucor Steel From 1980 to like 2000 and Nucor Steel, he grew new. Nucor Steel Nucor was short for Nuclear Corp. when he took over. They had all this other non steel business. He there were about 20 million in sales when he took over in 1980. And he grew Nucor from 20 million sales to the second largest producer steel in the world, during a time where the steel industry lost 50% of its jobs.

Bill D’Alessandro 01:02:27  also at a time where the steel industry became almost 100% unionized except Nucor Steel. And the reason they never became unionized was because of his compensation structures and the way built culture of that company. They paid some of the most money for steelworkers in the whole industry without a union, because it was all performance based comp and a really flat org structure. And this is basically his autobiography, his business autobiography. It’s short. You can read it really fast. It was published years a long time ago and he is an old guy. But it’s fascinating because he was doing stuff like Lean Startup, like in the 80s, before anybody knew what that was or had ever heard of that. So it’s so cool to kind of watch him come up with this stuff from First Principles and some of the the culture building and incentive alignment ideas that he had in the 80s and 90s, which are still great and work today, because the human primate is not any different today than we were in 1990. All these things still work.

Bill D’Alessandro 01:03:32  So it’s short. You can buy it on Amazon. It’s like quasi in and out of print, but strong recommend Plain Talk by Ken Iverson.

Josh Hadley 01:03:40  Love it. That’s a new book recommendation. Have not heard that one and I look forward to diving in.

Bill D’Alessandro 01:03:46  That’s my goal. Something new.

Josh Hadley 01:03:48  Love it. All right Bill. Next question. What is your favorite AI tool that you’ve been using and how have you been using it.

Bill D’Alessandro 01:03:55  So this is going to seem like a cop out answer. But let me try to make it not a cop out answer. My favorite AI tool is just ChatGPT, but I don’t think people use it nearly well enough. I’ll give you an example of how we use ChatGPT in our business that people wouldn’t think to do. if you guys sell on Amazon and also you sell wholesale, you probably are familiar with people pretending to be Josh’s stationery store, but placing a wholesaler with you and then taking your buy box on Amazon under a totally different name. And you go, where are these sellers coming from? And it is genuine inventory, but where are they getting it? And I can’t figure out I don’t have any orders in my order history from Josh’s stationery store.

Bill D’Alessandro 01:04:35  But you know, Hadley’s stationery store is is in my Amazon buy box and I can’t figure it out. We were having this problem we could not hunt down. You know who this purse this hijacker was? What I did is I dumped all of the wholesale orders we’d ever had into a CSV. And I’m just just talking about it in the interface of ChatGPT. I attached it, and then I wrote a whole prompt that basically described what was happening. I said, these are the SKUs that are being sold on Amazon. I want you to go and here’s and I pulled this. I looked up their entity with the Secretary of state from Amazon and like, pulled all of the information I could have. And I just attached it just right there in the prompt in the GUI. And then the text of the prompt said, I want you to go through my wholesale orders file, and I want you to give me the five most likely purchasers to be the the Bandit on Amazon. Give them a confidence score and describe why.

Bill D’Alessandro 01:05:35  And you know, it thought for a long time and it gave me five recommendations. The second one ended up being and the way it figured it out was that the email address they were ordering from with us was an anagram of the entity name that they were using on Amazon, which a human being would have never come up with. And they had put it together from, like the Secretary of State filing. The AI did like it put together a pattern match that just a human would have never been able to do. So you can push these models like way further, just in the basic chat interface, without being a developer at all than you think. All of the effort comes into constructing your question.

Josh Hadley 01:06:19  I love that, that is brilliant, brilliant, brilliant, brilliant. I love that use case. All right, final question. Who is somebody that you admire or respect the most in the e-commerce space that other people should be following and why?

Bill D’Alessandro 01:06:33  so the guys this is I think these guys are under followed the guys at Portland Leather Goods.

Bill D’Alessandro 01:06:38  Are you familiar with this company? so, yeah, I wasn’t either. your wife probably is. they are nine figures, multiple nine figures in leather handbags. Like all kinds of leather goods, they have their own factory in Mexico where it’s just like, as far as the eye can see. People making handbags and those guys. Curtis is the CEO, the CMO. Oh, man. I apologized to him in advance. I think his name is Connor. Portland leather CMO. His name is McCoy. Sorry. McCoy. McCoy. Merkley on X. he’s at Mack McCoy. Merkley, is just a great e-com growth CMO. and follow him on X. He’s very interesting.

Josh Hadley 01:07:27  Awesome. Great recommendation. Another new one. Phil, this has been awesome having you on the show. If people want to learn more about you, they want to follow you. reach out to you. Where can they do so?

Bill D’Alessandro 01:07:39  You guys can find me on X? I’m at BillDA. you can also find me on my personal website.

Bill D’Alessandro 01:07:43  Builder. Com I think you’re starting to sense the theme. if you would like to work with me, you can find a form to do that on building, but the most important thing you could do for me if you know of a pet supplements or pet treats business, maybe yours. Maybe a friend that is interested in selling their business. go on my website and send me a contact form. We would love to buy it. Morgan Stanley has a huge amount of capital committed and they are very serious. They bought my business and now I’m in charge of buying other businesses. So if you want to sell your pet supplements or pet treats business, get in my inbox.

Josh Hadley 01:08:20  There you go. If you want your second home, your beach house that you’ve been dreaming of. Reach out to Bill. That’s right Bill, it’s been great. Thanks again for your time today.

Bill D’Alessandro 01:08:31  Thanks for having me, Josh. Good seeing.

MC 01:08:32  You. Thank you for listening. Visit Ecom Breakthrough Comm for more information. If you’ve enjoyed today’s episode, the best way you can show your appreciation is by clicking the subscribe button and quickly leaving a review.

MC 01:08:45  See you again next time!