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A
92% of business owners were paying more tax than they legally had to, which was shocking to me. Meaning 8% only had, you know, we're paying the appropriate amount of tax, the rest were not. So it's kind of shocking, but the foundation of that is. Robert Gavreau is a visionary growth driven entrepreneur and the founder and CEO of Gavro Accounting Tax Law Advisory. Drawing from his expertise in accounting, tax strategy and business advisory, he helps entrepreneurs build profitable, scalable businesses while redefining how professional services support long term financial success. One of the greatest foundations that I would say, Rudy, for business owners, and maybe this is one of the largest mistakes, is that business owners just aren't paying attention to the score of how their business is performing. So what is actually happening in their business? Are they profitable? Are they not profitable? And it really, this comes down to the foundation of do you know your numbers?
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What are the key sort of 5, 6, 7, 8 metrics they should be tracking in that company?
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One of the greatest tools I think business owners can implement to make their business successful is actually doing.
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My name is Rudy Moore, host of Living the Red Life podcast and I'm here to change the way you see your life in your earpiece every single week. If you're ready to start living the red life, ditch the blue pill, take the red pill, join me in wonderland and change your life. Hello and welcome back to another episode. Joining me today is Robert and we're going to talk about your favorite favorite topic, money, and how to not only understand your money better, track your money better, but also how to keep more money by maybe optimizing your tax strategy. Robert's a tax expert, finance expert, him and his firm, hundreds of staff, top podcast author expert all around when it comes to, like I said, managing money, bookkeeping, finance, finance strategy for your company, and then obviously the other side of that, taxes, which is so underappreciated by entrepreneurs. I know I said to this many years ago, so wanted to have Robert on to just educate you guys more about it. So Robert, welcome to the show.
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Thanks for having me, Rudy.
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B
So let's dive straight in. You know I talk about money, right? And I talk about in business, there's three phases of business. Phase one is like trying to earn more money and grow your company, right? And then phase two, when you do a good job of that is like trying to keep more money and that's what we're going to focus on. And then there is a third phase, eventually when you get really rich, which is protecting your money and we'll maybe leave that for another day. But so let's talk about number two. How do you help an entrepreneur, small business owner, you know, manage their money in their business?
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Yeah. And, and one thing I want to say, like we don't touch people's money, but we help guide them and advise them on how to make sure that they make the most of their money. And one of the greatest foundations that I would say, Rudy, for business owners, and maybe this is one of the largest mistakes, is that business owners just aren't paying attention to the score of how their business is performing. So what is actually happening in their business? Are they profitable? Are they not profitable? And it really, this comes down to the foundation of do you know your numbers? And when we talk about knowing your numbers, it's, it's really thinking of what's your financial scoreboard? Are you winning or are you losing the game? Sort of the, the analogy that I use, basketball. Right. If you walk into a basketball game and you don't really have an idea of what the score of, there's no scoreboard there, what's the strategy? Are you on full offense? Are you on full defense? Was that a three point shot, a two point shot? If you don't have clarity around your numbers in your business, how do you know what strategy you can put in place to really win the game? And I would say that, you know, for business owners, they need to have up to date financials, they need to be accurate and they need to be reliable. And then lastly would be the need to understand what they mean. And you don't need to be an accountant to understand that. But as a CEO, you need to know your numbers. The most successful CEOs in the world really know their financial numbers in their business.
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B
Oh, good. So, so I, I, I'm glad you bring that up because, you know, I, for about eight years, seven, eight years of my life, I consulted so many small companies and they'd come entrepreneurs, they'd come to me for marketing and branding and social. But you know, really to market well, you've got to know your numbers, right? It's all the numbers game. What's your acquisition cost? What are you making per customer? Obviously, how much is your budget, your ad spend? And I think I was really good at this as a business owner because I came from a sports science background. So, you know, as a scientist, you're tracking all of these things in a different way, what someone's weight, body fat, resting heart rate, all those things. And it's kind of the same Here. So, like, I have dashboards everywhere. And, you know, I know, I think I know every number possible. Like, more than anyone. I would try and argue, but I'm pretty obsessive over, over the numbers. But, but let's start from reverse. If someone isn't, what are the key sort of 5, 6, 7, 8 metrics they should be tracking in that company?
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A
Yeah. And probably the, the first one that everyone sort of leads off with is revenue. Right. And. But even before you get to revenue, you have to have an expectation of what you want your revenue to get to. Right. And so what is the expectation? What is your budget, what is your goal? And is your revenue tracking to help you get there? But business owners usually understand revenue in a really great way. The second one, and probably the most important that I find, Rudy, is understanding your gross profit number.
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Yeah.
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So gross profit is really revenue minus the cost of delivering that revenue. So if you're a service industry, you know, it's maybe wages, subcontractor fees, you know, to deliver on that revenue. If it's a manufacturer or retailer, you know, you've got purchases, you've got materials, you've got maybe subcontractors, again, wages. So really understanding the cost that goes into delivering that revenue, because gross profit number is something that every business owner should be focusing on, it will show you the trend of whether you're heading in the right direction or in an opposite direction, Especially with everything going on in the world right now. You know, recessions, you've got increased costs of fuel, purchases may be going up, labor costs may be going up. And if we're not paying attention to that as a business owner, we can see our margins diminish. And all of a sudden what was a profitable business could go into maybe not making money or having cash flow issues. A third one that I would say understanding your net income is important. You know, net income is a number that needs to be positive. I know a lot of people say, oh, you know, a business, when we get started, it's not expected to make money for, you know, five to seven years. That's not true. You know, if you're in a startup company and it's a tech company, and you're investing a lot in creating an asset, maybe that's true. But if you're in my space or in your marketing space. Right. As an agency or, or really 95% of businesses, you should be making money right out of the gates, and you need to be paying attention to that. The third, the fourth one, I would say, and maybe I'll end with the fourth is really on cash flow. And I think the importance of cash flow, people understanding that one, cash is king, it truly is. But two, even if you have profit in your business, it doesn't mean that you have cash flow in your business. You might be losing cash and having really high profits. You need to understand the difference and some of the mechanisms that impact cash flow, like loan payments, you know, shareholder or owner drawings, inventory increases, you know, a lot of those things. So understanding the difference in cash flow can have a huge impact on the long term success of your business as well.
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B
Yeah. And, and one thing I think, you know, we all struggle with as entrepreneurs is, you know, when we start, we kind of obsess over this, like, oh, let's chase a million dollars, let's get to a million, then five, then 10. And it's always about juggling, you know, profit. Right. And, and I've gone through different phases of my life and goals and focus like chasing gross revenue because that obviously means a bigger brand, more customers, bigger database and obviously can, can grow your ecosystem. And then there's times where it's like, hey, actually now, this year or this phase, I want to focus on profit. So I think that's something that's important to understand is like, because you, because it's the same when I did sports science, it's like one phase might be, hey, I'm going to eat more calories and grow muscle this phase and then the next phase I'm going to eat less calories and lose body fat now. And, and it is important to know what you're aiming for because trying to do bits of both, it normally is suboptimal. It's kind of hard to do both at the same time. It's possible, but so I think that's. What do you think about that? Like having, you know, the entrepreneur having clear focus for himself or herself and the team, 100%.
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I think it all starts with good goal planning and a strategy and you know, good to great. If anybody's read that by Jim Collins, you know, in, in that book he focuses on some of the most successful companies that ever existed and what made them great. And one of the consistent things that he talked about in the book was having a long term plan, having goals that the company was striving for, but also having the KPIs and the metrics to understand how do we actually accomplish these goals. So you know, one of the, one of the greatest tools I think business owners can implement to make their business successful is actually doing budgeting. You know, I would say 95% of small businesses, they might budget like you said, the revenue goal to say, hey, we're just going to focus on growing this top line. But, you know, do you have expectations for every level of your business? Your, your cost of goods, your overhead costs? If you have expectations that you set, it will help you continue to drive profitability in your business.
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B
Yeah, so, so we talked a bit about the key numbers and that side of things. What about like, the, the more tangible side? So, like, how do you track it? What's. Is there a difference between tracking that and bookkeeping? Let's kind of segment into that now.
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Yeah. And I think, you know, we're big users of QuickBooks Online. It's a really great way to integrate your banking feeds into your ongoing books. But again, they have to be up to date and they have to be accurate. I feel like a lot of the challenges is that small business owners will maybe do their own bookkeeping, which maybe they're, they're good at. But, you know, a lot of times in our experience, there's a lot of things that are missed. And when we continue to talk about, you know, the financial metrics that drive success in a business. We didn't talk about tax, but, you know, maybe I'll, I'll circle in on tax because paying too much tax is just an extreme cost that's avoidable. And, you know, when we think of the books, the books are really the foundation of good tax. If you miss out on expense opportunities, it's probably because your books aren't right and we definitely don't want to pay tax. I actually worked with Tony Robbins for three or four years at his business Mastery Events. We were his global accounting advisor partner for Canada. And one of the outcomes that we discovered when we were doing all these free tax Reviews was that 92% of business owners were paying more tax than they legally had to, which was shocking to me. Meaning 8% only had, you know, we're paying the appropriate amount of tax. The rest were not. So it's kind of shocking, but the foundation of that is, you know, good business structure, making sure that you're optimized for tax but not missing out on those, those expenses. So to go back to your question, you know, what really goes into having good numbers? Some of it's bookkeeping, some of it's having really good goal setting, but then some of it is setting the KPIs right. What is it that's going to drive those results that you can track on a weekly basis with your team. So here's a good example. Yeah, my team, we do a lot of financial reporting. So like financial statements for businesses. Each individual is responsible to complete two financial statements a week for businesses. That's a KPI where I can say, hey, if we are going to complete two financial statement packages for business, business owners this week, that helps drive our revenue, that helps keep accountability to our team, to drive results, that keeps our client expectations in check. It also drives success. So that's one metric of about 30 that we have. Understanding what drives performance and tracking that on a regular basis is so important. So up to date financials, good KPIs and don't pay too much tax.
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Well, and I was, I was trying to lead there, you know, because it's two phases, right? It's bookkeeping and tax. So, you know, and we jump to tax. But like, one thing I've learned is you can't have everyone's like, oh, what's the sexy tax strategy? But it's like, you got to do the boring bookkeeping, right, every day, week, month to like, actually get the right P. Ls and to obviously categorize everything correctly. So to even know what the tax strategy can be. And I think the reason it's so important that most people don't understand, because I, I didn't understand this is what most entrepreneurs do, is, okay, end of the year, I do my books, but then the year's ended. So then when you're like, oh, wow, I got, you know, good revenue, good profit, I owe this much tax, how can I lower it? It's like, well, you can't now because you actually miss that calendar window. And I think that's. So if there's one thing I highlight here in today's podcast is like, by doing it monthly and knowing what taxes you're going to maybe pay and where your profits at, most of the tax strategy actually has to happen in the previous year. You can't at the end of the year look back and go in March or February. I got to write off some stuff from last year. I know you missed that window now. So. So what? Let's talk about that. Like how. How do you track it on a monthly basis or quarterly to make those decisions.
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Yeah, being proactive is, is key for sure. And you know, one of the greatest questions that I get asked every year, Rudy, at tax time is what is it that I need to spend money on in order to save taxes? And usually I say spend it on me. I'll take your money. That's, that's no problem. Right. But, you know, depending on where you are, let's say in North America, you know, the tax rates are different depending on the state, depending on the country that you're in. You know, taxes can go anywhere from zero all the way up to about 50% in the United States and about 55% in Canada. So you need to understand how the tax system works and based on your location to really, truly understand the strategy. But my point with this is, you know, don't spend money just to save taxes. That's the worst possible thing that you could do. Because, you know, if you're going to give me a hundred dollars, let's say worst case scenario, your tax rate is 50%, you give me a hundred dollars, you're going to save $50 in tax. So you have $50 left because you saved the tax money. Whereas if you give me the hundred dollars, I have the $100, I pay tax at whatever rate. Let's say it's 20, I have $80 left. So would I rather have, you know, half of it or more than half of it? I would keep the more and I would make sure that I'm, you know, if I'm going to spend money that it's going to be very strategic to help me make more money in the future. Don't just spend money for the sake of saving taxes. You know, there's, there's lots of gurus that are out there, and I won't name any, but, you know, there's lots that are out there who are going,
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buy a new car that's passing, buy
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the jet, buy the private jet. Yeah. Get the yacht, put that, get the motor home, buy the fancy car. It's like, well, no, that. If you really want that, you know, let's find a way to make it tax deductible in the greatest way possible. But don't do that just for a tax benefit. Right. The other thing that comes up with me, Rudy, at the end of the year is usually when somebody will say, oh, well, you know, how was the year? And I'll say, well, this is great. You know, like you said after the fact, you know, you had a really great year. You owe $20,000 in tax. They go, how do we possibly. Like, we didn't make $100,000. I don't have that cash left in my business. And I go, well, that's, that's great. While you bought a new truck with your, you know, your cash and your business, you took a Lump sum out because you thought you were doing well. You know, now that your seasonality maybe, you know, the business is down, you have no cash, and now you have this big tax bill, and you're mad at me where the reality is you need to be more proactive and understand where you're at throughout the year and have those conversations. You know, truthfully, for me, it's more strategic timing than it is. What can I spend to save tax money? You know, if you're in a business right now and you're coming up to the end of the year and you're realizing, you know what, in the spring, I have to bring in this new equipment or I need, you know, this new furniture, I'm going to do a, A renovation of our space or whatever it is. Be strategic about your timing, because if you put that in place in December or you acquire those assets in December, you're going to get a large depreciation or full deduction expense at that time. And you can take advantage of the tax deduction now because if you pay the big tax bill and then you go to do the renovation or buy the equipment later, not only are you at the cash for that, but you're also at the tax from the year before. So be strategic in your timing, but don't waste your money on things just to get a tax deduction.
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B
Yeah, yeah. And I think that's so important. Just to add, like, I, you know, when I first moved to America, first grew my business, I didn't do this well. I didn't have a good tax guy. And he. I did the exact thing. I was, you know, living a decent lifestyle, and I still had money saved. But then, you know, eventually he didn't do my taxes well. I hired a better guy, realized I had like a 300 grand tax bill and I didn't have the money to pay it because I had spent a lot of that. I had some money, but I need it for the business. So then I had to, like, go back and pay it off over years, Right? And it's like, yeah, I think everything is like a lesson. You get better from it. Like, I was like, thank God this happened in my early 20s, because now I've, like, learned the hard way forever. Right. I love podcasts. And doing these things is people can learn from our mistakes. You know, like, you know, spend a couple of gram. You know, I was trying to be cheap, but it's like, spend a few more grand a year because, like, I probably paid 100 grand in interest over the few years. Paying that off.
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A
Sure, yeah.
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B
If I just spent another five grand more that year, I would have like not had that problem. Right. So.
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A
But that's true. Right? And people forget about that. They forget about the interest, they forget about penalties for late filing, the costs that go into those things, you know,
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B
to work with the IRS and like, yeah, I got threatening letter, all these things. Right. And I was okay with it. I knew we'd figure it out. And I wasn't trying to like do tax evasion or anything, but, but, and they were pretty understanding. Got on a payment plan. But like I don't think everyone handled it as well as me, you know, it would have freaked some for sure.
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A
And well, that's a peace of mind is so important as well, right. To know, to sleep at night knowing that everything's taken care of. Right. So some entrepreneurs that are a little bit more aggressive, risk takers, that's okay, right? We can handle that a little bit more. But those that are a little bit more conservative, the last thing they want is the IRS letter showing up and threatening to take their home. You know, it's. Yeah, it's not a situation you want to get into.
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B
Yeah, good. So the last question, just, you know, as we wrap today, people like are interested in this. Obviously it's a lot for them. How do they speak to you? Where do they start learning? How do they find you in next steps?
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Yeah, for sure. So any, any social media channels, you can look me up. Robert Govreau. I'm on every platform but if you want to reach out to our team, go to our website directly. GovCPA CA. There's a contact us element right on our main page. Drop a line. You know, as I mentioned, we did work with Tony Robbins. We did free tax reviews for all his members. We're offering free tax reviews for anybody who wants to come in. Right. Again, 8% of people are paying the appropriate amount of tax, 92% are paying more tax. Come in, get a free tax review. If we can save you money, maybe we work together. But check that out on our website. GovROCPA ca.
- [20:17]
B
Yeah, great. So we'll put that in the show notes and maybe people can start there, maybe listen to some of your stuff, start learning these things and then yeah, I hope today kind of inspired them, is a great time of year if they're listening right now to take control of it for 2026. So yeah, excited, excited for you to help some of the folks listening. And guys, if you listen, hope you enjoyed today and you know, it's not the. Always the most exciting thing you jump on right away, but once you've got it set, set and kind of forget and you use, you know, work with someone that's taking care of it frees you up to do what you do best, right, which is growing the company and being the leader and all that jazz. So, Robert, thanks so much. It was a pleasure. And, guys, take care. I'll see you guys soon.