Welcome to Built by Margin, the podcast where strategy meets the spreadsheet. I'm your host, Laurie Chen, fractional CFO and tax strategist, here to help you make smarter financial decisions, build a profitable business, and keep more of what you earn. Let's dive into the numbers that actually move the needle. Welcome to Built by Margin, the podcast where we talk money, mindset and cash flow for modern entrepreneurs. I'm your host, Laurie Chen. My guest is Samuel Crane, owner of Cinch IT and CEO of Desert Rivers Credit Union. Samuel, Now, let's start with your journey. You are involved with two companies. Tell us about them and what problem are you Yeah, so Desert Rivers Credit Union is a financial institution in Southeast Utah. We're a regional credit union. We have four locations and we're about $100 million in assets. And what we're really trying to do is bring financial services to the underserved people in this area. So there's a lot of businesses and consumers that don't have access to financial products, and we're really trying to help them to change their life by having access to capital. Then on Cinch IT, that one really came through discovering a need as Desert Rivers was growing. We are in a rural area here in Southeast Utah, and there's not a lot of enterprise IT vendor solutions. And we realized really quickly that, you know, as a financial institution, we needed an enterprise level, high-end IT partner. And we didn't have one. The closest one was like 200 miles away. And so I had a board member that was kind of an IT guru. And we were able to get Cinch IT of Utah started and really solve that need for the credit union, but then also expanding, you Okay, wow, that's awesome. Yeah. What were some early financial lessons that you learned along the way, and Yeah. So let's talk Cinch IT since that one's fresh in my mind. We just started that 4 years ago in 2021. And the one thing that I say to anybody trying to start a business is always get more startup capital than you think you're going to need. And I don't think we ran... We didn't run short, but we definitely could have used a little more in the beginning. And then with Desert Rivers Credit Union, it's kind of a different take on getting started. But some of the financial lessons we learned along the way there was that with a bank or a financial institution, you actually are regulated. And so you have to learn how to balance risk with what regulators are comfortable with. And so there's like this balancing situation that goes on in banks that we learned really quickly that it's a With Cinch IT? Yeah. So what I mentioned earlier with just needing more capital earlier on, always get more capital up front if you can. And then it's really the lifeblood of your startup. A lot of startups, they think, okay, I'll just get a little bit of money up front, just what I need, and then I'll get more capital as I go. But what they don't realize is, especially if you're getting an SBA loan up front, is that the best time to get your SBA loan is in the beginning. Because if once you're If you're a startup, you can show projections and say, hey, this is what I think we're going to be doing. If you're a year in and you're off your projections, then they're going to base that loan on your new projections that may be lower than what you stated earlier. And so, it's always better to start bigger in the beginning and then you can fund How much do they look at your assets on the balance sheet Yeah, so assets are a big thing. And I think, you know, for me, we had one other partner, his name is David Tatton, and so the fact that we both were had maybe a little more established in our life. We had good credit scores. Assets were important, but it wasn't like the end-all because you do have the SBA guarantee that helps get through some of that asset. They want to see some assets, some skin in the game. We had to put 5% down at least. And that's what they like to see for And then how many customers actually get I think, based off of us with Desert Rivers Credit Union, we have an SBA department. And really what we try to do is assess, should you go conventional or should you go SBA? And a lot of people should go conventional instead of SBA because there's less fees and you're better off that way if it's a real estate deal or something like that, or it's a small line of credit. But once you fit the parameters for SBA, your chances of getting approved are pretty good. But you want to have a trusted partner that really knows SBA lending. so they can really look at your situation. Because you don't want to run the gauntlet. The gauntlet is hard. I mean, there's a lot of paperwork. It's kind of invasive. So you don't want to run that gauntlet unless somebody says, I think we've got a good chance. So with us, I would say more than 90% get approved for something once they run the gauntlet. But we kind of do a pre-screening of Yeah, that makes sense. OK. So let's talk growth and scaling. I always say that growth is great, but scaling is where businesses often break. When did you realize it was time for you to move from survive to Yeah. So with Cinch IT, it was really interesting because we started off, had this really great run at the beginning. Then things kind of got slow. And it was like, oh, man, what are we going to do? Are we going to are we going to keep growing? Are we just kind of going to stay small? Right. And that was that was a tough decision to decide on. We ended up making some changes in our business and really doubling down in another area of the state. The name of the city is St. George. We hired two new people there and decided to try to scale there. And that really paid off for us. But it took us about a year before things really started to pick up there and started gaining a lot of traction. And that was So that's good to know. St. George, I've actually driven through there on my road trip Yeah. See, we're connected. It's a small world. What role did financial planning play in your transition? Did you have someone on your team like a CFO helping you model scenarios, manage your cash flow, or raise capital? I imagine in the company of your size, you know, where you're dealing with multi-million dollars worth of assets, you Yeah. So with Desert Rivers, what's nice about them is we do have a hired CPA that we work with. And he's really important. But we also have tax people that work with us. We have a senior accountant and a bookkeeper and some clerks, clerical people at this point. But really, when we got started... When I got started 13 years ago, we were pretty small. We just had one branch. And like seven employees. And so we actually, like, I was kind of the CFO at that point. And that was hard on me. I wish that, you know, fractional CFO was a thing 13 years ago, maybe it was a thing, but it wasn't really big. Because I would have leaned against that. But it was, it was kind of all on me. And we did get help from federal regulators helped us and, and we did get some outside help as well. But there was that point where it's like, okay, we got to hire CPA, we got to hire somebody that can come and help us do this stuff because I can't do it all. I got to buy back my time. Exactly. As far as financial systems, what systems are you currently using? I imagine they're a little bit different from when you first started. Yeah. So on the Cinch IT side, QuickBooks is a big, big one for us. That's our big financial system on that side. But on the credit union side, we have custom software. The one we're using right now is CU-centric. And it's really based... It's very credit union specific. And so it's a cool system, but we also utilize a software system that kind of plugs into CU-centric that kind of pulls that budgeting What was the reason for deciding to CU-centric? Really, like, And most credit unions go this way. They call it a core software that keeps track of all your deposits, all your withdrawals, your loans, everything. And so, that's what most credit unions, most financial institutions do is they have a core software that keeps track of everything. And so, even though it's custom to the industry, it's still very common for banks and credit unions to have a core software. And because you have a core, they usually kind of plug in your financial software into that. I will say that it's kind of like. your deposits and loans, your loan origination is the first thought of your core, but your accounting is usually like the second or third thought. And so it doesn't always work as well as like I compare it to QuickBooks, where QuickBooks is really focused on the financial side of things. It doesn't always work as well as maybe a And when you say that you use QuickBooks and Cinch IT, are Oh, good question. QBO. Yeah. OK. Yeah. And we've seen both. We have actually clients that are CPA firms. And so Cinch IT will help support both. Especially a lot of the older firms are using QuickBooks Desktop. And they're really invested that way. And I don't know what QuickBooks going to do if they're going to eventually phase out QuickBooks Desktop? I think their plan was to do it, but I think they've been holding off because CPAs have been like screaming at them that they love the old system, not the new system, you know? Yeah, my understanding is that Intuit is phasing out QuickBooks Desktop right now, actually. Yeah, they've already started doing that, So, let's see. I think new subscriptions for QuickBooks Desktop discontinued as of September 30th, 2024. And then all 2022 versions will be discontinued on May 31st, which is in four days, 2025. So yeah, as we speak, they're phasing it out. Dang. Yeah, I actually was just made aware of this very recently as well. So yeah, it's really, really interesting that we're talking about this. I'm a big fan of QuickBooks Online. Most of my clients that I've worked with have been in QuickBooks Online. And certainly it's more agile than QuickBooks Desktop is. So, yeah, I think it's great for reporting to so I understand the move, but I mean, I can understand why other people that have been used to desktop for years Yeah, from an standpoint, a cyber security standpoint, we Okay. QBO. Yeah, because they're the data is in the cloud instead of on a server. And then you're not like a lot of firms. I'm not saying every firm's like this. But a lot of CPA firms have remote workers. And instead of like remoting into the server every day, they're able to just go sign on. Yeah, when Yeah, and I think what's good for a lot of QuickBooks desktop users is that because there's that link to QuickBooks Online, that they can easily export the data. It's easier to export data from desktop to online than it is from, say, zero to QuickBooks Online. So there's less of a transition there. So at least they have that going for them. All right, so let's talk more about the numbers. Was there a moment when the numbers told Yeah. The How recent was that? Yeah, and he was in sales for us on Cinch IT, and we had really had gone a long time without really bringing much, much revenue in. And I mean, just get to that point where it was like, well, the numbers just don't support keeping, keeping it. And we ended up shifting to, to like a commission only, only position, which because he wasn't able to keep going, that was, you know, he ended up having to find something else, which was probably best for both of us. And really, that was the turning point for Cinch IT to grow across the state, was we were able to hire another sales rep and then double down into St. George. And it's just kind of grown. And now we're up in northern Utah as well. But it was tough. I mean, nobody wants to have that conversation with somebody that they really like as a person, but the numbers are just aren't If there was one metric that was driving that decision, what would it have been? Was it profitability or was it a I mean, for us, it was straight profitability. It was just that we weren't getting any new clients and we were paying a salary for Right. Yeah, those are all tough decisions to make. But I'm glad it sounds like you had the right team on board to help you assess, assess that situation and Right? I honestly I waited way too long. Like it would have been better for both of us. You know, it was probably a good Yeah, I think yeah, definitely as business owners, we don't look at the numbers and we focus more on emotional decisions. Then we kind of allow our financial statements to suffer because of the emotions, right? I definitely went through that experience as well. It's difficult to lay off your friends. But if the numbers are not supporting it, Right. Yeah. I mean, in the end, everybody's got to do what's right for their their organizations and their family. And what I've noticed is that Usually, it's right for them to if it can be done in a in a positive way where it allows them to have, you know, Yeah, absolutely. So yeah, I'm glad we started digging more into find the financial truth. When we think about finances, how do you think about profitability versus growth? Do you like to reinvest every dollar you have or are you more cash It's really interesting because in my Cinch IT business, I mentioned before I have a partner and we're very different. I would be all about grow, grow, grow, reinvest every dollar back into growth. And he's a little more on the cautious side. Hey, let's build up a financial reserve. And so it ends up, we kind of meet in the middle somewhere, which is really good. And in a way, it's a good way because we peck ourselves. He sometimes asks me the hard questions about, I don't know if we should really reinvest in that right now. And then other times, I'm like, I really think we need to push forward and grow here. And so even though sometimes It's hard because we think very differently. It ends up being a good Okay, so it sounds like you complement each other in terms of your investing and financial philosophies. You always need to have someone like that on your team to kind of do the balance Right. Yeah. For sure. And I think it's good for both of us because it helps us both to grow, but we also keep each other in the If you could go back and hire one key financial person just Yeah, on Desert River's side, it'd be our CPA that we hired later on, like I mentioned before, seven years in. And even if... At first, I may have said, Well, we don't have the money to hire a full-time CPA. But just to get them fractionally looking at some of the metrics, helping us to know how to guide our business. I think that Great. Yeah, great point. I was just telling someone else earlier that I think even just to hire a bookkeeper, hire them as soon as possible. And to hire someone with a higher level of experience and knowledge and the numbers, hire them as soon as possible as well. Yeah, Absolutely. Yeah. Yeah. And the bookkeeper, you know, we We hired one early on at Cinch IT, and that was awesome. And then something happened, and they left, or they couldn't help us anymore. And I remember there was like six months where we didn't have a bookkeeper, and I was just kicking myself. So I'm like, man, this is way hard. It's not that I can't do it. It's just that taking that time away from the other stuff, it really pulls me away from things Exactly. And that was my whole reason behind hiring that bookkeeper as soon as possible, like when you're early on in the game, because it takes a lot of time to fix issues, it takes a lot of time to troubleshoot. So you've got to buy back your time as the founder or the CEO. And you want to spend your time on the things that actually makes the business money. And so bookkeeping can be very technical. CPA, being a CPA is definitely a technical profession. And so the sooner you can invest in that person, the better off your business Right. I hear that all the time from entrepreneurs. It's the, well, I can do it. And, and the thing is, well, yeah, you can do it, but should And I can do it attitude is a good attitude to have, Yeah, especially if you have audacious plans to grow, which I think everyone that is in the game of entrepreneurship us. And if you are succeeding and growing fast, then you definitely need to allocate your resources in the right direction. And then have the essential people that are specialists in their field do their thing, right? So that gives you more time to do the things that bring Yeah, so looking forward, what is what's next for your businesses? Are you in new markets, new products, or just optimizing what you already have in Oh, man, grow, grow, grow. So with with Desert Rivers Credit Union, we've we've really taken kind of grown into southeast Utah with our branches. And then the last few years, we've been trying to develop products and services that every financial institution really needs to have. Mortgages, business lending, some higher-end checking accounts, premier checking, those kinds of things. And so we've really been trying to build... It's like we grew and then we were like, all right, we need to work on our internal self before we expand again. And I think that's about where we're at. We're ready to pop out again. And then with Cinch IT, we just expanded. So we're on the southern end of the state right now. And then earlier last year in the fall, we expanded the northern end of the state, and now we're kind of getting started in the middle of the state. So we really cover the whole state of Utah. But what we're finding with Cinch IT is that remote clients are becoming bigger and bigger because a lot of people work remotely now, and they need IT services as well. And so we're going to try to expand Western Yeah, we just landed one in Denver that we're super excited about, and it's a virtual assistant company. So not only are we helping their administrative office in Denver, but we're actually supporting all the computers from their virtual workers in the Philippines as well. So What's one financial habit or tool that you currently use that you wish you had five years ago? You mentioned if 10 years ago, fractional CFOs was a thing, you definitely would have hired one. What's something that's financial Yeah, I really like dashboards. We have a financial dashboard in our credit union level that we can look at every day. Our senior management can look at every day. And you have to take dashboards with a little bit of grain of salt because all the data that you're getting could be lagging or it could be... There's always a little bit off. If you can kind of get used to seeing what the financial health is of your business on a regular basis, then you can make decisions that will keep you healthy or pull you back Okay. And are you using any particular type of software to track the dashboards or Yeah. So the Desert Rivers Credit Union, I mentioned that core system, it has a dashboard built inside of it, which is really nice. And then, of course, QuickBooks on Cinch IT, we use some custom reports, but we also kind of built our own custom dashboard as well on Cinch IT, which is nice. But we use the data from QuickBooks to pull Yes. Okay. Yeah, I've done that with my clients too. Yeah, absolutely. I think dashboard reporting is a key component and a key measure to track and ideally on a daily basis. How often are you tracking the metrics Daily for Desert Rivers Credit Union and then weekly for Cinch IT, just because it's a little more manual process. And I love red, green, yellow reports. I don't know if you guys do that same thing, but if they can show up red, green, or yellow. Because your staff sometimes sees numbers and they're like, Is Exactly. Yeah, no, I like that. Yeah, we also use the color indicators. And yeah, especially if you have custom dashboards built out, you can you can have that automatically feed Great tip. I'm glad we touched on that. Okay, so let's do a quick lightning round of questions before we close. What's Oh, man. So many good ones. Right now, the one I'm Benjamin Hardy. My goodness. Is it Dan Sullivan? Benjamin Yeah. Amazing, amazing book. And talk about a mind shift. If you're ready for it, I would just say, be open minded about some of the concepts because it can sometimes The whole idea around scarcity versus abundance, that one took me some Yeah, absolutely. Benjamin Hardy is one of my favorite authors. I've read almost all his books, and he also has an excellent YouTube channel talking about meeting your goals All right. Next question. Cash accounting or accrual I don't know. I like cash accounting. If you're a smaller business, I would say there's definitely a point where accrual accounting is warranted. Maybe when you grow a little bit past that seven figure, eight into that range. But yeah, that's my take on it. Either one can be good as long as you know what's actually being accounted, how it's being accounted. So I like cash for small business just because I think it gives you a better snapshot of where you're really at. But how So I definitely recommend accrual accounting because I've been trained as a CPA and a GAAP accountant. So I only like cash accounting, yeah, for like anything under $100,000 of annual revenue. Anything above that, even if you're a solopreneur making like 250K a year, I'd go ahead and switch to accrual accounting just because it's a better measure of your profits I think cash accounting is good for if you're like truly tight on cash and need to know like what your balance is at any one point. It's definitely valuable. I think you need to measure both. But like tax basis, I I agree with that. Yeah. Yeah. What are you seeing? Like when someone gets to that point, kind of in that 250,000 up I think the main benefits is just like timing. Timing wise, if they're able to delay the receivables or do something with AP, then it might actually be advantageous for their tax liability. I think if you want to be very simple, I think the cash basis for tax accounting is probably the most conservative way to go. But I think there's a little bit more that you can, I don't want to say manipulate, but there's a little bit more that you can shift timing wise between AR and AP on the accrual accounting. How do you help your clients understand cash flow? Because a lot of people... We have a deal with a lot of small businesses, right? And they see their profit statement at the end of the month. And they're like, well, that's how much cash I made. It's like, well, not really. How do you help people understand Well, you've got to show them both. So a key service that a fractional CFO offers is cash flow forecasting. And PNL forecasting. So you're able to show the CEO or business owner the two different sides of the coin. It's basically, you know, like looking at your balance sheet, projecting it out versus looking at your profit and loss and projecting it out. And so you have very different pictures, but I think you need to see both, especially if you're a very cash intensive business. So a very large multimillion dollar construction company that I work with has a very low profit because they're a general contractor. So they only get like 2% profit. And they have a large amount of accounts receivable at any one time. And they're constantly collecting on their pay apps. But depending on when that customer pays makes all the difference between whether or not they can make their bank that week or not. And so for companies where that cash flow is really tight, it's very imperative to see the difference between the cash forecast and then the profit and loss forecast, which basically measures Yeah. So we talked a little bit about financial metrics. What would you say is the most underrated financial metric that you track? Um, you know, for on the desert rivers, Union side, it's a lot of growth metrics, you know, and it might be like, you know, just growth of like direct deposits growth of of checking accounts, growth of online banking users, a lot of those things that kind of show us if we're headed in the right direction. It may not be the profit side, but it's kind of this leading indicator on whether we're going to meet our goals or not. And so a lot of people don't really track those kind of things. They just kind of focus on the main financial metrics. And same with, you know, same with Cinch IT, it's all about user growth because we're based off a user model. We charge based off of a number of users versus just a, hey, we don't charge hourly or anything like that. And so if we can understand what our churn rate is, that's really important. A lot of people don't really, especially on a user model, they don't really track their churn rate. And that can be a killer to you if you're losing more than you're bringing in. Yeah, churn rate is, because most of my customers are in software or SaaS, churn rate is huge. We measure that all the time. Yeah, churn rate, customer lifetime value, customer acquisition costs, those are all key indicators of how the business is performing, especially Now, lastly, if you were not a CEO or business owner, I would be a trail guide for... I've thought about this my other life. If I wasn't ambitious and wanted to be in business, I would probably work in the mountains and take people on these guided trips or something in the backcountry and do something fun there. I'm actually headed... This Friday, I'm headed to the Grand Canyon to hike the Rim to Rim. It's a 23 mile hike from the north rim, the south rim. Yeah, it's been on my bucket list for a long time. So that kind of gives you an idea of what what's That's great. And you I mean, you live in the perfect state Yeah, absolutely. As when I was in college, you know, summer, I would work in the park service. And I really grew a love for the backcountry and for the trails and, you know, always wishing I had more time back there. So yeah. Well, Samuel, this is awesome. Where can people find you and your work? Yeah, best place to reach out to me is on Instagram at Samuel crane CEO. I'd love to hear more from you. And you know, if you if you found something value from this podcast, just just me and let me know that what you heard and I I've got resources Awesome. Thank you again for being here. And if you enjoyed today's episode, share it with a founder friend who needs this. See you next time on Built by Margin. Thanks for tuning in to Built by Margin. If you're ready to turn insights into income, subscribe and join me each week as we break down the numbers behind smart business growth. I'm