Alex Brokhin, Founder and President of Imperial Cost Control, joins us to talk about fractional bookkeeping and accounting services.
Please excuse any typos in this hasty transcript.
Matt Register: Welcome back to the show, Texas Business Radio, texasbusinessradio.com is the website. As always, I’m your host Matt Register. Jay Curry is over there in the co-host chair. We’re talking about fractional services today, and we have, in the studio, Alex Brokhin, who is the CEO of Imperial Cost Control, which does bookkeeping. Bookkeeping and accounting services on a fractional basis.
You’re really good at what you do as a business owner. You’re not necessarily good at some of these other skills you’re going to have to have and master. Sometimes it makes sense to bring in a professional, let somebody else do it. What do you think, Jay?
Jay Curry: Well, absolutely. Anybody who listens to us for any amount of time at all, they know that we really push hard on you need to do what you can do that drives the revenue and drives the uniqueness and drives the competitive advantage, and you need to let other people take care of the stuff that’s not relevant, so you can totally focus. That’s fractional services, and that can be a big contributor to your business.
Matt Register: Yeah, no doubt. Alex Brokhin, Imperial Cost Control. Alex, welcome to the show.
Alex Brokhin: Thank you. Thank you for inviting me.
Matt Register: So talk to me about Imperial Cost Control, what do you do?
Alex Brokhin: Sure, so we’re a fractional service that provides services controller level down, so which would include controller services, assistant controller as well as bookkeeping or clerical staff. Been around since 2008. We’re a staff of nine people, and we enjoy what we do. We think that there is a huge gap for small to early stage businesses that need that help, and we provide that. So we enjoy that.
Matt Register: Well, we’re talking about basic bookkeeping, because I can’t, as an investment banker, I can’t tell you how many times we get our hands on a client that wants to do a transaction and I can’t prove their earnings, right?
Alex Brokhin: Sure.
Matt Register: So talk to me about what level you’re coming in, because these guys certainly aren’t experts in bookkeeping and accounting. You guys are though, right?
Alex Brokhin: We are. We absolutely are. We all have accounting degrees, we’re all, like I said, trained accountants. Some of us are CPAs, and so one of the big things we do is we deal with messes, with accounting messes. We enjoy messes, we love them, and we can always figure them out. Our business is event driven. It’s usually either as companies are being sold or bought. It’s either companies cannot file tax returns, clear loan through the bank or the business owner or CFO just cannot figure out what’s going on with that company, and that’s when we get a call.
Matt Register: Well, and you get a call. You can bring in people to not only fix the mess, right, but you have people who can hang on long term and make sure that it doesn’t go back to being a mess, right?
Alex Brokhin: That is correct. That’s part of the business. And like I said, we do specialize in messes, but once you’re done with that, everything else is easy and you’re just cruising. We provide offsite and onsite bookkeeping and controller services on and ongoing basis and I think that’s what’s most helpful for the business owners, not to go back to the ways the company was.
Jay Curry: Alex, do you find that there’s a certain size or a certain limit that a small or a medium sized business just comes to where they have to get a full-time person, and maybe that’s when you’d come in to help clean it out and they hire a full-time person? But is there a size that you’d look at?
Alex Brokhin: Sure, so we start at probably a million dollars in revenue.
Jay Curry: Okay.
Alex Brokhin: That’s usually a good size to start looking at financials and make sure that you’re up to speed. But we go all the way up to probably 15 to 20 million in size, and at that point we see that there is a need for a full-time controller and we very often help companies to hire somebody by helping them to interview the right people.
Matt Register: Well, the benefits you bring to that smaller business that’s not quite ready to handle a full-time controller is they don’t have to pay for a full time controller, right? They can pay for a part-time guy. You can pay for a part-time bookkeeper that has a supervision of a controller, right? And it’s a cost savings measure, correct?
Alex Brokhin: It is, very much so. So what happens very often, you’ll get a controller [inaudible 00:04:43] that does not qualify. It could be somebody with less years of experience, and you know, for not knowing any better, it seems that it’s the controller. Well, we bring somebody that has at least 15 years of experience on a controller level, that also has a CPA and has done this kind of work for more than one year, clearly. And I think that the knowledge that we bring to the businesses is amazing. They managed to get somebody with many, many years of experience at a fraction of the price. So it will cost them probably 20% or 30% of what the full-time person would cost them, and they would absolutely get the service that they need.
Matt Register: Well, the whole concept of fractional professional services is interesting to me, because the business owner can certainly benefit from that higher level of experience, probably beyond what he could typically afford as a full-time employee, right?
Jay Curry: Absolutely right.
Alex Brokhin: So that’s one of the reasons why I started the company in 2008. I saw that there was a big gap with the small business in [inaudible 00:05:44] mid-sized businesses where they just don’t have the help that they need. Once you go into larger companies, you can see that there is people with higher skills and more qualified, and those businesses do better. But as we know, the rate of failure for a small business is much higher than a larger business, and I think that not having the right skills is a big issue.
Matt Register: Well, quite typically you’re going to have the business owner is not using his financials as a decision making tool.
Alex Brokhin: Correct.
Matt Register: He’s using it as, “Hey, we’ll throw them to the bank every once ina while, get them off our back for our loan,” and otherwise doesn’t pay a lot of attention to it. Talk me through how you guys can help that business owner take his financials from an afterthought to a tool with which he uses to drive business decisions.
Alex Brokhin: Absolutely. So thank you for bringing that up, by the way. So one of the biggest things that we see in the small business arena is we spend time by educating and training business owners on what financial impact does on their company, not looking at their books. So we would explain, you know, basic things like the difference between cash and accrual, and what the impact that does. We’ll implement months and closings. We do a closing checklist and help them to make sure they understand what’s going on, and what decision at what time they should be making. By no reason we are acting as a CFO, but there is definitely an educational piece for those guys.
Matt Register: Well, and it’s sorely needed, because a lot of these guys don’t understand it, and especially don’t understand not only the difference between cash and accrual accounting, but don’t understand the role of cash in their business, because 99% of the time that a business is going to fail, it’s going to fail because of a lack of understanding of cash and where it comes from and where it has to go, especially in a high growth scenario, right?
Alex Brokhin: Absolutely. Yeah, and that’s when I think what helps is we have relationships with bankers and also the other finance professionals, and we’ll help them to make the right contacts and make sure they don’t run out of cash at the right time.
Jay Curry: Now, I’ve got to think that working with a lot of CEOs, I run into situations where they don’t know what they don’t know, so they think they’re doing okay. But the reality is, in a lot of cases, they’re just flat breaking the law. They don’t know it, but they’re not doing their taxes right, or they’re not doing the withholding right. Do you come in and do an assessment to help them figure out what they need to know and help them figure out what they need to do before you come in to actually work with them? I mean, you’ve got to know how bad it is too. Is that a service that you provide?
Alex Brokhin: Absolutely. So we get together with them quarterly, usually, and we start with monthly and then we slow it down to quarterly and we sit down and we’ll look at their bottom line and we tell them what things they should be looking for. As you know, a lot of the business owners would go into the business because they enjoy what they do.
Jay Curry: That’s it.
Alex Brokhin: Yeah.
Matt Register: Yeah.
Alex Brokhin: They don’t really know how to run the business, or they’ve been trained how to run the business. So the last thing they want to do is worry about their accounting, but it’s very helpful when somebody comes in, sits down with them and takes 10, 15 minutes explaining where they are and what’s happening with them.
Matt Register: Well, invariably they get into business because they enjoy what they do, and they find themselves not doing that. They’re doing collections and accounting and bookkeeping and all kinds of nonsense they never signed up for, right?
Alex Brokhin: That is correct.
Matt Register: And fractional services are indeed a good way to try to get that figured out, right? And be able to add some other depth and knowledge into your business that otherwise the size of it wouldn’t necessarily support. Imperial Cost Control, we’re talking to seed founder and CEO Alex Brokhin. Alex, I want to thank you very much for joining us.
Alex Brokhin: Thank you.
Matt Register: So what is the easiest way for somebody to get in touch with you, should somebody want to learn more?
Alex Brokhin: Absolutely, so you’re welcome to go to our website, which is www.imperialcontrol.com. Welcome to call me or email me. You can call me at 7134440710, and all the contact information is on the website as well.
Matt Register: Alex, thank you very much. Imperialcontrol.com, we’re going to have that linked right from texasbusinessradio.com. We’re out of time, we have to go pay a couple of our own bills. We’ll be back right after this with a whole lot more Texas Business Radio.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.