Why Your Business Makes Money But Still Struggles Financially with Gita Faust | Ep. 413

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[00:01:20] You see this beautiful offices, equipment, and everywhere, and millions in revenue coming in. But outside, everything looks wonderful. But then when you start looking at your financial statements, that tells you a different story.

[00:01:36] Gita Faust is founder of Fast Track Consulting and realestateaccounting.com. Since 1999, she has helped business owners and real estate investors understand their finances through bookkeeping, accounting, QuickBooks, cleanup, and CFO services. Gita believes financial management goes beyond organized books. It means knowing where money goes, what drives profit, and what doesn't. She translates complex numbers into clear, practical conversations that empower owners to make smarter decisions.

[00:02:07] Welcome to the show, Gita. Thank you, LaTosha. It's a pleasure. Absolutely. The pleasure is all mine. So, Gita, you've spent a successful career. You've definitely built a successful career helping entrepreneurs and real estate investors gain financial clarity. What inspired you to start Fast Track Consulting, and what challenges did you encounter along the way?

[00:02:33] So, you know, being good at your profession is one thing, but running a successful business is two different, completely different things, right? So, let me tell you something funny. Most business owners do not go into business because they love accounting, right? They're passionate about something, right?

[00:02:56] It could be marketing like you or construction or real estate, you know, helping people, right? But nobody tells them that when they become business owners, they also are responsible for understanding their cash flow, taxes, and hundreds of other things, right? It's not like wearing one hat and doing everything by yourself.

[00:03:23] So, to help business owners, I started my business, Fast Track Consulting, back in 1999. And over the years, I discovered that I really enjoyed it. I love challenges. So, you know, that's what I learned during the course of my business. When a client comes and says, you know, can you do this? I used to say no, but then one of my clients challenged me saying, you've got to do this for me.

[00:03:53] You're the only one I know can do it and are capable. I'm like, okay. So, I learned that I love my challenge. I love a good one. So, I like to take complicated things and make it simple, you know? Sometimes the clients may look at their financial statements and say, Gita, I have no idea what I'm looking at.

[00:04:18] And I would say, yes, let's do it together and figure it out what it is that you need to know. I love that. I love that. And so, actually, I want to piggyback off of that question because do some of your clients, like, they're so scared that they're like, you know what? I don't even care. Like, you just take care of it? Or are they really into that partnership and they really do want to learn?

[00:04:46] I have different kinds of clients, right? There are, we become partners either way. Whether we teach them how to do it as a consultant or a mentor, right? Or we do their bookkeeping, controllership as a controller or as a CFO, fractional CFO. So, we are still partners. It doesn't matter how they, we work together. Okay. Okay. Love that. Love that.

[00:05:16] Many entrepreneurs are so passionate about their businesses, but they absolutely dread dealing with their finances. I'm one of those people. Why do you think so many business owners avoid looking at their numbers and what can they actually do to overcome that fear? And you know, that is so true, right? Maybe they're worried that they're worried. Maybe they're worried that they're not making enough money.

[00:05:43] You know, maybe they don't understand the reports that they're looking for. Or maybe they're worried that they're worried about. Or maybe they're embarrassed to ask us questions. You know? And they think they already know the answer. But let me ask you something. Okay. If you own a restaurant, does that automatically make you an accountant? No.

[00:06:13] Right? Right. So if you're a real estate investor. That's true. That's true. Right. If you're a real estate investor, does buying property suddenly teach you how to read a balance sheet? No. Right?

[00:06:31] So I think that business owners wear so many hats that as accounting department, I'm going to broaden it a little bit. Right? Does not generate revenue right away. But. Good point. Yeah, it doesn't. Okay.

[00:06:55] Over time, if you know how to read, plan, forecast, and budget, you can definitely see that accounting, financials, does generate revenue. Because you learn to cut costs. You learn to increase your revenue. You learn to protect your money.

[00:07:22] So that's the fear of numbers that everybody has. That's a good point. That is a really, really good point. So you mentioned like fear of certain reports, right? Are there, I know you can't give everything away, but is there one major report that all of us as entrepreneurs should at least have or look at? Yes. Cash flow report. Okay. Okay. Okay.

[00:07:52] And I always tell my clients to keep their books on accrual basis. Right? So create invoices for your clients, customers, tenants. Right? You enter your bills for your bills for your vendors. Right? When you receive a document saying, okay, you owe somebody X amount of dollars, you enter it in any software that you're using. Sure.

[00:08:18] That way you can forecast. Okay. Okay. Okay. So you're a pay upfront kind of a business. You're receiving money on credit cards. And you're receiving money on credit cards all the time. Sure. As soon as you send an invoice, that's a different story. Yeah.

[00:08:48] But the cash flow will tell you what your cash is with all the customers who are going to pay you and any bills that you owe somebody. Right? Okay. So to keep it simple, cash flow is one that I really like to show my clients. Okay. Okay. That sounds really, really cool.

[00:09:18] And yes, I thoroughly am so appreciative of you answering that question because I know a lot of entrepreneurs are thinking that but wouldn't have asked it. So I just wanted to make sure I got that out there. All right. So you help entrepreneurs move from what you call shoebox accounting to organize lender ready financials. So what exactly does that transformation look like? And why is it so important?

[00:09:45] Like what is your style and how you approach it to? You know, shoebox is one thing. I have got Kleenex boxes with receipts. When I first started my business. So it's changed nowadays. So the shoebox has not disappeared. It just went digital.

[00:10:16] Right? So nowadays is everything is electronic. You just have to snap a picture of your receipts, your bills, your whatever document you have. And you just share it. Right? And that makes a process streamlined. Okay. Okay. I love that.

[00:10:41] So it's like an homage to the days that you had an actual box. That's cool. I like that. I love that. Yes. So, yeah. So it makes it easy to whoever is helping you for us. If we are helping you, you can be anywhere in the world. Right? And we can still help you with your accounting needs. Okay. Because everything is digitized. I love that.

[00:11:11] I love that. I love technology. I know some people are afraid of it. I'm like, bring it on. I'm good. Because if it can keep me from doing mundane tasks, if you will, you know, like certain things that I, you know, gathering your receipts, not the sexiest thing in the world. Right? But you still need to do it. Yeah. Don't gather that. Just stick your cell phone and start snapping a picture. That's all you need to do.

[00:11:38] As soon as you spend the money, take a picture and save it in a calendar, you know, on your cell phone. It's so much easier that way. Yeah. I love that. I love that. So can a business appear successful on the outside, but actually be struggling financially? And what are the warning signs that entrepreneurs should watch out for before it's way too late? Oh my God. You can look like a millionaire.

[00:12:08] Like we do right now, right? Yeah. I will claim that. So. And we may still be struggling to pay our bills. Yeah. Right. Right. So you see this beautiful offices, equipment and everywhere and millions in revenue coming in, but outside everything looks wonderful.

[00:12:38] But then when you start looking at your financial statements, that tells you a different story. Right. So let's look at two business owners. Both have $1 million in annual revenue. Right. Owner A runs a lean business. After expenses, he makes $200,000. Right.

[00:13:01] But now you look at owner B, he has a beautiful office, expensive equipment and more employees than the business needs. And after expenses, the business only made $20,000. Same revenue. Right. But very different financial results. Yep. And here's what makes it more interesting.

[00:13:30] Owner B might look more successful from the outside. Right. But not on his books. So we don't want to confuse looking successful with being financially successful. Yes. I tell people all the time, looks can be deceiving. Like those Instagram posts. Oh, look at this. Look at that. I'm in this car and that. Yeah.

[00:13:59] Sometimes they may be renting it. Okay. Like there are companies that let you rent things. Oh, yeah. I tell people all the time. I had a friend that was thinking about like taping a video and she was like kind of self conscious about like her space. And I'm like, there's no need, man. Like you can go rent the space. Like, I mean, people do it all the time. And some people just aren't as truthful with where they are.

[00:14:27] You know, and not to say that you have to tell your, tell everything, but if you've got people following you and you're just not being 100, you know what I mean? Like that to me, I got a problem with that. So. Yeah. Yeah. Well, you know, I have had a few clients who are very well known in the industry. And they have walked in our door, signed the agreement.

[00:14:54] We have worked with them and they are so successful. Their names are way up high and their books are terrible. They have no idea what the equity is. They have no clue where the money is. And they realized that only when they started going downhill and they came to me for help.

[00:15:19] I'm like, why didn't you come before? Yeah. Even you had a slight feeling that something is wrong. Yeah. Some numbers are not working out. You know, cash flow is not working out. I said, even if you did not come in from the very beginning, if you had that sense, you know, something is off. That's the time you need to jump. Yeah.

[00:15:47] And make a decision and get some help. I love that. I absolutely. Absolutely. And that brings us to our next question. So many entrepreneurs believe that making more money will solve their financial problems. However, is it possible that the real issue isn't how much money they're making, but actually how they're managing it? So let me work with an example here, right? Let's say you're selling something for $100.

[00:16:17] But it costs you $110 to deliver it, right? With the product. So now you're losing $10 on every sale, right? Now you tell me you're going to double your sales tomorrow or this month. But congratulations, I say. If nothing changes, you can double your losses also. Exactly. Yep. Yep.

[00:16:48] Right. That's why more revenue is not always the answer. Sometimes you need to understand the cost. Yeah. I love that. And the cost to operate one product you're selling or one service you're selling and compare it with the revenue you're making as well.

[00:17:18] And then look at your whole business together. So you need to look at the whole picture and break it down by the product or the service you're selling and see what your profitability is. I love that. And yeah, and you answered my question. I had a feeling that's what the answer was going to be close to, you know. But it's kind of funny how people are like, oh, I just need more. I need more.

[00:17:48] And it's just like, need more ways to mismanage what you have? I mean, that's essentially what you're asking is I need more money to fail with. So that's why one of the reasons why I asked that question. I had a conversation not too long ago. I'm like, maybe it'll sound better coming from someone else. So there we go. There you go. All right. So let's say that someone is listening right now, right?

[00:18:18] And their business finances are a complete hot mess, right? They're overwhelmed. They're embarrassed. And they don't know where to begin. What are the first three steps that they should take to regain control? First step. Sit down on a chair. Close your eyes and take a deep breath. Don't panic. That's your first step. Got it. Yep.

[00:18:47] Second, do not feel guilty or embarrassed about it. You know, trust me. I have seen worse. And you just need to be proud of yourself that you have taken the first step to acknowledge it. That you need help. Right? So to start with, there are three things that I tell other people to do.

[00:19:17] Where do you start once you realize it? So you start gathering your bank statements, credit card statement, loans, and everything that you need to take the next step. Right? If something looks wrong, do not rip out, shred out that page. Save it. Or do not delete a transaction in your software if you have to. Just leave it. Right?

[00:19:44] The second is reconcile all your accounts. You know, you identify what is missing, if there are any duplicates, bills have been paid, you know. And then you figure out what is giving you the wrong information. And that's when you start. When you start the process is when you are reconciling. Right? Then learn to use the numbers right. And break it down.

[00:20:12] So this billion dollar company. Right? All their expenses is 80% on credit card. They were doing their bookkeeping by themselves. And all the credit card transactions were without vendor names. Is this real? It's real.

[00:20:38] A billion dollar company was doing their own accounting. Yep. And they had vendor. Wait, they had vendors. They had receipts without vendor names? Yep. Yep. And in QuickBooks. Right? In QuickBooks? In QuickBooks. So this is what AI does. That's why. Okay. And not knowing how to do it right is the thing. Right?

[00:21:06] So QuickBooks says that it's easy to do things. Yes, it is easy. But you need to have the human touch. You need somebody to look at things. Right? Yeah. How did we find this out? We pulled a report. Expenses by vendor summary. And we saw like one or two pages of vendors only. But the expenses were very high. Okay.

[00:21:34] They received money. They received money on commission basis. So they didn't have any invoices. Right? They received monthly money. And that's it. So eventually we had to go down and add names on each and every line item. Oh my goodness. That had to be painful. Okay. Yes. So they realized that. And when we gave them a report, they said, oh my God, this expense should have not been incurred.

[00:22:03] And they were lucky enough to go back to the vendor and said, here is a list of payments you auto withdrew from our account. Charged a credit card. And it was approximately $350,000. They got refunded right away. In a month, you know, after we started working with them. So there are things that need to be followed through. Oh, wow. Right?

[00:22:32] Because they were wearing so many hats. Yeah. And they didn't have the time. They say, oh my God, is this something we should have been doing? I'm like, yeah, you should be. So you don't have to understand every number today. Right? Yeah. Just stop ignoring it. Yeah. That's a good point. Yeah. That is so crazy. That's an actual example. It is. It is scary.

[00:23:02] Wild. Oh my goodness. It's wild. So real estate investing, you know, a lot of folks are trying to get into real estate. So real estate investing is often promoted as a great way to build wealth, generate passive income. But what are some of the financial realities or hidden costs that aspiring investors need to understand before purchasing their first investment property? Oh boy. Okay.

[00:23:30] So the hidden costs are forgotten because they are not hidden. They are not acknowledged and they are not documented. Okay. So when you think that you're going to start a business. Okay. Whether it's real estate or any other business, right?

[00:23:54] Any money, any expense that you incur during the course of your thought, your research till you purchase your first property should be documented as well. Because that can be a deduction on your tax returns as an expense. Okay. That's what everybody misses. You know?

[00:24:23] And it's very scary. Say, for example, you're collecting $2,500 a month for rent. Your mortgage payment with tax insurance is $1,800. So in the end, you're making $700. That's $8,400 approximately. Seven times 12, I think it's $8,400 a year. Not bad, right? But you forget you have repairs.

[00:24:50] If you have a high turnover every year, then you have to account for that vacancy amount. Your move out expenses. You know, if your property is sitting empty for two months till you get the next tenant. You know, who pays for capital improvements? Like refrigerator, heating and conditioning. Now that annual money that you think you have in your hand, $8,400, is totally gone.

[00:25:20] So having the money accounted for by not only looking at your monthly expenses, but your futuristic expenses as well. Right? And the life of that equipment. Right? So your roof may be 20 years or, you know, 15 years. Right? So what happens after 15 years? Do we have the money?

[00:25:49] Will we have the money after 15 years to replace the whole roof? Right? When you have one property, you look at it different. But when you have multiple properties, the money is kind of one supports the other. One property cash flow profit supports the other property.

[00:26:14] Now, the decision you have to make is between if you have three properties, if only one is profitable and the others are not, you don't want the profitable property to carry on the expenses for the other properties. Okay. So you need to make a decision what you want to do with the other properties. Right?

[00:26:42] So whether you want to increase your rent or how do you manage the properties or just say, okay, you know, it's time to just figure out and sell that property and invest in a better one. All right? Until you separate the numbers for each property, you do not know. Right? Yeah. So that's very important, I think. I love that. Very, very thorough.

[00:27:11] I love your responses. Like, they are super, super helpful. Which leads to my next point. You've spent decades helping entrepreneurs navigate financial challenges, right? What is one belief about money, business, or success that you've personally had to unlearn? And how did changing that mindset affect your life? Being busy means being successful.

[00:27:42] Yeah. Yeah. Yeah. Yeah. You could be busy working on all the wrong things. Yep. Exactly. Yes. Yes. Right? So, and bringing it back to the same thing I have mentioned a couple times. You're wearing a hat. You're doing everything yourself. You're working on the weekends. You know, you're running out of time. You're not taking vacations.

[00:28:11] You know, how do you spend more time with your friends and families? How do you take me time? Yeah. Right? So, it's trying to balance and figure out how can I be profitable by working only 40 to 60 hours or 50 hours at the max. Right? In the beginning.

[00:28:36] So, when we start a business, we are putting all our energy and resources in it. Right? Oh, yeah. But eventually, you need to delegate. Right? Oh, yeah. And it starts with what is your time worth? In health, wealth, together.

[00:29:04] Not accounting for one at a time. Right? Right? So, where is your mental peace? I love that. Yeah. So, money does matter. Right? Yeah. But, you know, what are we building the equity for? Whom are we building it for? Where is our legacy? Everybody has a different way to explain what their legacy is. Mm-hmm. Right?

[00:29:34] For me, don't ask mine because it's a totally different answer, which nobody says that. So, let's skip that one. I love that. So, if your business is making you miserable and keeps you away from your friends and your family... What are you doing this for? Exactly. What are you doing this for? Yeah. Right.

[00:30:04] So, you know, what's the point of asking is, what does success really mean? Because you cannot define it. I love that. Love it. Yeah. So... I love that. Yeah. So, here's the thing. We are almost done with 2026. And we're talking about success and legacy.

[00:30:33] I know we're almost done with this year. But if you had to choose one word to represent your goals for this year, what would it be and why? I would love to share. And everybody make the same goal. That do not become busy building a successful business. That you forget to build a life. Yes. Absolutely. Absolutely.

[00:31:03] Right. And that's so important. Because once you decide that, you can see that light bulb going on. You know? Yeah. I do not want people to become accountants. I want them to make better decisions that matter to them. Right? And which eventually affects their personal life as well. I love that.

[00:31:32] So, if I can help someone avoid a costly mistake or understand where their money is, that's really meaningful to me. I love that. I love that. So, if I caught it correctly, your word would be build. Would it be build? Yes. I love that. Build a successful life. Yes. I love that so much. I love that. I really do. Because sometimes, you know, and I'm guilty of this.

[00:32:00] Sometimes I've been guilty of working on the wrong things. Being busy does not mean you're being productive. Right? Right? No. So, I think a lot of us, especially if you're more type A, I'm going to be honest, I'm more type A. If you're more type A, hold up your hands. Yeah. I know. I think we have a problem with that. I'm just going to say it. But yeah, I love that. Focus on building a life. I love that.

[00:32:25] So, at Hustle & Faith, we believe that your past doesn't have to determine your future. Right? So, for someone who feels discouraged by past financial mistakes or just believes that it's too late to achieve their entrepreneurial dreams, what advice would you give to them to help them move forward with confidence? Okay.

[00:32:52] I would say do not compare your journey with somebody else's. Yes. Okay. You can learn from their mistakes so you do not make it. Yeah. Right? Start where you are. Understand what you have. Right? And then decide what you want. Oh, I love that. Okay. Right?

[00:33:22] It's the same thing that when we make a checklist, right? So, my mother-in-law, she would say, do you want it or do you need it? There's a difference. Yes. There is a difference. That's where you are. You know, you want to start where you are today. Understand what you have and decide what you want.

[00:33:51] And then take the next step. Right? Because that leads to your financial statements as well. If you don't have your profit and loss and balance sheet by each property or each product, right? Or each service, you need to know that that's what you want eventually. I love that. I love that. Well, Gita, we could talk all day.

[00:34:21] I know for just like full transparency, we had an amazing conversation before we even jumped into this. So, I could talk to you literally all day. And I know our audiences learn so much from you. If they want to continue this conversation, like how can they go about doing so? You can reach me at realestateaccounting.com. Okay.

[00:34:46] I'm the only one and only Gita Faust in the whole world, as far as I know, as of today. All right. Prove me wrong, please. And I do have something to offer to your listeners. Yeah. We have a property profitability checklist. Nice. Okay.

[00:35:12] And it's totally free that people can assess where they stand for each property. Oh, nice. Okay. Fantastic. So, I'll share the link with you and you can put it in the bio then. Absolutely. I would appreciate it. Absolutely. And I appreciate you sharing that with the audience as well. All this information can be found on the Hustle and Faith website, the show notes. Gita, it has been an absolute pleasure speaking with you.

[00:35:41] Thank you so much for coming on to the show. You're welcome, Latasha. Pleasure is mine. Thank you. Thanks so much for listening to this episode. If you enjoy listening to Hustle and Faith and would like to support the show, please consider sharing it with your friends, rate or leave a review, donate or make a purchase at our shop starring you crew.

[00:36:07] Remember, if you're everything to everyone, you never know who you will inspire. See you in the next episode.