Prepare Your Startup for Investment and Tax Season with Eric McKenney

Eric McKenney is President of Simplified Management Products (SMP) an Accounting & Consulting Firm headquartered in Montgomery, Alabama with a Satellite office in Atlanta, GA.

He founded his Accounting & Consulting Business in 2010, worked with venture capital fund Queensbridge Venture Partners as an Accountant/Consultant from 2014-2016,  and is currently working with venture capital fund Cunningham Capital in the same capacity since 2020,. He authored "Handle Your Biz" The Entrepreneurs Guide to Setting Up Your LLC, Partnership or Corporation in 2020 during Covid and developed Tax Software scheduled for Pre-Launch February 01, 2023.

Eric has an E-book called "Handle Your Biz" The Entrepreneurs Guide to Setting Up Your LLC, Partnership or Corporation. It can be purchased on Amazon.com for $9.99 or get Free copy at www.handlemybiz.com when you subscribe to his email list and follow him on Instagram @handleyoubriznis

Transcript

00:04.74
wearabletakeover
Welcome back to wearable takeover where we introduce wearable technology our ecosystem and the people that support it I am your host coachel also known as Lakeishia greenwade and today we were going to talk about what everybody wants money money and we're gonna. Talk about how to account for that money and processes and things that our founders and aspiring founders should pay attention to and I'm so excited that we have the expert here with us today and I met this expert I believe it was in California at a black enterprise event. And at that time we were just wasn some buddies made a partnership we're we're going to help each other along this dirty. But um I am pleased to introduce Eric Mckinney Eric Mckinney is the president of simplified management products and accounting and consulting firm.

00:46.84
Eric McKenney
Um.

01:03.64
wearabletakeover
Headquartered at Montgomery Alabama with a satellite office in Atlanta Georgia and folks let me tell you Eric is somebody that you want to know he's that silent partner but that powerful partner that is there and that's supportive. And this is why we wanted to make sure our ecosystem knew who he was now you might have heard of a famous entertainer who made waves with some of his investments in tech. Well let me just tell you that Eric was on that team that was supporting that particular entertainer. So when he founded his accounting and consulting business in 2010. He also worked with the venture capital fund queens bridge venture partners as an accounting consultant from 2014 through 2016 he currently is working on a venture capital fund cunningham capital excuse me Cunningham Capital in the same capacity since 2020 and he's been working with startups and other vcs for the past ten years overall he is the author of handle your biz. The entrepreneur's guide to setting up your l lc partnership or corporation. And in 2020 during covid um, he self-published that and he's currently developing tax software scheduled for prelaunch in February of 2023 so folks let's give it up for Eric Mckinney Give it up give it up give it up give it up we have the master.

02:34.51
wearabletakeover
We have the guru Eric Eric this is taxi and so tell our folks how how are you and other accountants doing right now.

02:36.47
Eric McKenney
Thank you maiesia.

02:44.78
Eric McKenney
Ah, we're busy tax season kicked off yesterday. So like we were talking about before been really busy with that from the start and I'm hoping that it continues throughout the rest of the tax season. So yeah.

02:59.53
wearabletakeover
So this is why it's so important that we have Eric here right now number one. It's truly an honor that he was able to carve out some time for us because I know many accountants and especially those that deal with the bread of work that Eric does he's he's creme de la crim. Okay.

02:59.96
Eric McKenney
It's busy right now.

03:17.77
wearabletakeover
Ah, right? He's working with a lot of the top features a lot of the top businesses and he's pretty humble. So I'm gonna try to pull some of these things out of him during this particular episode but you know what I got to take it back Eric you're from the Midwest Michigan to be exact sorry you're from Michigan you know I'm from Ohio but but.

03:28.24
Eric McKenney
Yes.

03:35.59
Eric McKenney
Um.

03:36.42
wearabletakeover
About your. Let's talk. Let's talk about your journey before we get into the the nuggets here in the nuts and bolts as relates to you know, accounting finance and and what our startups should be doing to prepare for tax season but tell us about your journey of getting to the Eric of today. How did you get started.

03:53.56
Eric McKenney
Wow um I actually started in a whole different field a whole different space I worked in automotive as a engineer and I decided that I wanted to go in a different direction. So I started taking classes. At my Hbcu Alabama State University got my my undergrad who got my undergraduateate degree in accounting international business and then I went and got my master's degree in accounting as well. So ah, found it.

04:12.15
wearabletakeover
Okay.

04:28.67
Eric McKenney
simplified management comp simplified management products ah while I was in undergrad and we started meeting people networking and here we are today.

04:39.63
wearabletakeover
Um I love it. So eric not only are you a premier man you know in this particular industry. You've worked with a number of major sports entities a number of major vcs and so. I'll let I'll give you liberty to namedrop if you feel the need to but folks let me tell you he is the real deal as a result Eric actually introduced me to 1 of my Bc Mentors who is just changing the game. For many investors for many athletes entertainers and for many startup companies and you could find him on most of the major news stations. But Eric what's so was so interesting is that you are a model of some of the things and and with some of the capabilities. Um, in competencies that we're going to see in this ecosystem because we are the ecosystem that takes people from where they are and give them that space to transition into a founder or or into other tech talent that's going to support the startups within a wearable tech ecosystem. And thank you for being a champion of warble tech ventures. Thank you for being an example of what success looks like and thank you for being an entrepreneur that is building these ah platforms and software and these consultations.

06:01.52
wearabletakeover
But also building it with community at heart and that says a lot folks because we at this ecosystem we believe in relationships and we believe in giving back and Eric has done that consistently even though he has worked at the top of his game. He is. Always made sure to make time for us along this journey and for that I wanted to make sure I extend my gratitude to all of our listeners so that they know the real man behind the business that is helping our startups so that they are doing the right thing.

06:36.50
Eric McKenney
Yeah, absolutely thank you I Appreciate those kind words and I want to say I appreciate you allowing me to be a part of wearable tech ventures and and to to help as much as I can. So yeah.

06:37.47
wearabletakeover
Doing the right thing.

06:52.18
wearabletakeover
I love it and so folks if you're listening you definitely want to take notes. You definitely want to take down Eric's contact information because he's somebody that were saying you want to go to him you could trust him and Eric let me just tell you one of my worst subjects and um'm um.

07:03.49
Eric McKenney
And.

07:09.58
wearabletakeover
I'm happy to say this right I like to stick with what I do well accounting is not what I do well throughout all of my formal business school. Um, and and folks I even taught business school accounting was not my being so I'm so excited that we have Eric who loves this stuff and you know what.

07:16.65
Eric McKenney
Um, if.

07:27.52
wearabletakeover
Big deal to go and get a master's in accounting like you're not just out here saying oh I do taxes on the side. No like you really went through the curriculum and whatnot and so what? what do you see changing for the field of accounting in particular and then also what do you see changing as it relates to the field of accounting as it relates to. Um, yeah, interacting with startups.

07:49.18
Eric McKenney
Well I think that right now if you would to do some research you would find that accountants are kind of limited right now they're having trouble trying to get people to actually go into the field. Probably because it's It's such ah, a strenuous curriculum. Ah as you've attested to and so yeah, and so I see I see it coming back around though because whenever there's a void people are going to jump in and feel that void. So I see. Coming back around soon enough but you know for now I'll I'll kind of fill in the holes where where people are needed and I can be reached at any time. So yeah.

08:31.20
wearabletakeover
I love it I love it and thank you for being that example, you're absolutely right? So for those of you that might be saying hey I may not be in tech but I want to support the ecosystem go to Eric we'll have Eric vet you.

08:42.20
Eric McKenney
Fish.

08:45.82
wearabletakeover
Give you that stamp of approvalal to to work with our founders because what we're building here is incredibly important. We're generating a generational wealth. We're making sure that our startups are barn on in the industry and so let's let's talk about the foundation. So it's tax season. Eric how should our startup founders prepare for tax preparation.

09:07.45
Eric McKenney
Wow I think first of all, it starts with setting up your business infrastructure properly to do so I think you need to file articles of formation if you plan on following an lllc. Articles of incorporation if you are incorporating and those documents need to be filed with the state in which you are choosing to establish a business and I think ah next you're going to need. Ah, set of bylaws which those bylaws are the rules of conduct for operation of the company. All agents members shareholders must follow those. Ah, another thing you're going to need for founders specifically ah is cap tables I'm sure you're probably familiar with those. Cap tables show company assets and securities and they show the percentage of ownership of each investment that the ah the investors have invested in and what that percentage of ownership is this is important because founders. If a founder decides to exit at any stage then their share of ownership at the time is easily determined and so is their compensation. So one of the last documents that is going to be needed is going to be annual meeting minutes.

10:37.14
Eric McKenney
Definitely have to keep your minute minute meeting every year. Ah in order to document any important decisions that were made throughout the year the documents should be kept in a ah company database and should be easily accessible. If needed to review or update it.

10:57.73
wearabletakeover
Okay, folks this is real work. Okay, so for some of you you might be saying oh I have this great idea and I can't wait to get started. Let me start on the product. No, let's go back to the foundation and art you you provided 4 key tools and 4 key instructions.

11:11.12
Eric McKenney
Um.

11:16.58
wearabletakeover
That are incredibly useful and I can tell you that when we started here wearable tech ventures before we we were not at five hundred one C then we transitioned to a five hundred one C three but even doing the bylaws. Ah that was like it was somewhat overwhelming. You know to to try to get that together and then also keeping track of all those records and.

11:26.64
Eric McKenney
Are.

11:35.18
wearabletakeover
For those of you that may be more on the artsy side or or you might be um, you know like ah, a kind of 10 creator or whatnot um that this might be a challenge for you. But there are tools that are available that you can incorporate to make sure that you have these documents in place. Um, there are some Ai tools note taking tools. Believe it or not that are incredibly helpful as well. So that you have everything that you need so one of the things one of the other important things you mentioned there was that of cap tables and so for those of you that may be hearing that term for the first time. If you're a founder that's just saying hey I'm just really trying to develop my product I know I want investment but I'm not exactly sure how to go about this whole cap table thing. There is a course that we can recommend to you if you email us and we'll send that to you as well. But what are some other tips that you can provide. Um, when establishing that initial cap table Eric.

12:31.82
Eric McKenney
Well, you're typically going to use. You can use an excel spreadsheet to create the cat tape the information that you're going to need is going to be all of the information related to the investors their name Address. Ah. Their social security number or the ein if they decide to come in as a business. Ah, you're gonna have the percentages of ownership as I stated before and basically that's that's what it's comprised of.

13:00.10
wearabletakeover
So it's very simple so it's not something where you know folks have to go and purchase a software for a cap table. They could do it using excel what they might have on their computer right now that's important that's something we want to share So folks don't overcomplicate it take your time.

13:05.94
Eric McKenney
No yes.

13:18.66
wearabletakeover
Give yourself time and establish a deadline as to when you want to get these things done and 1 of the other things you were talking about designating a state for operation. There are many startups that choose delaware as theirs of a corporation. Can you give us some history as to.

13:28.74
Eric McKenney
Who.

13:36.10
wearabletakeover
Why that may have been a preferred choice especially when we think about you know Silicon Valley um and many of them having you know their operation out of Delaware what are some advantages to that and why might a startup choose Delaware over their physical home state.

13:53.19
Eric McKenney
First Delaware doesn't have state tax. So and I think one of the the most important things is Delaware has a history of ah when it comes to legal issues of siding with corporations of most people. Determine. You know that Delaware is a good It's more corporation. Friendly. So that's why most people or companies decide to go ahead and incorporate in Delaware um, it can be kind of tricky though because you you can end up paying some high. Um. Business not business taxes but the taxes in order to have your company organized in Delaware every year that you have to pay that can can be kind of high so what? I've recommend is whatever state you're in just incorporate in that state. Because if you do incorporate in Delaware you're going to have to incorporate in the state in which you do business and then you'll be considered a foreign entity in that state and then you'll be paying that business privilege tax in both places so you know to start with you want to just choose 1.

15:03.88
wearabletakeover
Um, oh.

15:07.84
Eric McKenney
And if you decide down the line that Delaware may be a better place. You can always you know, ah move it over to Delaware.

15:14.48
wearabletakeover
Oh Eric you just answered one of my questions because I had businesses in the past. So I've set up that Maryland and in Delaware and I would notice that there were these fees that were coded for dola and I didn't understand it and I was like resistant what is that? No not pan it. But thank you for dismiss.

15:29.62
Eric McKenney
Yeah.

15:32.35
wearabletakeover
Buying that process and helping us to understand what that actually means and what it looks like all right? So you kind of touched on this. You said you know when preparing these documents is important that founders identify there in a sense their exit strategy because I know being a mentor. Um. For tech stars as well as being a mentor for Nasdaq and many other entrepreneurial ecosystems even in where protect ventures um one of the questions we often ask founders is you know what is your exit strategy and you basically provided a cheat sheet for founders. So that they can think about that and put some of that in writing but they can also you know shift that that answer as to what that's going to look like so um, can you reiterate any key verbiage and or documents that founders should have in place as relates to number 1 ownership and then. How does that again. Can you give us a better picture or and an example of how that applies to tax preparation if founders are exiting the business at different stages. So again, you know the document as relates to overall ownership and then a different stage exit if that happens to happen because we we want our founders to be prepared. For the worst and best case scenarios.

16:50.28
Eric McKenney
So those initial documents that I talked about the articles of formation in the articles of the corporation. Those documents are basically going to illustrate who the shareholders are different percentages of ownership etc. The bylaws. And sometimes the operating agreement is going to speak on everything that goes on in the business. How it's going to be run including an exit strategy. So if if things don't work out. This is how we're going to start dissolving the company. Ah, this is who's going to get their share of the money first creditors typically there's is's kind of a peck in order for it. But the bylaws in the the operating agreement should state all of that.

17:38.70
wearabletakeover
Okay, that's really good and I think that for any advisor coming in or potential mentor or advisor if they're looking at a startup or a startup is looking for advisor these are documents that you want to ask that startup do they have in place and it might be encouraging to say before we come to the table.

17:52.28
Eric McKenney
Absolutely.

17:57.45
wearabletakeover
Don't you get that in place so that we know how we're going to play right? and when we talk about our underrepresented founder group I really honestly Eric I've been in a lot of programs. Um I've been in a lot of startup programs I've been in a lot of accelerator incubator programs.

17:58.43
Eric McKenney
Right? right.

18:14.75
wearabletakeover
And I don't think anyone has introduced this advice as plainly as you have done today and and that's why I say Eric is a gem he is saving you time he is saving you money if you just listen and apply the advice that he is giving you right now. So kudos and that's. That's why it's so important we have people like this in our ecosystem. So okay, so let's talk about investors. Let's shift a little bit right? Um, let's fast. Forward. So let's say a startup has their document things and um, they have already you know started to build their model. Perhaps they have.

18:36.95
Eric McKenney
You.

18:48.78
wearabletakeover
You know they're getting some traction. They have their their model out there in the marketplace and and they get some investors. Um, how does having investors impact a startup's taxes if at all.

19:05.36
Eric McKenney
Um, so we want to talk about taxes as founders. We typically seek capital to fund our startups and help develop our ideas and products so in doing so most of the time we look to Vc firms. Or we establish our own funds to raise money so we must understand that when you take on investors in most cases, you're taking on a partnership you're forming a partnership each investor in the fund is considered a partner for federal tax purposes. So when partnerships are formed. The internal revenue service requires that form ten sixty five which is a partnership return. Be filed to report each partner's investment and gains or losses. So when you compile form ten sixty five it produces another form that must be. Distributed to each investor in that form is called a k one that k one is used by the investor ah to report those gains of losses when they filed ah ten forty their their individual tax. Return. Or when they filed the corporate tax return if they came in as a corporation so this is important for the actual founder of the fund because that person is the person responsible for ah, making sure that both the 10 65 is filed.

20:34.83
Eric McKenney
And for making sure that the k ones get distributed to the investors if this isn't done. You could potentially be on the hook for any tax liabilities on any gains and for any penalties for not meeting the Irs tax filing requirements. So yeah.

20:54.51
wearabletakeover
You know all this stuff is scary to me I'm just gonna be real with you. That's why it's awesome. They have Eric as a partner because sometimes it's like what and I know that's how some people may feel when we talk about tech and some of these people well um, and and you know how some of these things work.

21:03.33
Eric McKenney
Are.

21:10.94
wearabletakeover
And that's why Eric and his firm are so important he just broke it down and he told you the types of forms that you need and so folks I specifically recommend startups. Do not do this on your own. Do not. Do this on your own. It can be a little bit more complicated than what you think? Okay, so it's not like you know some people that may have few income streams and they may be filing their taxes online and think they're good. No. You need an advisor you need someone at the table.

21:36.87
Eric McKenney
Yeah, so look.

21:50.53
wearabletakeover
Um, to make sure that you are doing this correctly all right? So Eric let me let me ask a little something like this too. So do you recommend that? Startups. Let's say they're working with you. Do they do you recommend that they have an attorney as well. Um, and how does that work. Um, or are there different stages where they work with you and or an attorney to ensure financial health of their startup.

22:18.62
Eric McKenney
Well I think if you if you have an idea and you are planning on filing patents and things of that nature. You definitely want to have an attorney's assistance with that or a patent a patent attorney specifically. Um, other than that. I think one of the most important people that you need to have on your team from the beginning is an accountant, not just saying that because I'm an accountant but there's many reasons why and you need to have an accountant on your team throughout the lifecycle of the the company to assist with. Ah, financial record keeping ah like we talked about earlier earlier tracking the investors. The the accountant will know how to actually document these things based on accounting principles and prepare your financial statements. Ah, to be used to prepare your tax return at the end of the year so and another reason why an accountant is so important is is that the irs requires that financial records ah be kept for tax purposes every business in the United States should be doing this though. There may be a lot of ah us that that don't because in the beginning you just want to get out there and do business and you want to get your id out there and let people see it but you need to be keeping track of all the money that you're spending and any money that you bring in.

23:50.21
Eric McKenney
And so the internal revenue services doesn't really require a specific method for keeping track of these activities but I personally would suggest using a platform like Quickbooks online. It's a cloud platform and it's easily accessible. It's easy to use. And um, it's available for founders to access at any time as well as the accountants. So yeah, it's a Quickbooks online. It's an accounting platform that's in the cloud now they have desktop versions as well. But.

24:15.97
wearabletakeover
What was that resource again. Eric.

24:29.62
Eric McKenney
The Cloud version makes it easy to access from anywhere at any time you can access it from your mobile device and you can also share that login access with your accountant so you guys can work in the program at the same time he can train you and show you different things. Because accounting is is more than just numbers. It's really principles on how things should be documented so you know other than that is just simple addition and subtraction a little bit of multiplication and division.

24:53.59
wearabletakeover
A.

25:06.43
Eric McKenney
It's nothing complicated that part but the principles on how things should be documented. That's where it gets kind of complicated.

25:14.21
wearabletakeover
I Love that this is so simple to you and that's why you are the person needs to be open these teams make it simple for everybody else. Other folks might be like I don't know enough though we pull my hair out but you know what you you said something important. Um that.

25:31.43
wearabletakeover
People 1 of the most important people on your team is your accountant and so Eric as a resource that we have internally at wearable tech ventures somebody that we truly trust someone that has been on our team since the very beginning. So for our startup founders. Um, you know.

25:35.25
Eric McKenney
Absolutely.

25:50.51
wearabletakeover
We highly recommend that you contact Eric and and get a consultation and then also if you are a member of our ecosystem How do you become a member. Basically you just tell us who you are when you go to wearable tech ventures or go to the bottom of our page and tell us who you are. We actually have resources available and discounts available with some of the resources like Quickbooks and whatnot to help you build your business and to keep everything in play. So it's incredibly important if you have not already done so and you're listening to this episode stop right? now go to our website register. Our ecosystem. So that as we send out those discounts and other resources to help you on the back end you will be in play and you will be prepared for your conversation with Eric so Eric we are a global ecosystem and currently we have representation in 4 continents and we have founders. Ah, coast-to coast and the United States are there any stipulations for any of our founders working with you considering your dream your excuse me your geographic location in the south.

26:58.14
Eric McKenney
No, not at all, um, accountants can work with you no matter what states you're in if you're out of the country if they have that amount of knowledge that can work with you. Um, so no, there's no restrictions on that at all. As well. That goes for tax filings. If your accountant is filing your tax returns like I do um, it doesn't matter what state you're in I'm able to file your tax return because it's actually a federal tax return that we're following and then it also. The the software that we use comes with a state return as well. So every state in the United States we have access to the state return. So not only are we following your federal returns but we're following with the state if the state return is required.

27:46.59
wearabletakeover
I love it. So folks regardless of where you are the us you can work with Eric and then also we have startups that are moving from other countries to the us currently we have that we know of at least 2 founders that are moving to the us and then we also have founders that are coming to visit in the us. Um, and they're looking for spaces and things to do so it's incredibly important that even if you are transitioning from another country and coming to the us that you still consult with Eric because there's things that you might be doing here in the us that have to be accounted for and so that's the beauty of having Eric and his company. In our ecosystem so that you have that one stop shop all right? So Eric getting into that outside of tax season. What should startups do to account for their finances and their cash flow are there. You know I know you mentioned Quickbooks and so we might have some resources and discount coupons that are that are.

28:30.39
Eric McKenney
Are.

28:42.56
wearabletakeover
Ecosystem can partake in but are there any of our particular systems of people that they should be in contact with you know and and for how long they should be in contact with those folks so outside of tax season. What should they be doing.

28:54.59
Eric McKenney
So again, basically your your accountant is your go to guy. Ah typically I know my company has relationships with different banks across the nation and you definitely will need a banker. Because your business is going to need a bank account and your accountant is going to use the connection between that bank account and the software program like Quickbooks in order to ah receive all of your information so that your information can be classified and put in a. Ah, format to produce your tax returns with so.

29:35.58
wearabletakeover
That's really good and and we if you go to our web page. We have some insight from some bankers from 2 major institutions that are recorded and we recorded this when we first started the whole wearables 1 on one workshop series folks. So you could listen to some of those tips from those bankers and just take that as advice from that particular conversation I would like to say that wearable tech ventures is not promoting any 1 particular bank as of right now. However, we are open to those relationships so that our entire ecosystem. Be supported by that one particular bank. So if you hear me bankers makes you go to our website. You know, sign up for that sponsorship form but that was incredibly important Eric so you said every startup needs to have a business bank account and so you want to make sure.

30:17.13
Eric McKenney
Um, this is.

30:26.59
Eric McKenney
Yes.

30:30.40
wearabletakeover
That you're talking to those banks understanding. What are the fees associated with that bank account. What are some of those benefits associated with that bank account. What is the minimum deposit that you need for that bank account am I missing anything Eric.

30:43.71
Eric McKenney
No, but you you may actually have to use those banks to get funding for your company so you want to build relationships with those banks after you of course understand all the rules for banking there and you want to. Build those relationships up. So if you need to use them for funding. You can.

31:07.12
wearabletakeover
I love it. So there's a system that we use unashamedly at my church and basically we instituted a process where every fifteenth of the month we do ah ah. Ah budget and we review the budget we we assess what we've done over the past month with our finances or whatnot and we put that on our calendar I'm sharing that as an example of perhaps something that our startups and our ecosystem partners can put in play. Um, do you have any suggestions as to. Ah, schedule or certain things that startup founders should be doing every month to ensure the health of the business and to make sure that they're ready for you.

31:45.57
Eric McKenney
Absolutely, you should be reconciling your financial statements with your bank Statements. You should be reviewing them with your accountant at least quarterly that way you're able to get a clear picture of. How well your business is doing and you know you're always informed and you're able to make good management decisions with with that regard. But without that information you won't be able to you won't know. The health of your business and that's that's something that's important for you to know at all times.

32:21.66
wearabletakeover
Okay, so that's important. So I heard you say a quarterly review so founders. Do you have a quarterly review currently in your 2023 and beyond calendar if not, you need to establish that right now.

32:27.44
Eric McKenney
Um, the.

32:39.53
wearabletakeover
Start with that quarterly review work your way backwards right? And and if you want to use that model of you know the fifteenth or whatever that you carve out that time on that specific date of every month to provide maybe a couple of hours maybe 1 to 2 hours where you're looking at the at your finances and. Making sure everything's in alignment is very very important. The the challenges associated with starting a business. You know the tech startup etc. We understand. It's a lot in many cases when you're starting out, you're doing everything. But this is the foundation and this is one of the most important pieces and if you know you don't do this? Well if you know you are not that organized. You need to make sure you're in contact with Eric to set up that schedule and to build that relationship because we're not asking you. To continue to do something that you don't necessarily do well what we're asking you to do is to put a system and some basic principles in place so that when air comes in he can help you and make sure you're operating according to standards and also it's incredibly important because. If you talk about you want money and if you want investors you want to make sure your house is cleaned. You have to make sure your house is clean and so Eric I want to I want to um, have you share? Um, whatever you can, um.

34:11.12
wearabletakeover
Um, because you've been involved in ah in a lot of deals. You've been involved in a lot of deals from small businesses to Vc deals to like major major um and I'm trying to be careful with what I'm saying here to protect privacy at everything that you do, but. Um, many multinational global type organizations right? They have that impact you've seen a lot of things. Um, so let's talk about the if you can give us a hypothetical example of of.

34:50.72
wearabletakeover
The best case scenario of let's say a team like yourself and maybe some other bc partners coming in to assess a business. Um, what does that flow what does that really look like and if I need to explain that a little bit better. Please let me know. But ultimately what I'm trying to do here. Is to give our listeners and those that may be watching us later on Youtube an example of the ideal situation of what it looks like maybe in stage one stage 2 stage 3 meeting 1 meeting 2 meeting 3 of bringing in folks like yourself to assess the business. And determine if they're worthy of investment. What's the ideal situation. What should that look like.

35:29.52
Eric McKenney
Well, ideally it should look like having all of the things in place that we talked about having all of the documents from the very beginning the structure. We're gonna want to look at you know how the business is structured. Want to look At. The shareholders who are a part of it any members that are a part of it. What's their background. Ah then we're going to go into looking again at those financial statements We Want to see the numbers. We Want to see exactly how well. The business is doing or how not so well. The business is doing ah and we want to see what that basically will tell us when we look at things like the profit and law statement the cash flow statement and the balance sheet is going to tell us.

36:04.37
wearabletakeover
Um, yes.

36:21.91
Eric McKenney
You know the history of the company so far and the potential of the company going forward. So Yeah in the ideal situation If you have all of the things in place that we've talked about we're probably been to want to take a peek at your cap tables to see. You know your investment information to see how many investors are involved already. Ah if you have all of that stuff in place then that's the ideal situation for trying to woo other investors.

36:53.81
wearabletakeover
You know what? thank you Eric and 1 of the first things you mentioned and if I could just simplify it here was team who is on your scheme I get asked that a lot and so for those of you that may be starting maybe saying I don't have a team.

37:02.81
Eric McKenney
Your team.

37:11.49
wearabletakeover
I don't want you to get discouraged I know personally what it's like when you are building from scratch and building yourself up as a leader so that you can attract your team. But if you do the work and if you apply the principles that Eric has mentioned. You will get the right people on your team and the beautiful thing is by coming into the world tech ecosystem we're here. We're part of your team and there are other players that we can bring there so that's incredibly important and you want to have someone like Eric on your team. You do they.

37:43.65
Eric McKenney
Absolutely and someone like you being part of the the wearable tech Echo system I mean it has its advantages. So you know you definitely want to be a team and that's that's why I'm thankful to be a part of it.

37:48.69
wearabletakeover
You you you want? you help.

38:01.58
wearabletakeover
Absolutely you know what if I could play a song right now go to my dj mode Eric I would I would play that song who who you whi ah, you want to be with us. You want to be with us and so we have so many resources and so many people.

38:09.33
Eric McKenney
Um, yes.

38:17.40
wearabletakeover
So many companies and we're bringing more companies to the table more corporate partners that are invested and interested in your overall success. So okay team then the other thing you said was you you got to look at those numbers you got to look at those numbers and folks you're not going to get away from it. And the conversations get real I can tell you that along the lifecycle and when I say lifecycle I'm I'm referring to if you get that opportunity where you're positioned for growth and you can present your business business model to investors. Okay, the conversations. With those investors they can be lengthy and you could be talking to multiple investors and so with that being said, there's going to be a lot of data shared so Eric are there any tips that you could provide for our founders as they are shopping around for investors. How much information they should share and how can they protect themselves in that process.

39:20.30
Eric McKenney
Well I think one of the first things you should do is always have an nda and have that signed off for anyone that you share ah private information with or your your corporate information with. Once you get that out of the way you can pretty much open up everything that is required. Um I don't think there's too many things that you you cannot allow in it a potential investor to see unless you just decide. You don't want to let them see that. But. As long as you have that nda in place then you're fine to open up.

39:56.96
wearabletakeover
Absolutely And that's one of the things that we do here at wearable Tech ventures all of our partners. All of our advisors and even all of our founder ambassadors they in order for them to come in. They have to sign an nda. Okay.

40:10.21
Eric McKenney
Are.

40:12.31
wearabletakeover
And so some of you founders. You may be saying I'm not a founder ambassador yet if you choose to move to that realm of a founder or ambassador you must sign an nda in order to play in our ecosystem and I say play loosely but is for your protection and we are different in our setup where we truly have the founder interest.

40:25.43
Eric McKenney
Um.

40:32.24
wearabletakeover
Right? So for those of you that may be saying hey I haven't got my Nda yet or I need to establish that we encourage you to curate your nda as you are out there working and getting those things together and you may not even be using it yet. But you want to make sure that you at least have that Baseline document right? So These are Baseline things that you want to have in place. Um, but the other thing I would encourage you to do is if you have someone that is interested in investing in your company, ask them? Why right? because too often. There are many organizations and there are many funds that are saying hey we want to invest in a startup and.

41:03.15
Eric McKenney
Um, and.

41:11.55
wearabletakeover
If You've listened to our other episodes. We explain the various stages of investment. Um, but for those of you that might even be at that later stage Angel or maybe at that bc stage I think that's an important question to ask because you're basically inviting this person into your home. And you do not want to have someone in your home. That's gonna tear it up or it's not gonna respect it and so all money is not good money. Let me repeat that all money is not good money so you want to be discerning. As far as who it is you are bringing into your organization. Yes, you might need growth. Yes, you might really think that you're desperate. But ultimately you are not okay so I think that's incredibly important.

41:58.98
Eric McKenney
Gascutia Yes, and I I think it goes both ways when you're out here wooing investors to invest in your company. You need to do your homework on those investors as well and know.

42:12.84
wearabletakeover
Yes.

42:15.52
Eric McKenney
Who they are and you know what they're about before you actually invite them in to your house as you say.

42:21.57
wearabletakeover
Absolutely and every advisor or every person that claims to be an advisor is not a good advisor. Every mentor is not a good mentor and so one of the things that we do here is we assess you know we invite folks to the table but we also assess and we validate.

42:36.70
Eric McKenney
See that.

42:41.30
wearabletakeover
Um, you know those persons that might be able to add value in the future to our startups because again, this is not just a lakeishia thing. This is not just a Eric thing you need a team and so I encourage um our startup founders if you are adding mentors and advisors to your team. Ask for recommendations from the folks that those mentors or advisors have actually worked with in the past please don't take it blindly please don't think that you don't have that liberty to ask because you do you do and every person may not have.

43:16.33
Eric McKenney
Are.

43:17.90
wearabletakeover
Our best interests in mind and so you want to make sure that you're asking good questions but make sure that you are coming to the table prepared make sure you are tight. That's ultimately what we're trying to say isn't that Eric just comes in tight and if you're not tight right now. All you have to do is follow.

43:27.88
Eric McKenney
Absolutely absolutely yeah work on it.

43:37.99
wearabletakeover
The instructions you know what? Ah so funny I was telling um some of our foundary ambassadors I said please don't make me repeat myself please don' make me repeat myself. So if you are a person that needs repetition that this is why we have the wearable takeover podcast you could easily go back rewind. And listen or fast forward to you know the section that you need to get to. Okay, so Eric what questions um should startup advisors to startup investors asked to ensure the health of the business. What are so so we're flipping the tables a little bit moving from the founder over to the. You know investor that buys are what are some good questions for them.

44:20.20
Eric McKenney
If I'm an investor again I want to I want to know who's on your team I Want to know how well you've done so far what stage you're at in the in the life cycle of your business. Um. Want to look at those financial statements again maybe some tax returns so I can kind of match them up to make sure that the information that you know I'm getting is correct. Ah and so yeah, those are the type of things that that I'm going to be looking for as an investor. If I'm thinking about investing in your company and as an advisor I'm going to inform your advise advise you that these are things that you need to have buttoned up tight so that those investors will take you seriously.

44:53.50
wearabletakeover
Um, so.

45:10.42
wearabletakeover
Absolutely so tighten up tighten up basically is what we're saying you know what? they we didn't touch on. We talked about investors. Um, but but do some of the rules that you've already talked about Eric especially with documenting payments or whatnot. Does that apply to advisory payments as well.

45:29.72
Eric McKenney
It does advisors are going to be treated typically um as any other business expense or or they'll be treated as a contractor so depending on how they have their company structured. You may or may not have to provide them with a tax document at the end of the year if you do it's most likely going to be a ten ninety nine in ec which stands for non-employed compensation and so that's how advisors will be looked at with regard to.

46:05.69
Eric McKenney
Documents that you have to issue to them.

46:07.70
wearabletakeover
Thank you for sharing that because I wanted to highlight the notion of advisors that are truly gifting their time versus advisors that you know you bring on board and so both are necessary. So with our startups and our founders and aspirational founders.

46:11.62
Eric McKenney
Um.

46:21.27
Eric McKenney
Um, you know.

46:25.96
wearabletakeover
It's important that you're within our ecosystem because you're getting a lot of knowledge. You're getting a lot of advice. You're getting a lot of mentorship from our team right now for free and there are other startups. There are other companies that actually have to sign advisory agreements for this type of information. But we understand who we're working with and we want you to win with that being said, there is going to be a time where you need more intimate advice more intimate guidance and so at that time you're going to have to institute an advisory agreement at some so at some point. Okay, so we've put. We've got some programs in play. We've got our other mentorship program that will be announced so you want to make sure you are tuned into our website that you're signed up so that you get that announcement so that you have the extra level of support. But then after that you will have to institute some advisory agreements and so you want to make sure. That you are accounting for all of these things right? So you're accounting for your basic business cost. You want to make sure that that number 1 investment that you make is going to be for the account because we're going to help ericica's gonna keep you safe. He's gonna keep you safe.

47:31.10
Eric McKenney
Um, yes, absolutely.

47:37.11
wearabletakeover
He's gonna keep you tight, you're gonna have that reoccurring meeting but Eric knows people. Okay, so he's not He's not like oh just my cousin I'm be he taxes. No Eric knows people Eric has been proven. With a number of the venture firms and things that he's been working with okay so he's a valuable person. You always want somebody on your team that is going to be willing to give you that advice. It's going to be willing to help and also that will provide some introductions when necessary because in order to be successful. You need people, you.

48:04.82
Eric McKenney
What.

48:10.87
wearabletakeover
Need people and you need good people and so I'm telling you that everybody that is coming on this podcast. Um, you know that? especially that I know they're good people. We've been at this thing for a while. This is not an overnight. Type of venture. This is not an overtype overnight type of success. These folks have been seasoned and tested and so I'm saying this that I trust Argan in the event that anything happens you want to make sure that you have some agreements some um, some expectations in place. And so I highly recommend that you put those in play as well. So when you're going to air or if you're working with an attorney or whatnot make sure you have an agreement place as to what it is it. You're expecting and what is that timeline and what are those terms for flexibility. Okay, because 1 thing I know to be true and this is not a dis.

48:55.63
Eric McKenney
Are.

49:05.91
wearabletakeover
But especially those in this field and in a stem field. There could be some communication challenges. There could be some communication challenges and so we might not be communicating as effectively as we think that we are right and so we want to make sure. That you are doing your part and yet you could see what it is that you are saying and what it is that you're agreeing to and again we have really good people that are here to help you. We want the best for you and also understand that these are true professionals professionals. So just like you as a startup founder you want to be compensated or rewarded for your work or professionals want to be compensated for their work as well. All right? So Eric you created a resource that I consider to be in in a good way I'm saying this the cheat code. Okay, and so that is.

49:57.76
Eric McKenney
Um, event.

49:58.24
wearabletakeover
Handle your biz Can you tell us a little bit more about handle your biz where can folks get a copy of this and how they can follow the journey of handle your biz.

50:11.49
Eric McKenney
All right is is basically a guide or road mapt for startups to actually set up their beers and the structure as I talked about in the beginning. Um, like I said it's just one of the the most important things that you can do because it. It's. Basically when you do it, you want to have in your mind that you're setting this thing up to protect you ah from any potential liabilities of the the company itself so you want to create a separation between yourself and the company and. Those documents initial formation documents do that and what this book does it walks you through step by step doesn't matter what states you're in to get all of those documents filed correctly gives you? ah. It tells you where you can go to actually find the documents that you need to file and then it kind of gives you some extra gems at the end of some things to do after you have your structure in place that will help you to also be successful. So ah. You can right now you can get a free copy of it all you have to do is go to my one of my Ig pages this one is handle your business and it's handle your b I z n I s if you go there I want you to follow me there.

51:26.90
wearabletakeover
Um, oh.

51:40.68
Eric McKenney
Click the link in the bio that link will redirect you to a website where you can put your get on the mailing list and will send you a free electronic copy of this ebook handle your bids.

51:56.31
wearabletakeover
Did you just say FREEEric

52:00.70
Eric McKenney
Yes, It's absolutely free right now because again, we're doing all that we can to try to help ah startups and founders get started properly get out of the gate. And to give them the best chance to succeed so we put that together just to do that.

52:16.85
wearabletakeover
That's phenomenal folks so he put it in a book and something that is is not too thick, but it's enough where you have all the necessary information and you can get through it and I actually read it and so kudos to Eric Super excited about that.

52:30.18
Eric McKenney
Thank you.

52:31.30
wearabletakeover
Maybe we'll have to add that to our founders and leaders book club as well throughout tax season So that so that folks know about that. So can you repeat again? where can they get the book.

52:41.64
Eric McKenney
Okay, so first thing you do is go to Instagram handle your business that's handle your b I c n I s when you get there, follow us and click the link in the bio. It'll redirect you to the website. On the website you can leave your information your email and you'll be able to receive a free copy in your email.

53:04.99
wearabletakeover
I love it all right? and then also Eric for startups and maybe saying I need Eric on my team but we know that this is tax season. You have some folks that you're a lot of folks I should say in a lot of businesses that you are already working with how can our startups number one if they need.

53:18.55
Eric McKenney
Right.

53:24.15
wearabletakeover
Start their taxes done. You know how can they get your services in the number 2 if they want to bring you into their business and say hey I need Eric's help throughout the year how do they do that.

53:34.70
Eric McKenney
So You accomplish both by simply going to my website at wwwww.smpacct.com and once you get there all my contact information is there. Ah, you'll see what services we Provide. You'll see how we can help you as little chat box there. So if you got some questions you can reach out to me and I can respond in real time and from there we can talk. And we can discuss whatever it is you need and we'll do our best to help you out.

54:11.12
wearabletakeover
I love it. So he's a valuable resource in after tax season folks, you might see Eric representing wearable tech printers and at a tech event near you in Alabama or Atlanta ah, but he he's gonna need a break after twice.

54:26.84
Eric McKenney
Um.

54:28.79
wearabletakeover
Tax season and but in their interim folks. You have what you need. We have just given you tools to put in your tool belt. It's up to you to sharpen them by using them. Okay, so first of all what you're going to do today. You're gonna share this episode. You're gonna share this episode because free game free game ninety nine is what this was right here. Number 2 you're going to follow Eric at handle your biz and make sure you're doing handle your business at on Instagram we'll make sure we put the specific links the website links etc in the show notes you want to follow him, get your free copy of the book. Get your free copy of the book.

54:54.43
Eric McKenney
Handle your business. And.

55:07.32
wearabletakeover
Is there a limit to when they could get their free copy Eric.

55:10.82
Eric McKenney
No, right now I just have it open and I actually don't plan on closing it. So it's really just to help help ah startups and and Brand new entrepreneurs kind of direct them in the right direction. So it's it's out there now. So go out there and get it.

55:25.87
wearabletakeover
Ah, oh take take that gift and especially you know for folks that may have been laid off in the tech industry and they're thinking maybe they want to start a startup or start their business.

55:28.66
Eric McKenney
Ah, we may may start selling it again. But right now it's free.

55:42.16
wearabletakeover
Eric is that resource so make sure you go and get your copy at handle your business in I and on Instagram and then number 3 you're gonna go to his website. You're gonna go to Eric's website you're gonna set up a consultation understand number 1 Eric already has a portfolio of clients but he is opening himself up. To the wearable tech ecosystem for consultation as well as to provide some initial service and then determine what a professional relationship with extending those services can be throughout the year so you can make sure you have your quarterly meetings so that you can make sure you are tight so that you can make sure that your foundation. Is sound and that your soil is fertile so you can receive the investments so that you can receive the additional funding and things that you desire to help your business grow. It is up to you founders. It is up to you to take advantage of these particular steps. Please don't say oh nobody's investing in me or they said I'm out of order. we told you we told you in this effort. So all right? Any last words of wisdom to share with our audience Eric.

56:46.61
Eric McKenney
Yeah, or I'll ah, there's a lot that I could say ah but just founders always keep 1 1 thing that I want to share with you before I go. Is that you should always keep in mind that when you are raising capital to fund your business It's never for personal expenses expenses. So you always want to keep that legal separation between your business and yourself so that means. Once you've established and opened up your bank account. Do not ah, make any personal purchases out of that account if you do you kind of break that what they call it a corporate veil and it kind of sets you up to? ah. For your personal assets to be affected if if anything ever goes on with the company. So yeah, that's that's kind of like the parting zen that I want you guys to know. So hopefully you guys I wish everybody won ah much success and again I'm available to help. Just reach out to me at those addresses and and those locations that we gave you during the podcast.

58:03.86
wearabletakeover
I love it. Thank you so much Eric for being a valued guest here where we'll take over this is just the beginning folks. You will continue to see him especially after tax season. We so appreciate your partnership and everything you've contributed to our ecosystem and folks you know what. We're gonna wait to incorporate some of that this or that product novels because we don't want you doing too much extra homework today. We want you to focus on making sure you're contacting Eric and get into free resources as well as the the consultations with him today. So with that. We are signing off. Did you love this episode. Make sure you give us a high 5 a thumbs up share it rank it alright and thank you so much for making us one of the top I believe it was the top 3 ah tech podcasts of 2022.

58:49.52
Eric McKenney
Are.

58:51.71
wearabletakeover
We were one of the top 3 wearable tech podcasts of 2022 and this is a really major feat because the number 1 podcast was Apple and so here you have our ecosystem as that at third one so thank you for listening. Thank you for sharing.

58:54.72
Eric McKenney
Um, okay.

59:00.63
Eric McKenney
You knew that.

59:07.24
wearabletakeover
And continue to share because we have a wealth of knowledge here. So with that we are signing off.

59:10.32
Eric McKenney
But right.