Kunle Campbell (00:01.226) Hey Lonnie, welcome to the 2x E-commerce podcast. I’ve been looking forward to this conversation. Lonnie Bloom (00:08.876) I’m like, great for, great for, yeah, thanks for having me. I’m really excited to, to join the podcast. Kunle Campbell (00:14.198) Okay, so you’re really deep into auditing. You’re with a top 10 accounting firm in the States and very specifically you work with technology companies, D2C, e-commerce brands. Do you want to just give us your backstory up until now? How did you sort of come to where you are now? Lonnie Bloom (00:35.804) Yeah, it’s a good question. So yeah, I’m an auto partner at Withum. I’ve been with Withum for about 13 years. I’m a member of our technology emerging growth practice and I co-lead our e-commerce sector. I think I found accounting at an early age. I really was interested in business. My first job in high school, I was assistant bookkeeper at the Staten Island Yankees. If anyone’s a New Yorker, you might know the Staten Island Yankees. Also had a paper route. My first experience teaching me about client service was that first paper route, that first work experience. Lonnie Bloom (01:19.706) working as a bookkeeper for a number of years. It got me excited about learning the ins and outs of a business and accounting was sort of pitched to me as it’s the backbone of a business. You kind of learn how a business operates, how a business makes money, and what they’re interested in from a financial perspective. So that’s kind of how I started. Found with them right out of school, right out of college, and kept finding reasons to stick around. Gave me a lot of opportunities to travel, work with different clients. And then eventually I found technology, joined our technology emerging growth group, moved to New York from New Jersey. and found e-commerce from there. So e-commerce sits under a technology umbrella. And e-commerce kind of came naturally to me. I was working on a lot of e-commerce clients. I found interest in working with clients where I was also a customer, which was great. And I understood the nuances around inventory, revenue recognition, some of the nuances that e-coms face today from an accounting perspective. Kunle Campbell (02:30.813) So what kind of e-commerce brands work with them? Lonnie Bloom (02:37.884) Yeah, it’s a good question. You know, we work with, you know, anywhere from, you know, pre-revenue small companies to large public companies. So we have a kind of run the full gamut. You know, I would say our bread and butter is around the series A, series B, you know, 30 to 50 million top line revenue, you know, D to C or B to B, depending on the business and what the product is. But not only just true, you know, e-commerce of business selling products to customers, We also work with e-com enablement companies, so think software, SaaS companies that operate in the back end to support e-commerce businesses. So we kind of run through a wide array of different clients that are in this space and interested in the topics in the industry and what’s happening in the industry. Kunle Campbell (03:30.442) Okay. That’s really smart. So it’s the entire ecosystem, the demand side and supply side in terms of the people who sell off the tools and also actually do the work and build the brand. From what I picked up from, from what you just said, you, you’re servicing funded companies, you know, so, um, companies that are quite ambitious. They’re, they’re, they’ve done their, their seed round. They’re, they’re going through their series A and series B and they need. accountants will jump into those specific needs. But with the economic downturn, what’s been the lay of the land from your perspective with them, because you’re seeing the numbers. And as you said, that your accountant is the backbone. So what does the backbone look like right now in 2024? Lonnie Bloom (04:22.516) Yeah, it’s interesting, post COVID, COVID really changed consumer behavior, right? I think going back to mid 2020. through the end of 2021, there were incredible peaks from an e-commerce business perspective, right? There was this huge surge. Consumers were stuck at home, right? Sitting on their couch, a little more disposable income because they’re not traveling, not going out. So they’re buying goods online, right? So a lot of our clients faced, you know… a good issue, right? They were growing rapidly, right? And they had to keep up with growth. Then you kind of saw 2022, interest rates are climbing, consumer spend declining, I think, which is a big contributor to the downturn, I guess, in Ecoms. So you’re kind of seeing, you know, through COVID, there’s this peak, and then there’s sort of a plateau and a slowdown, right? So I think with interest rates expecting to slow down, hopefully later this year, I think that will potentially open up people’s wallets a little bit more, consumer spend might go up, but 20 to four, it’s anyone’s guess, but I would expect maybe a modest growth year, maybe a flat year. But we’re kind of seeing those macro trends our e-coms are facing. you know, challenges, right? And I think from a consumer perspective, expectations are higher, right? They, you know, through COVID, you know, that a lot of different brands came out and, you know, really thrived, right? So consumers are, you know, or these brands are facing expectations that Amazon built, right? Consumers expecting same-day delivery, free shipping, personalization, sustainability, you name it. Kunle Campbell (05:47.278) Thanks for watching! Kunle Campbell (06:11.755) Mm-hmm. Lonnie Bloom (06:15.406) competitive out there. And that’s what kind of retailers have to do to make sure they’re touching on all those points to stay competitive. Kunle Campbell (06:24.158) And have their accounting needs change from the COVID peak in 21, 22, to now in 24? What sort of financial needs do, are they coming to you for restructures? Lonnie Bloom (06:42.193) Yeah, it’s… you know, when you’re growing rapidly, you know, you’re probably getting more capital infusion, more investors, more mature investors. And when you have more mature investors and, you know, banks, if you’re raising debt financing, more people are looking at your financial statements, right? And if you have 2X year over year or 3X or even 10X, your financials become, you know, conversation. So accounting needs, there’s always tax compliance, even early stage companies, you need to be compliant. Sales tax, that’s a big hot topic. Making sure you’re compliant. Companies went from being a small e-commerce company to then overnight selling in 50 states, and to be compliant from a sales tax perspective, there’s this idea of nexus of having presence in different states. not only physical presence, but if you’re doing business in those states, even remotely, or if you have an employee in those states. So there’s different rules in different states that require compliance from a sales tax perspective and also a corporate tax perspective. So understanding the needs around that with these companies that grow overnight, it’s a lot of catch-up, a lot of catching up to make sure they have the right advisors in place, the right software. And that’s where we come into play, right? We help with you getting tax compliant, corporate taxes, sales tax. We help with understanding your financial statements, consulting on a number of accounting issues and helping you prepare financial statements if you’re gonna need to need an audit. And an audit requirement could come from the bank, could come from investors. So it really depends on the size and complexity of the company. Kunle Campbell (08:39.778) We’re going to speak, speak about audit a little while because we’re having conversations in our companies about, in our company about audit, but digging deep into your portfolio of clients and you don’t need to mention names. What are thriving clients doing well? What, what are you seeing? Cause you’re, you’re privy to, to a lot of data. Why do you think? e-commerce companies now in 2024 that are doing well are performing the way they’re doing in comparison to the rest. Lonnie Bloom (09:16.124) Yeah, it’s interesting. We see a lot of different brands, right? We see brands struggle. We see brands thrive and be successful, even in economic downturn. A lot of it is the product. What is the product and how are you, you know, product market fit, right? How are you delivering that product to the consumer? there’s certain industries that can sustain economic downturn. We see a lot with baby products, right? Or post-COVID, beauty is a good industry that we see success in. But I think you have the right advisors, you have the right strategy, and you are. speaking to your consumer, right? You’re not just trying to grow the business from a top line perspective. It’s understanding the consumer, making sure you’re addressing those expectations, right? Customization, personalization. A lot of our clients are utilizing softwares to use data analytics and AI to enhance that personalized shopping experience. implementing customer loyalty programs, right? Being creative to offer that, you know, personalized content and knowing how to, you know, you know, sell to their customers. And then once you obtain the customers, you know, cost of acquiring customer, you know, that it could be a high cost, right? But how do you keep them, right? How do you keep those customers and, you know, how do you treat those customers throughout your life cycle? So, you know, through the last couple of years, you’ve seen, sort of plateau right after COVID after the growth years. So we’re seeing a lot of lean and mean teams right maybe that are cutting back on costs from a personnel perspective, you know, and kind of shifting focus to profitability. So it’s a number of things of, you know, making sure you’re gearing your product and your efforts towards your consumer and making sure you’re, you know, to be financially successful, making sure you’re, you know, spending Kunle Campbell (11:05.079) Mm-hmm. Lonnie Bloom (11:31.566) your money in the right, right places. Kunle Campbell (11:34.014) Yeah, and I have to say that AI hasn’t has been perfect timing, you know, sorry, people have, you know, lost their jobs. But when you streamline, you find that AI can actually improve the productivity of you know, whoever is left to take, say an email team, for instance, and you know, just crafting of of email flows or your customer service team having an air assistance, you know, help with crafting emails in real time. So you just put the intention, you know, on there, you know, this is how you want to respond and just doing that in seconds. So you’re going through so many tickets very quickly and it’s, it’s great timing. I can’t, I can’t, you know, deny that. Right. So. With regards to clients of yours, again, another question has to do with like capital raising. Did every one of your clients intentionally sort of get into business with a view that okay, we want to build something really huge here, really impactful rather. And so we’re going to need capital to grow this or did some customers sort of initially start out in the bootstrap? over out and realize, okay, this is a really big problem. And so we will, you know, eventually need to realize we need, you know, capital, we need to get into the capital markets to raise. What’s been the journey of Lonnie Bloom (13:07.241) Yeah. Yeah, for our client base, it’s a lot of VC backed companies, PE backed or raising debt financing. That’s typically when they need to upgrade their advisors to a level of sophistication that they may need an audit, they may need to do more tax compliance. So most of our clients are the venture capital backed, raising a series A, series B. But certainly, there’s a case for bootstrapping, right? Bootstrapping allows you to maintain control, hold more equity of the company, allows you to encourage growth or sweat equity. You know, in e-commerce business, I would say it’s probably pretty challenging to bootstrap. It typically requires a lot of infrastructure. Inventory, you know, if you have a model where you’re holding a lot of inventory, it’s costly. You need a warehouse. You know, you need personnel. And if you want to grow quickly, you know, fundraising is almost always necessary, I would say. You know, things move pretty quickly, you know, especially in the last few years. You know, we’ve seen companies 2X, 3X, or, you know, 10X overnight. Kunle Campbell (14:11.781) Mm-hmm. Lonnie Bloom (14:20.642) So you need capital to support that. Yeah, there’s certainly businesses maybe that have a drop ship model, maybe aren’t necessarily prepaying for inventory that could survive with less capital. But we’ve typically seen through a couple years back, growing top line revenue was the primary focus, right? Growing quickly, raising capital to grow quickly. That sort of is shifting. Kunle Campbell (14:45.666) Mm-hmm. Lonnie Bloom (14:49.782) the last couple of, you know, last year or so with a shift towards, you know, profitability. So Kunle Campbell (14:59.79) So what have, yeah, it makes a lot of sense. What have been the capital raising challenges, you know, with these businesses now, given all that’s transpired, particularly with rising interest rates? Lonnie Bloom (14:59.88) bootstrapping as possible, but I think it’s challenging for e-coms. Lonnie Bloom (15:16.892) Yeah, you know that customer expectations are higher, right? There’s also investor expectations are higher. There’s increased competition for e-commerce in general. The whole landscape is crowded. It makes it challenging to stand out as an e-commerce business, as a brand, right? You have to differentiate yourself through some sort of value prop. And by doing that, you have to speak to the consumer, right? What does the consumer want? How can you gain traction from the consumer? but it’s costly to acquire customers. So some of the challenges are just customer acquisition costs. It’s really hard to, really expensive to market and to acquire new customers if you’re going on Facebook and TikTok and social media. So balancing the acquisition costs of a customer with customer lifetime value is crucial. customer lifetime value being the longevity of a customer. How long are your customers actually sticking with you? And that, again, depends on the profit or the product. So we have a lot of clients that do subscription-based models, and you have that reoccurring revenue. But how often do you have consumers canceling subscriptions? So. Kunle Campbell (16:32.096) Mm-hmm. Lonnie Bloom (16:41.276) you know, raising capital is challenging given the increased competition. You know, the harder to, you know, it’s harder to become profitable if it’s, you know, customer acquisition costs are high. And then there’s supply chain disruptions, right? There’s always understanding your supply chain where you’re sourcing your inventory, shipping delays, and actually satisfying customer needs on time. I think that’s always a challenge. So there’s a big web of logistics and understanding your customer. And I think all of that competition just makes it harder to raise capital. And… Yeah, there’s dry powder out there. There’s investors looking to invest, but you need, as a founder, you need to go in with a, you have to be profitable or have a really defined path to profitability. So you can’t just show up and say, we’re growing year over year and we wanna do around. I think it’s getting a little bit more, a little more stringent with the requirements for investors. Kunle Campbell (17:36.002) Mm-hmm. Kunle Campbell (17:51.902) What’s the what’s the appetite for investors now is more debts coming through versus equity is what’s a debt to equity. So landscape now. Lonnie Bloom (18:04.592) Yeah, we’re seeing a lot of bridge rounds from an equity perspective. You know, you have companies that don’t necessarily want to go to, you know, the next round just yet. They want to wait until maybe valuations could come up. So we’re seeing a lot of bridge financing and companies exploring other debt vehicles rather than raising a new equity round, which would bring on, you know, potentially new investors, investors that might want more, you know, a bigger piece of the pie. So I think, you know, rather than giving away some equity, we’re seeing sort of the shift to maybe some non-traditional debt financing and, um, getting creative with how they’re going to, um, you know, sustain, right, and continue growing, but also sustain. So, you know, it’s a combination of doing bridge financing, you know, bridge round from existing investors, exploring some debt vehicles, and cutting costs, right? So we have some, plenty of clients going through reduction forces and, you know, looking for areas to cut costs and continue their path to profitability. Kunle Campbell (19:15.946) Interesting. Is a bridge financing coming from their existing investors from the VC funds or are they looking for bridge financing elsewhere? Lonnie Bloom (19:25.736) Yeah, it’s typically from existing investors, extensions of old rounds, rather than going out and do investors, typically it would wanna do evaluation, understand, do a little bit more diligence likely. So, they’re considering scalability of the company, competitive positioning and the technology these companies have and existing investors are typically aware of all that, right? or they’re close to the financial statements and the operation of a business. Not to say it’s new investors can’t come in and invest in a company and sort of do a smaller round, but we are seeing a lot of bridge rounds with our existing investors. Kunle Campbell (20:18.074) Yes. And I guess it also secures their position until, you know, the, the market sorts of ease off, you know, a bit, you know, longer term. Okay. Um, on the flip side, you, you mentioned the e-commerce enablement, you know, space. How, how does that compare how, what’s the activity in the e-commerce enablement space? That’s e-commerce SaaS space versus consumer brand. Lonnie Bloom (20:26.417) Exactly. Lonnie Bloom (20:44.212) Yeah, it’s a good question. I’ve seen a lot of talk about e-com enablement. I talked to some research analysts in the space, and we’re seeing a lot of discussion around that from the back end or front end of an e-commerce business. And yeah, I think there’s going to be a lot of investment in e-commerce enablement, because it just further pushes that growth. mentality for an e-commerce business. They need software, they need technology, right? They need to be on the forefront of technology to support their business. You know, when you think of an e-commerce business from a consumer’s perspective, you think of, you know, I click a couple buttons and I get a product shipped to my doorstep, but you don’t realize the amount of technology that goes behind the scenes from, you know, order placement from a website to, you know, where is that being sourced from, sourcing? software is just to project inventory at a skew level. There are softwares to just help navigate this sort of omni-channel approach to selling, right? You’re in retail locations, you’re online, DTC, you’re fulfilled by Amazon. there’s multiple levels behind the scenes to get the product to the consumer. So I definitely see the conversation of enablement technology. It’s pretty prevalent and yeah, I’m excited to see what we see next in that. There’s a lot of technology out there and disruptors. There’s a lot of disruptors in this space. So, yeah, really excited to see what’s coming. Kunle Campbell (22:34.026) Super same here. I found that a lot of the e-commerce as founders, you know, that come on this show, at least I’ve spoken to, um, have been operators themselves. So they, they know the pain points. They understand what it feels like, you know, to, to be an operator, what the challenges are and then on their bets, their best place, particularly if they know the technology or they, at least they have the team to execute on the technology. that they’re able to roll out really, really nifty solutions. So it’s an exciting time, you know, nonetheless, because I’m still seeing raises, you know, in that space. So we’ll watch and see. Okay. So for listeners who are building, you know, companies, you know, impactful companies and looking to raise, you know, further, might not be now, it might be… in a year’s time when the market has much more activity, why is there a need for them to get audited? Lonnie Bloom (23:40.072) Yeah, you know, an audit of financial statement is effect, you know, it’s a third party independent CPA firm, you know, reviewing, auditing your company, right, auditing the financial statement. So what we do is we look at a company’s financial statements, you know, we take a risk based approach and we take a deep dive on some of the, you know, significant areas of your financial statement. So when you think about an e-commerce company, you know, we spend a lot of time with inventory. We spent a lot of time with revenue. understanding revenue. We spend a lot of time with equity if there’s a complex, you know, cap table structure, capitalized software if you’re, you know, capitalizing any website development or any software you’re utilizing internally. You know, from a fundraising perspective, companies are out there fundraising all the time, right, and if you want to raise that next round of financing, we typically see an audit requirement around the series A, series B, Lonnie Bloom (24:40.066) a debt round and banks will say, hey, we’re okay with lending you this $10 million, but we want to see audited financial statements. So you want to be proactive there. Companies plenty of times have come to us and say, hey, we need an audit because our bank told us and it’s due in 30 days. And if you don’t know what an audit is, you know it doesn’t take 30 days. It certainly can be done. If you know all the resources. Kunle Campbell (25:01.462) Mm-hmm. Lonnie Bloom (25:10.366) are there, but we’re scheduling audits out six months in advance. And a first year audit could take six to 10 weeks plus, depending on how clean and clean the books and records are. So yeah, from a founder perspective, from management perspective of a company, being proactive, understanding what your next one to five years will look like. And then reaching out and getting the right advisors in your corner early on. Because there’s a lot of complexities. You know, you think you have your financials in order, but when you get to that third party looking and poking around. you’re going to find that there might be some skeletons hiding. And that’s what we do. We help our clients get to a point where they could raise capital and hit their next level of financing. So we’re not just, we’re doing compliance, but we’re also advisors to our clients. So we could see what your, since we work from early stage to growth, we kind of see what your life cycle is, what your plan is, what your exit strategy is, and we set you up for success. Kunle Campbell (25:56.04) Mm-hmm. Lonnie Bloom (26:22.562) So if you plan to go public, if you plan to get acquired, we’re making sure that if you’re gonna go through a diligence round with a potential investor that you’re checking all the boxes from a risk and exposure perspective. Kunle Campbell (26:36.255) And from a firm selection perspective, how should ecommerce businesses navigate? Because there’s sometimes you say, okay, you’re just starting out, you raise some, some seed, you know, money, you’ve, you’ve seen traction. You’ve got your first say. 10,000 customers revenues is say two, three, four million. And you approach some firms saying, look, we want to get audited because we’re looking to, to make some subsequent, to go for some subsequent rounds, you know, further and then looking at your revenue and that initial conversation is like, well, you’re not really in our revenue threshold, but obviously you’re ambitious and you know where you want to go. How do you select it, given the fact that the switching costs both from a time Let’s forget the financial, just switching from firm to firm is just a headache. You’ve said it already, you’re planning six months in advance. So what is the conundrum here? How, how, how should we, you know, as, as e-commerce operators, you know, navigate that, that pathway. Lonnie Bloom (27:44.808) Yeah, I would say doing it in steps, right? You don’t necessarily need to jump into an audit right away. If you’re planning to raise financing, if you’re planning to raise a seed round, you don’t typically see an audit requirement during a seed round. If you’re just planning to raise an A next year, I would say start talking to people. Start talking to your advisors now. Getting complying from a tax perspective, I say would be your first priority. Making sure you’re filing taxes in the right jurisdictions. Sales tax compliance, you’re selling products that are likely taxable, right? Making sure you’re filing in the right states. Doing that exposure analysis, because then an audit is required to raise capital potentially. Lonnie Bloom (28:39.046) at any stage, right? So as you’re growing, I would say, do that first, right? Get compliant there. From an accounting perspective, you could sort of build up towards an audit, right? First step is making sure you’re doing your bookkeeping correctly, right? Are you outsourcing it or do you have someone internal? Do you have a team that is working on it? If you’re a seed company, it’s probably outsourcing or you have sort of a one person show internally. which is fine, but when you get to a point when you’re being audited, we’ve worked with plenty of outsourced accounting firms through an audit process, but there’s only so much they know, right? They’re not day in day in the operations of business. So typically, there’s headaches involved with that, right? So stepping up to an audit, so getting the bookkeeper, getting a key hire, maybe a controller or accounting manager early on. And then you don’t necessarily need to jump into an audit right away. You could do a reviewed financial statement, which is sort of a step down from an audit. So think sort of, you know, the minor leagues versus the big leagues. Kunle Campbell (29:48.438) Mm-hmm. Lonnie Bloom (29:50.16) So you kind of warm up to it, right? And a review is primarily inquiries and analytics. You’re not doing like audit test work. But the end product is similar. It’s a financial statement, full set of disclosures. Our opinion would just change. It’s not an audit opinion. It’s just an accountant’s conclusion, providing limited assurance rather than, you know, reasonable assurance on the financial statements. Kunle Campbell (30:16.226) Got it. Got it. So, so, okay. Okay. Reviewed financial statements. Okay. Makes sense. Makes sense. Makes sense. And, um, yeah, a financial controller is really important because I think that is the personnel you’d be liaising with, um, as a, as, as an auditor, you’d be working closely with the find. You don’t want to work with a founder. Do you want to work with a, with, with someone with who has financial acumen? Lonnie Bloom (30:41.576) Exactly. And a founder shouldn’t be the point person for an audit, right? This is, you know, the founder should be focused on the operations, growing the business. And, you know, if a founder’s ever looked into an audit to an extent where it’s, you know, a second job, then, yeah, there’s probably an issue there. Kunle Campbell (30:44.991) Yeah. Kunle Campbell (30:59.562) when’s the perfect time to get a financial controller in? Lonnie Bloom (31:03.764) You know, it depends on the business, depends on how complex the company is. You know, I have some clients who are smaller, drop ship, not a lot of complexity around inventory. you know, not a lot of complex about revenue, around revenue, and they, you know, kind of operate with an accounting manager and an outsource bookkeeper and this, you know, series A company, right? But I would say typically around, you know, when you’re ramping up to a series A, you kind of want to have that more sophisticated, you know, key hire from the accounting finance perspective, even prior to that, right? So they could have time to learn the business, understand the business, understand the nuances. raising rounds with sophisticated investors. You know, they’re gonna be poking around a little bit more, you know, and maybe potentially asking for an audit. And when you get to an audit, you definitely wanna have a key hire to kind of run that process. Kunle Campbell (32:02.274) Yeah. And then what are your thoughts on fractional financial controllers? It’s become a thing now in e-commerce, I think, since COVID, a lot of fractional CFOs have e-commerce that is propped out, you know, offering their services. Lonnie Bloom (32:20.476) Yeah, no, it’s great. I talked to a lot of fractional CFOs in the space that are doing work with a lot of interesting companies. So from my view, it’s always good to get a different perspective on the business, right? Have an outsider come in, understand the business. Even if it’s working in a limited capacity, you sort of get a different viewpoint. And sometimes you are almost forced into it. You know, oftentimes you see controllers, you know, at a company for a year, year and a half, two years, and then, you know, leave, right? And then the companies then in a pinch to find a new, you know, find a replacement. So fractional CFOs, you know, likely get a lot of work through, you know, just turnover, just natural progression of an accounting manager, a senior accountant, a controller leaving the business. So, you know, I think it’s always good to get a fresh set of eyes and you never know. You know, you’ve seen Fractional, see if it always go into a role, really like it, really enjoy the company and stick around for longer than, you know, expecting to become a full-time employee. So, I’ve seen that plenty of times. Kunle Campbell (33:29.078) So for listeners who are, you know, working on the capital raise now or thinking about capital raise now, what you think are the key pieces for the financial stack for the capital raising financial stack. Lonnie Bloom (33:46.416) Yeah, so financial stack, you know, so from a software perspective, the financial stack, I would say, you know, you definitely want to have an accounting software, right, an ERP that can handle your level of activity. So if you’re selling, you know, a high volume of transactions, low dollar value, you know, there’s only so much you could do out of Excel spreadsheets. So you want to have an ERP that can handle the level of activity. So I kind of think of it, if you get to a $10 million in top line revenue, high level of transactions, you probably need to upgrade your ERP to something that is a little more sophisticated. inventory management, having a software in place to sort of manage the inventory management and forecasting at a skew level, at a level where you have your founders asking questions, are we going to run out of this product? Do we need to procure more in real time? That data should be available in real time, theoretically. And you see smaller companies struggle with that. you know, having key softwares in place is great, right, to support the financial stack. And then, you know, you’re probably working with credit card processors, you’re working with, you know, different sort of ways to fulfill, you know, a sale, so shippers and, you know, so there’s a lot of different sort of, this is Spiderweb, right, so there’s a lot of different elements, but, and there’s softwares that sort of each component, so, you know, prioritizing that, right? most important, getting a product to the customer. What software do I need to, in my tech stack, what do I need to get that product to the end user? Super important. And then how does it roll up into the financial statements, having that ERP in place to manage that level of activity so you get real time financial data and you’re giving it to the right people, controller, CFO, how does that roll up to the founders and management? Lonnie Bloom (35:56.688) So we had a lot of layers involved, but I think if you prioritize and start from the top, you’ll get there eventually. Kunle Campbell (36:08.095) What about cadence on financial reporting? When is, when is it too late? When is it just in time? You know, from a monthly perspective, most, most businesses are, you know, doing monthly financial reports, just checking in and trying to make decisions. Um, you need a dashboard. Um, when is, when is, what is an optimal time from the end of the month to, to know your numbers? Lonnie Bloom (36:33.596) Yeah, I mean, I would say, you know, most of our clients are closing their books monthly within, you know, five to 10 business days, you know, sometimes less, right? You know, if you’re more sophisticated, you could close in two or three days, right? If it hinders your ability to make business decisions, to move operations and to sort of move the needle, if you’re running into issues where inventory is a mess and you can’t fulfill orders because you don’t have the right data and you’re not making the right decisions, that’s when you know there’s something, there’s a kink in the armor, right? And you have to dig into it, right? So… you know, monthly closes are important. And then doing an annual, you know, from an inventory perspective, if you’re doing, you know, if you’re maintaining inventory in a warehouse that’s owned and operated, or is it a third party, a 3PL, third party logistics provider. doing a full inventory count annually. I think that’s important as well to make sure you’re, you know where inventory is, to make sure nothing’s damaged or, you know, you have a visibility into that. So you can either do an annual physical or you could do cycle counts throughout the year. So there’s, you know, the product getting to the end customer, right? Knowing that where the issues lie and… and then having that data available timely, like you said, monthly, where it’s not hindering operations, I think is key. Kunle Campbell (38:11.79) Okay, so on a final note, what are your predictions and thoughts for the rest of 2024? Lonnie Bloom (38:22.153) Yeah, I mean… I think interest rates might get cut by the Fed later this year. If they do, potentially consumer spend increases. But I don’t think it will necessarily be a high growth year. I think it’s a modest growth year for e-coms. E-commerce is not going away by any means. There’s physical big box stores that have a need to be online, be an online retailer. online retailers that primarily sell online had never had a physical presence, but are now finding a need to have a physical presence, right? Now more people are out and consumers want to see and feel your product, depending on what the product is. So I think you’ll see maybe more businesses that are primarily online start to open up some retail locations or make sure you’re in those big box stores through wholesale arrangements. I think from a growth perspective, really depends on consumer spend and kind of where that goes. Anything can happen. As we’ve learned in the last few years, things can happen outside of our control, right? But I would probably predict a modest growth year with higher growth potential moving into 2025 and beyond that. But yeah, I’m looking forward to seeing what the future lies for us. Kunle Campbell (39:52.138) Yeah, we’ll touch base again in 2025 and check on those predictions. Um, yeah, but, but yeah, it’s, it’s been, I’ve certainly left this conversation smart in, in finance, particularly in relation to, to capital raising, what investors want to see, what the landscape is particularly at this point in time and how, um, you know, companies who are essentially who’ve Kunle Campbell (40:24.432) to a more buoyant, you know, capital markets, you know, probably in 2025, as you said. It’s been an absolute pleasure having you, Lonnie. For those who want to find out more about with them, it’s withum.com. Are you active on any social media channels? Where should we sort of follow the conversation from here? Lonnie Bloom (40:49.172) Yeah, absolutely. LinkedIn, I think, is probably the best. I do some interviews too with some founders, so, you know, it’s always good to check out some content. And I think LinkedIn, just feel free to reach out. And yeah, Kuhnlein, thank you for having me. I really appreciate it. Kunle Campbell (41:03.914) A pleasure, a pleasure, pleasure. And you do host events, right? In with, with Econ. Lonnie Bloom (41:09.276) Yeah, we’re New York based, but that’s sort of the New York metro area. We’re active in the market going to events or hosting events. So I’m always looking to find new partners and people that are interested in the space and industry just to chat with. So yeah, excited to hear any feedback. Kunle Campbell (41:27.022) Okay, good. So we’ll link to all of the resources in the show notes. Lonnie, it’s been an absolute pleasure having you on the 2XE Comments podcast. Cheers. Lonnie Bloom (41:37.992) Thanks, Phil.