Cash Basis Accounting | Rich Danhof and Owen BonDurant, Independent Rx Consulting

Transcript

Cash Basis Accounting | Rich Danhof and Owen BonDurant, Independent Rx Consulting

(Speech to Text)

Mike Koelzer, Host: [00:00:00] Rich and Owen, for those who haven't come across you online, introduce yourself and tell our listeners what we're talking about today. My

Rich Danhof: name is, uh, rich Danoff. I am a CPA. I'm also an owner of pharmacies. I've been in pharmacy for about 15 years, probably in some capacity. So spent another 15 years before that in public accounting.

A lot of time spent now figuring out the accounting and the financial aspects of independent pharmacy

Owen BonDurant: or company independent RX consulting kinda started out, helping people start and buy pharmacies. And you know, when you've done enough of those people want us to keep working with them. And that's how we kind of ended up in the accounting world.

Mike Koelzer, Host: People start with an accountant or start with a system, and then they find that. Kind of at work. Do they want to keep going? That seems almost especially true in a given industry like pharmacy accounting,

Rich Danhof: like any [00:01:00] other industry. I mean, there's, there's good and bad. They're innovative. There are people that are, you know, stuck in their ways.

There's, there's a lot of different, uh, approaches to things, nothing's black and white, even with the tax code, nothing's black and white. There's a lot of decisions that need to be made along the way. And so we see, you know, when we, when we owned 15, 16 pharmacies and we were buying and selling pharmacies, you get financials from different accountants and they would tell you completely different things.

And everybody kind of had their own little way of doing things. Some of them understood the intricacies of pharmacy and, and you know, whether it's billing and rebates and DIR fees and all the different things that come along with pharmacies, some of 'em understood it. And some of 'em, didn't probably 90% of 'em didn't.

So, you know, you just get this, this. You know, the view of, uh, you know, from different accountants that were just very diverse. And, and, and so, you know, we spent our own finances trying to [00:02:00] understand our own business. We spent a lot of time delving into, you know, what is the best view? How do we get, how do we get the numbers that we need to actually run the business?

Uh, when you look at the numbers of pharmacies, I mean, you're getting pharmacy system data, you're getting financial data, you're getting payroll data, you've got these sources of information and, you know, the financial aspects of it are, are really important. And historically that wasn't always true.

I mean, people would run their pharmacies, they'd fill their scripts, they'd, um, take care of their patients. And at the end of the month, their bank account was up. Right. Yeah. And, and that was their, that was their best judgment on how their pharmacies were performing, was how their bank was moving. Cuz they would get.

Their financials might not show up for four months. They might not be detailed enough. They might not be correct. And so they weren't very reliant upon and pharmacists in general, weren't typically, um, didn't really have a whole lot of training or care sometimes for, for the financial side in the accounting side of the business.

Mike Koelzer, Host: That's kind [00:03:00] of a crazy answer that I'm hearing from you rich. Because when I think of a profession, like if someone said to me what's like a typical profession, that's kind of black and white, kind of boring. There's not a lot of creativity in it. The first thing I think I would say, well, accounting, it's black and white it's numbers.

It's to the penny. It's a profession that there's no creativity to it. And it's like your definition. And it's true. I've just never heard an accountant say it where it's like, no, you can get answers across the board. There's some people that are gonna have this style. Some are gonna have this style. Some are gonna have a stomach for something.

Some are not going to. That's a pretty wild definition I'm hearing from you that I just never thought about before from

Rich Danhof: accountants. I even threw the tax side in the IRS because what could be, you would think would be even more black and white than, than general accounting principles would be, you know, how the IRS treats things.

And yet we make decisions every day that have different [00:04:00] levels of risk associated with them. Do we think this is a black and white issue? Is this a gray issue? If we go this side, you know, how do we treat these things? And so some can be very advantageous to treat one way versus another. And, and you've gotta have a, take a position on these things and, and, uh, determine how you want to, uh, how you wanna approach 'em.

So it is, it is quite a bit of, there is a level of creativity that goes with, you know, and decision making to make sure you're making informed decisions and understand the risks.

Mike Koelzer, Host: Is there a word for that in accounting? Like the stuff that we're talking about, do you have to have a full. Couple sentences to explain it to someone like me, or is there a word, is it called risk taking or is there like a more professional word in accounting?

I don't

Rich Danhof: know that there's a word necessarily to describe it. And, and we're not always talking about risk. What, what we're really trying to do is, especially in the financial side, you know, a step away from the tax side, where there is risk associated. If you take an aggressive [00:05:00] stand on something and it gets overturned by the IRS in an unlikely audit, then there's risk associated with that.

But when we're looking at the financials of the pharmacy, we're trying to get the best information so that we can look at our store and we can understand whether we're making money or, or not. And, you know, as reimbursements are going down as costs are holding steady as so, margins are getting compressed.

You know, I need this bit of information. I need to understand what's happen. And, and so some accountants are gonna use what's called accrual basis of accounting. And that's, that's a, that's a gap it's based on gaap accounting, generally accepted accounting principles. And they're gonna adhere strictly to gap based accounting.

And, but others are gonna be using the cash basis of accounting. And there is a huge difference between using the cash basis of accounting and the view that the cash basis of accounting is gonna give you versus what an accrual basis is gonna give you. And most pharmacists don't necessarily understand that. And they, they shouldn't be right.

That's not what they [00:06:00] went to school for. That's not their background. That's not what they're trying to do. So, um, so if they, their accountant says, Hey, we're gonna U we use accrual based accounting, and this is what we're gonna do. I mean, those are the financials you get. And so you have to understand what that's telling you.

And if you go to your accountants and they say, well, we use the cash basis, accounting, and this is you, you know, it's gonna give you a very different view of how your, your pharmacies, uh, perform financially. They're just different concepts. And then. Everything's a hybrid or modified, like I'm using modified cash-based accounting.

So there's just lots of different views. And again, our goal is to make it as clear as possible to people and, and because it comes from ourselves, right. When we're looking at our stores, we need the clearest possible view to understand how our stores are performing and, and make sure that that they're performing the way that we need them to perform so that we can be there down the

Mike Koelzer, Host: road.

We tried predicting in the past but it hasn't seemed to work so well. Let's just see how it all comes together with cash. You'd [00:07:00] think that accrual would be more reality, but actually cash. Yeah. Seems to be more reality predicting versus not predicting, but there's something more than that. I'm listening.

Rich Danhof: Well, you, you talk to any accountant and they're, they're always gonna gravitate towards accrual.

Thd dn emily.

Rich Danhof: Because that's what they've been trained in, any publicly traded company is going to be an accrual basis of accounting and, and accrual tends to smooth out a lot of the volatility in the numbers. Um, because you're you, cash, cash is simple. Cash is when the cash moves in or out of your bank account is when you're recording the transactions.

Whereas with accrual, accrual is trying to do something called matching. It's trying to match up at the point of dispense. So everything happens at the point of dispensing. When you dispense those drugs across the counter, you are recognizing the revenue and the cost associated with those.

right. So [00:08:00] that's all at dispensing. It's matching up to 30 pills. You're the cost of those 30 pills as you get paid for 'em whereas cash, you might have bought those 30 pills, six months ago. So under the cash basis of accounting, I recognize the cost of those 30 pills when I paid for it six months ago, not now when I'm dispensing them and I might not get paid for a month or three weeks or longer if my payer's really slow.

So I don't recognize revenue in, in cash based on accounting until that cash comes in from my third party payer. So you're in cash based on accounting. You're really separating, uh, you're not doing the matching at the point of dispense. It is when I buy it, I, I, and pay for it to my wholesaler. I'm taking the, uh, deduction or, or the, the expense into my P and L.

And when I get paid. Which is on the other side of dispensing, I'm going to recognize it. So I'm not gonna recognize it until I actually get cash from the payer. So [00:09:00] there are two very different approaches to the business and, and each one has its merit, but at the end of the day, you know, if, if I'm running a small business and you know, what's most important to me, well, cash is most important to me.

If I, you know, in today's brand environment, when you've got three or $400 brands constantly going out the door, you're paying for those in advance of getting paid for them. There's your cash flow problem, right? Because you're right, you're spending all this cash and it's going out the door. It's not reflected in your P and L until you dispense it.

And by the way, you're not getting paid for it for three weeks after you dispense it, that's when you're gonna recognize the revenue. So the cash base of accounting, we've kind of, you know, and that, that really threw me for a loop as an accountant, that I was gonna go back to cash, right. Because you spend so much time and energy.

Focused on getting the accruals. Right. But what we find is that, you know, small business owners' cash is king. And so you gotta, you gotta [00:10:00] track the cash.

Mike Koelzer, Host: Would it be fair to say that cash accounting, I get to delay my profit. We know in pharmacy, the profit may never even show up, but would that be like a one sentence benefit that we get to delay that profit?

Rich Danhof: do. We, we, we get to do two things. We accelerate a deduction and we delay a recognition of a revenue

Mike Koelzer, Host: because the cost is early, right? The cost is earlier than accrue. Yeah.

Rich Danhof: When, when you pay your wholesaler and it depends on your terms with your wholesaler, but typically it's, you know, uh, two payments a month or something.

So you're about 15 to 17 days out with your wholesaler. So when you pay your wholesaler, that's when you're recognizing the cost into your P and L you're not putting it into inventory. holding it into inventory for three months and then dispensing it and then recognizing the cost in your P and L as you buy it, you are, you're recognizing the cost as you pay for it.

So as the cash goes outta your, your bank account and oh,

Mike Koelzer, Host: That becomes an expense right then.

Rich Danhof: Yeah. You're [00:11:00] accelerating a deduction or an expense and you're. Delaying the recognition of revenue.

Mike Koelzer, Host: For some reason, I was thinking that like, you were able to do cash for a year and then you had to go to an accrual or something like that.

I mean, when does this catch up? I gotta believe that in the end, when all is said and done in a business, like finally closes that this all catches up with each other. If not everybody would be doing one or the other, but there's no like catch up time. It's not till the end where it all evens out

Rich Danhof: to zero.

No, you're absolutely right. I mean, this is not a permanent difference in accounting. There's in taxes, there's permanent differences and there's, there's timing difference. This is purely a timing difference. You're accelerating a deduction. You're delaying the recognition of the revenue. That's an advantage to you.

I mean, you're gonna wanna deduct things as quickly as possible and, and delay the recognition of revenue. You know, when you go to sell your store, if that's 15 years down the road, , you're not gonna have inventory on the books on a cash basis because you've already [00:12:00] deducted it. So you have no basis in the inventory that you sell.

So you're gonna pay a big tax bill on the inventory at the end of the road. But at that point you're getting paid for your inventory. You have the cash to pay it, right? This is all about cash flows about ex it's about the timing of the cash flows. So if you had to make a big payment, I'd rather make the big payment at the end of the road.

When I sell my store, since I don't have any basis in my inventory, I'd rather make the payment when I'm getting paid by my buyer. And I have cash to make the tax bill rather than pay that tax

Mike Koelzer, Host: today. I'm running away too. Fiji. They're not gonna get me.

Rich Danhof: Well, that would be a permanent difference, but you probably can't come back.

Right? So.

Mike Koelzer, Host: But wait a minute. Is there any business where this would not be good for? And if that's the case, why doesn't everybody do this and why isn't cash more popular than accrual? Now you do see

Rich Danhof: a lot of cash now. And in 2018, with the change in the tax legislation, that's when it [00:13:00] opened it up even further.

So the, the rules are generally, if, if you don't make more than 25 million in revenue, Oh,

Mike Koelzer, Host: I see. Gotcha.

Rich Danhof: Right. So, um, if you're over 25 million in revenue, uh, you cannot use cash for tax purposes, so, mm. You know, and, and they've also opened it up where if your inventory items are less than 2,500 a unit that you, so if, if you have large expensive pieces of equipment and inventory, then you're, you're also excluded from using cash.

And then anybody that's using gap bases of accounting, and maybe they've got bank loans that have covenants that require gap bases of accounting gaap basis of accounting could not be, you know, could not be using cash. So there is a select it's it's meant for, uh, select group of small businesses to use cash basis of accounting.

And, and again, not just for the tax deduction, but for. The insight into your business and, and that, that cash tends to give us, it [00:14:00] gives us a very different view than what accrual does. Accrual can say, you, you can look at your accrual financial statements and they say you're making money every month.

Yeah. But you look at your cash and your cash is going down. Right. But that's because of, of, of the difference in timing, on how things are handled under the cruel base of accounting. And that's where it's a much simpler view of the world and of your business when you're looking at, at, at cash basis, financial statements.

And so that's for our clients, we use cash basis, financial statements, and, and it's not to go. It's not that the accrual information isn't really important. That matching concept is really important because if you're dispensing 30 pills tomorrow to your patient, and you, you wanna know if you made money on those 30 pills, right.

It doesn't matter. That I bought it in a thousand count bottle six months ago, but now I've got, now I've gotta dispense it. And I wanna know on these 30 pills that I dispense, am I gonna make money? And especially if it's a brand, right? [00:15:00] And, and you're, you're, you're paying $300 for that, that, that bottle of drugs you wanna know, am I making $10 on a and, and so I'm getting paid three 10 and I'm, I'm dispensing 300, I've made $10 on that particular script.

So the accrual and the matching principle is really important. And we. Make sure it's right. But guess what, your pharmacy system's telling you that

Mike Koelzer, Host: it's not giving you the day to

Rich Danhof: day reality though. Right? And so we spent probably 10 years and, and we spent, we had a larger business than 25 million. We spent, you know, 10, 10 years running our business and, and our books were accurate.

And we, we, we spent so much time fighting between our, what our pharmacy systems set our inventories were and what our books say. We spent more time doing that, trying to get the two to match and they never did. And so then you're really in, in no man's land and you've got these, these guesstimate numbers that are rolling in for your I, for your inventory and for your receivables.

And you know, what's flowing through your [00:16:00] P and L isn't necessarily, uh, reality. So we spend a lot of time banging our heads and, and time and energy trying to get our financial statements and our pharmacy system to match up.

Owen BonDurant: Pharmacy's unique because you have this pharmacy system. A separate AR yeah.

Software typically like a, you know, NetX or what have you, um, that's telling you AR it's telling you inventory, it's telling you the accrual margin you made on something. Yeah. So to Rich's point, we stopped fighting it. Okay. Show me my cash. Okay. Show me my accrual. Now I know what's going on. Right. I can see both views I've got, and it allows you to identify, do I have too much inventory or am I just not buying at a proper cost?

Right? Or am I not getting

Mike Koelzer, Host: reimbursed in their great benevolence and, and wisdom? Why did the government, then it sounds like when they were going under 25, Million and under, or whatever that was. And under two and a [00:17:00] half thousand dollars per item or something like that, why did they make that cash? Is that a lot easier for, you know, mom and pop things or not keeping track of, you know, the appreciation of a candy bar or something like that?

Why did they do that? Smaller for cash, just cuz there's so many little transactions across the board, no matter what industry you are in at levels below that it

Rich Danhof: is simpler and it's and, and being simpler, it's, it's more cost effective. I, I think that they. Gave access to cash accounting, to more people that can, you know, don't have to spend as much time and energy creating their financial statements and, and getting their information together more timely and, uh, utilizing, you know, those, those financial statements for, for both operational and tax purposes.

So it just opened it up to more small businesses. And again, people aren't relying on their financial statements in the same way that, you know, a large corporation where they've got stockholders and they've [00:18:00] got investors and they, and they need consistency and they need a, a, a standard way of doing things.

And so, again, the end users, even the SBA, don't have debt covenants. So when you have an SBA loan, you don't have debt covenants with the SBA that requires you to, you know, submit financials every quarter or every year, even. So. There's not a whole lot of people relying on these financial statements, other than you, they're just a

Mike Koelzer, Host: pain in the ass and no one's really relying on 'em anymore.

Rich Danhof: Well, and that's part of the problem, right? It's been such a pain in the ass that everybody hasn't relied on 'em and they've forgotten how to use them and read them. And now that again, margins are getting compressed, um, you know, reimbursements are down significantly over the, even the last few years.

The margins are, are, are so thin. I, if you don't understand your business and you don't know where it's going and, and, and have a view of it, um, from a financial aspect, you're taking [00:19:00] significant risks with, with your most important assets. So it's becoming more and more important every day to understand your financials and to

Mike Koelzer, Host: do that.

The cash makes it easier.

Rich Danhof: We found that the cash basis has been simpler. And again, the fact that we've got a pharmacy system, that's kicking out basically cruel, it's doing the matching for us. It's telling me this month, I will dispense 5,000 scripts and this is the cost associated with it. And this is the revenue associated with it.

So we've got the, we've kind of got the accrual side and the matching side coming out, the pharmacy system. Now we've got financials that are cash basis, and they're telling us a little different story. So we, again, we've got, you know, we've got the pieces, we've got more pieces of information to make decisions on.

I think the other thing,

Owen BonDurant: Mike is you you're, you're absolutely. But also making those financials so that they're tailored towards the pharmacy because they see so many financials, you know, you get, I mean, there's lots of good or local accountants, but there's, but they have to, [00:20:00] they have to make their businesses scalable.

So the pizza place has the same line items. Is the pharmacy. Yes. Gotcha. Right. And so, you know, you have sales, you have cost of goods, you have expenses. None of it's broken down, it's it doesn't show you. Okay. OTC or how much cash did I do? How much did I do? Um, from my cost of goods, you know, how much did I buy from secondaries?

How much did I buy from my primary? Like, it doesn't tell you anything. And so then you, as the small business owner, stop reading them. Right. So that's, you know, that's where getting someone specialized and it helps you. You have something that, that. Is is towards your business that you can understand and then make decisions

Rich Danhof: off of, I

Mike Koelzer, Host: suck at a lot of stuff in life, but one thing I really suck at is knowing what my inventory was over the years.

And my account would always say, well, this matters. And it's like, all [00:21:00] right, I know it matters. But even if I have it down to the day, that's not even down to the hour. I mean, that can shift by 10 or $15,000 depending on, well, do I count this as in the box in the back room or not? Right. And now multiply that by a week of, you know, whatever, a hundred thousand dollars or something.

The question I have. Am I a little bit off the hook now with the cash accounting. Did I hear that rich or am I still on the hook to pretend like I have a good, uh, inventory level when my accountants ask for it both.

Rich Danhof: I mean, you definitely, we don't wanna lose sight of what our inventory is. Right. And, and that's probably, like you say, that's probably the hardest thing in pharmacy is to get your inventory.

Right. Okay.

Mike Koelzer, Host: I understand the benefits, not having money tied up in it, but let's say that I have a nice tight inventory, you know, and I'm, I'm doing great. There is that value important for accounting reasons,

Rich Danhof: not necessarily for accounting reasons, but for operation reasons. [00:22:00] Right? So when the first thing we look at when we see cash going down on a cash basis, financial statements, when we see the cash balances declining, the first thing we're looking at is.

Is the inventory increasing, right? Because that's usually the exchange that's happening is you, you you're, you're putting your cash into inventory and your inventory and your we're hoping because that's an easier one to fix than most other ones. Right. We're hoping that you've got a ton of inventory staying on your shelf and we can do some returns and we can clean up and quit buying so much.

That's the first place we look. So if we don't have a tight inventory, like you said, we're not sure. Right. So we need to see, you know, what your inventory levels are doing. And, you know, you want your pharmacist at the verification station to be able to look and see, am I making money on the script I'm dispensing or, or should I, you know, try to get a, a switch to a generic or something else to, to, um, not lose, you know, a hundred dollars on the script on dispensing.

So you need a good inventory to understand that. But at the same time, when [00:23:00] we know. That inventories are not right. And that people don't keep good inventories, the cash based financial statements, at least tell us the truth, right? The cash doesn't lie. What came in, in and out of your bank account is the

Mike Koelzer, Host: truth.

That's what I'm getting at. There's still a lot of good reasons. And I understand the reasons for having a tight inventory and, you know, investing and not having product collecting figurative dust on this shelf and being in date and all that kind of stuff. I get that. But as far as tax wise, do you need to know the value of my inventory to complete your cash accounting?

No.

Rich Danhof: If you're on the cash basis of, uh, accounting for tax purposes, when you buy it, you will deduct it. So there is no inventory. So at your end, You should know what your inventory is, but there's no place on the tax return where we're gonna say, here's what your inventory is. The thing

Owen BonDurant: We see Mike is, and I'm sure you've seen this is, you [00:24:00] know, to get at the end of the month and your accountant asks what your inventory is, because to finish up that month's financial.

And then you're like, Ugh, I gotta go try to true this up. I didn't keep it up in my pharmacy system. And so then that's what starts causing the delays in receiving your financials.

Mike Koelzer, Host: Exactly. Oh, and that's what I'm

Owen BonDurant: getting at. And so then you just get used to not using them and it's just this perpetual.

Yeah. So cash allows you just that at least you have something that said, I sold this, I bought this. Um, and, and you at least have something. Now that being said, I mean, everyone listening, please keep your inventory as up to date as you can. Um, but it won't delay your

Mike Koelzer, Host: financial. I don't wanna let anybody off the hook with this.

There's a lot of great reasons, but you're exactly right with the accountant. It was like, we know Mike's not gonna get his inventory. Month. Exactly. It's gonna delay something. So let's do it at the end of the year. Well, that's fine. When [00:25:00] years ago, when oh, and our dads were, what was your dad saying?

Everybody would complain about the profits in pharmacy and then it all hopped in their BMWs or something like that. You know, when there's money there, that's fine. But when you need stuff, month to month, that year end inventory for accrual counting is not the way to go.

Rich Danhof: Right. It's just, you know, part of the value of.

Your financial information is the timeliness of the financial information. And so we're able to get financials out much quicker. Uh, they give us a good view of how our store is performing. We're also looking at our pharmacy system. We're looking at our reconciliation service for our receivables. Our two biggest assets are still our receivables and our inventory.

So we're gonna still manage those and make sure we're tracking and trying to get better and better, and, you know, use a pharmacy system that actually, you know, gives you half a chance at getting it somewhat correct. Um, but you know, the financials are gonna be there. They're gonna [00:26:00] be more timely and they're gonna, they're gonna tell us a, a, a big piece of the equation and used in conjunction with your operational data and your payroll data.

You now have a pretty clear picture of how your store's performing.

Mike Koelzer, Host: I mean, it sounds like with cash accounting, it sounds like if your accountant has. The system is set up, right? In order to turn this over, really, there's no delay in your month. End report just getting the numbers and manpower of doing this and that, but you're not waiting for anything anymore.

You're not waiting for it. It used to be that my accountant would ask us, like, what bills do you have coming soon, you know, before the 15th of the month and this kind of stuff. And that always seemed to delay stuff, but that's not really there either. It seemed right.

Rich Danhof: No, those are accruals. And that's the accounts payable and the accounts payable accruals.

Again, those, those don't get recorded until they're actually paid. So we're not worried about bills at month end that are gonna get paid in three weeks because in three weeks when they're [00:27:00] paid, we'll record them. So there's definitely a shift there. We do look at debt and we keep that on the books.

We feel like that's, and again, this is back to, nobody's usually pure cash or pure accrual. There's some hybrid that we like to keep the debt on the book. So we know exactly how much debt you owe your, the SBA or your bank or your wholesaler. So those large debt pieces. So we'll have to confirm. what your debt balance is at the end of the month, you know, what payments that you've made and, and what the interest versus principal portion of those payments are and stuff.

So that's really the only thing that we kind of gather at the end of the month. There may be, you know, we have to look at transactions and make sure we understand, uh, all the cash transactions that went through credit cards and bank accounts and such. But, uh, our commitment is generally to get financials published within a week to three, three and a half weeks.

We definitely want 'em published before the next month comes around and closes. So [00:28:00] if we can, on average, get our financial statements pushed out within a couple weeks. That's, uh, that's pretty timely and, and valuable enough that, um, we have time to react and, and to make more decisions, right? So you have the data in hand too.

To make decisions if you need to.

Mike Koelzer, Host: That means a lot because sometimes people are hinging on a bank loan or deciding they might be selling their business. Maybe someone's ready to flip the lever of saying, well, buy you. But we wanna see the last three months, you know? Well, when the third month doesn't come in, well, by that time, you might have been great and come down already.

And then they're worried about that or something. So that turnaround is big, especially in this age of people wanting instant answers and having accounting, which is behind just. It doesn't make sense anymore, especially when the availability is there for the cash accounting. Yeah.

Rich Danhof: And, and even if you did accrual, you could, you know, you still gotta get [00:29:00] those financial statements published.

You can't, you can't wait three to six months to get data on how your store's performing. So whichever method you're choosing or your accountants choosing, there's gotta be an expectation that, you know, within 30 days or so that you're seeing, you know, the financial statements. And it's also based on, you know, we've talked about kind of timeliness and, and, and, uh, the matching principle, but there's also materiality, right?

You could, you could take a whole lot of time to get down to the nickel and dime and, you know, we've, we've gotta keep materiality in, in perspective. And so we don't have to be down to the nickel dime. We've gotta, we gotta have, have 'em materially. Correct. And we've gotta publish them quickly so that they're timely.

And, uh, and that's our goal. Owen

Mike Koelzer, Host: do you and rich, do you tell each other, and do you tell the accountants like, well, this is what is material for us? Is that based on your company? Or is there any kind of [00:30:00] standard, like for someone a dime might be better than a penny and for others, maybe a hundred dollars is close enough.

Rich Danhof: Yeah. It's just gonna vary depending on the store because you may be looking at a store that's filling, you know, 55 or 60 scripts a day. And their level of materiality is very different from a, you know, compounding store that's doing you. Three four, 5 million, right. And, or a retail store. So it, it, it depends on, on the store

Mike Koelzer, Host: And it depends who's on the other end of the email, because if you send Bob at Bob's pharmacy, you know, a hundred emails and he never gets back to you and you just want to make sure he is still alive.

Well, right. Maybe a thousand dollars is close enough for Bob. Yeah, absolutely.

Rich Danhof: I would say the other thing, Mike, is

Owen BonDurant: That, you know, as a business owner, is your time really spent, well, looking out a hundred dollars on your vials, right? I [00:31:00] mean, what we try to do is someone comes back to us and says, Hey, this was categorized in other versus pharmacy supplies.

It's like, well, we are waiting on you. We'd rather get 'em out and allow you to concentrate on the 80% of your business. You know, that matters. Okay. What are you doing to increase revenue or, you know, cost of goods, for example, is 80% of your expense. What are you doing today to get it to be 79? Because that's a lot more valuable to you than what was categorized in supply, you know, your categorization of payroll, you know?

Okay. Yeah. I want to know how much did I spend on pharmacist, technicians, drivers, but eh, like, you know, if one of these is off for a month who cares and the

Mike Koelzer, Host: supplies, are they really gonna go back and look at their accounting to see if they can get better supplies? They're gonna compare maybe supply companies.

They're not gonna go back. We should have cut supplies. We should have [00:32:00] given those tablets just to somebody with our hands , you know, we should have just let them put a handful in to say this. It's like, they're not gonna look at

Owen BonDurant: that. That's how we help with materiality. It's like, you know, revenue's important.

Cost of goods is important. Payroll, you know, that's, that's where most of your money is. Right. So let's try to get that as correct as possible. And then we can work through everything else. Do you

Mike Koelzer, Host: ever have people that want to get more than you want to get? They're just hanging on like this dime where it is.

Do you get that

Rich Danhof: ever? We're we're usually more

Owen BonDurant: exact than

Rich Danhof: They, they even want us, we get more of what Owen alluded to is that people are worried about their utility bills when they should be out visiting doctors, driving more scripts into their business. Right. They're they're just focused on the wrong things.

Mike Koelzer, Host: Yeah. And. And you can tell that they're not focused down to the penny with you guys, but you can tell they're spending more time talking about that. Yeah, for sure.

Rich Danhof: The things people should be [00:33:00] focusing on are the three things Owen alluded to. I mean, you've gotta, you've gotta drive more business and get your revenue going right.

More patience. You've gotta focus on your purchasing, making sure you're, you've got a good contract that you're buying from secondaries where you can, and, uh, making sure your cost is, is, uh, as good as it can possibly be. And then third is your payroll and your people and, and that's pretty much it, once you get beyond those things, most of it is immaterial.

I mean, and, and not again, not that we want you just to, you know, have your employees crank your air conditioning down to 60 during the, uh, summer and, and make your air conditioning bill, you know, $400 versus, uh, 200, but that $200 on extra air conditioning isn't gonna make or break the pharmacy. If you get your rebates this month, that just might so.

Getting focused on the right thing or, and, and particularly around payroll also is, is a lot of people. That's an area where you've really gotta stay focused and it can get away from you quickly. [00:34:00] And I think that's a hard thing

Owen BonDurant: for not just pharmacists, but every small business owner, you know, where do you focus your time?

Um, because it's easier said and done, right. You're working the bench, you know, you've gotta do bills, you've got family, you know, you only have so much time. So like it's hard to even think about what should I be

Rich Danhof: focusing on.

Mike Koelzer, Host: Oh, and rich, your company, independent RX consulting. You're both accounting slash consulting.

If I was focused just on the accounting part of it. And rich, I'll say to you, because you're the CPA of the group. If I was just focused on that, and let's say you were just. When I say, just an accountant, I mean, an accountant versus consulting, would that drive you a batty? If you were an accountant and you couldn't really touch much on the revenue and the cost of goods and the payroll, or would you still touch on that [00:35:00] as an accountant?

It's kind of outside the scope of doing the monthly packaging, right? Yeah. It seems like it would drive me bad if I wasn't allowed to say, all right, I'm seeing this. And here's what you should be doing on a bigger scale. Sure. But if you're just accounting, just accounting, they wouldn't really hire you for that.

Rich Danhof: No, I hear exactly what you're saying. When I went to school, I did not want to be an accountant. I studied accounting because I felt like it gave me a very specific skill set. It helped me understand business. And, and it's kind of the language of business. And so even now I, you, I mean, I've told Owen and Owen is on again, the bar buy start side of our business and I'm in the accounting in the middle.

And then we've got, you know, we help people sell their stores on the other side of our business. But so I, I tell Owen all the time, man, I never really saw myself coming back to being an accountant. And I don't wanna necessarily be an accountant because an accountant in a lot of ways is very reactive, right.

You're running the business and we're [00:36:00] recording everything that you're doing to run your business and. I wanna be a businessman. I wanna understand business. I want to, I wanna help make decisions. I wanna drive the business. I don't wanna just respond to what the business is doing and what's happening to the business.

So the accounting part is really, really important. We gotta get it right. Yeah. Right. And the tax part is really, really important because there are huge dollars that are, that can be saved or, or protected there. So, and, and so those are really important pieces, but they're only pieces of the, of the big picture of the business.

And that's what we want. We want that information. and, and we want to do that so that we have the information to make decisions about the business. It's not for the sake of gathering the data and getting the entries right. It's for the sake of understanding the business and then making decisions about the business based on the data that you have.

And if, you know, we have bought and sold stores over, you know, the last 15 years, probably, you know, 30 or 40 stores that we bought and sold and seeing the [00:37:00] disparity and the type of data that we're getting both off of the pharmacy system, not, not just the accounting data, but half the time the pharmacy system data is really screwed up.

But half the time, you know, probably three cores of the time, the accounting dis data is really screwed up all that is data and information that we need to understand the store. Whether you're gonna run it for the next 20 years and try to make money running it. We need that information and we need it to be correct, or whether you're gonna sell it in a year from now or in six months from now, we need that information to be able to make decisions.

So it was all about getting the data and the information so that we could better understand and, and help make decisions about, or for our own case, just make the decisions about how we're gonna run our stores and what we're gonna do. Wasn't about wanting to build an accounting practice. I wanted to get it.

Accurate data, which we rarely ever saw in this business. Does

Mike Koelzer, Host: pharmacy carry any certain love or could you be just as enthused doing this for a [00:38:00] bicycle manufacturer or for, you know, whatever, you know, roofing supplies or something? Is there something about pharmacy that, that business, and I understand rising above the accounting, but does pharmacy hold anything or would this be exciting in a lot of different businesses?

Just the flow of the business, not just the.

Rich Danhof: Pharmacy is unique. It, it, it's, it's more complex than most of it, you know, you're dealing with rebates where you buy your inventory and you don't even really know what you're paying for it for another month or two down the road. I'm not just slow. No, well, come on.

And pharmacy's just a unique business. There are, you know, DIR fees. So you don't even know what you got paid for the first six months at times. So there's some very unique challenges to understanding pharmacy. And that's, that's the difficulty when you're dealing with pharmacists who are very clinical and patient oriented and, and, and such, and you're, you're [00:39:00] talking about, you know, a complicated business in and of itself.

Yeah. There's an appeal to pharmacy in, in that way. Um, but you know, I never, I never saw myself. I had no clue. I would be, you know, spending the latter half of my career in, in the business of pharmacy. I was in a fortune 100 company doing mergers and acquisitions. We bought companies over in Europe. I was traveling all over and now I'm dealing with these small little independent, you know, stores in, in, in small rural towns or, or cities or wherever.

And, but it is exciting. And, um, so I enjoy it because it's a challenge and it's also a frustrating business because. Uh, I, you know, what other business can have no control over what you're getting paid for the product you're dispensing and, you know, in other medical fields, you you're, you're paid for providing, you know, medical service.

We've got reimbursements that [00:40:00] that's based on the cost of a drug. And so our hands are really, really tied in this business as it sits now. And I hope that within the next few years, that that really starts to change. I know there's some momentum now in that regard, but my hope would be that, that, um, these, these pharmacies have to stay as healthy as possible in order for those changes to come into fruition and come into effect.

So understanding your business and not, not having been put in a position where man I have to sell today. Absolutely.

Owen BonDurant: That was a unique question for me. Well, I grew up in pharmacy, right? So it's, it's the only thing I've really. Done. However, I kind of like business in general. Like I read, I don't know, 10, 20 books a year on business.

I study business. Like it's almost a hobby for me. So, you know, I do hear a lot of people. Rich is right. [00:41:00] Pharmacy's unique, but there's also a lot of aspects. Just the business that applies. I mean, you gotta go out and get business. Yeah. You've gotta do marketing in sales. You've gotta control your costs.

You've gotta find other ways to make more money per patient, right? Yeah. So, okay. I sell 'em a vitamin. Can I sell 'em cash DME? Can I sell 'em? Who knows what? I mean clinical stuff now. Right. So all that is just basic business. It's Hey, the vitamins, for example, that's just, I want, do you want fries with that?

That it's the same concept, same concept. So there is a lot of just basic business stuff. It's just. Pharmacy's complicated. So it gets a little bit more fun. I mean, as rich was saying, you gotta kind of manipulate it and figure the way around it. You know, what other business has all kinds of rules around your marketing.

Right. We can't pay people to, we can't even give people coupons in some [00:42:00] cases, right. Because they're on a federal plan. So we have to get creative. Uh, so that is kind of what has never been asked for before. It was kind of a unique question. Let's

Mike Koelzer, Host: assume that the average person that goes to pharmacy school is a certain breed, maybe a certain IQ, maybe a certain EQ, maybe a certain way to deal with facts.

And also with things that are not so factual, not so black and white and so on. What do you think a negative trade is that that person who ends up being a pharmacist brings to the business world.

Rich Danhof: I think the thing that's that, that we occasionally see is we, we see pharmacists that don't understand and don't necessarily care about the financial aspects of the business.

And so, where we have great relationships is, and a lot of these pharmacists on our buy [00:43:00] start side, come in and get into pharmacy from the chain business. And they aren't on the chain side of the business. Right. They don't see the details. They don't, they're not exposed to the entire, uh, um, aspect of running the business.

And so the most frustrated people instead of the negative side, the positive side are the people that really embrace that. Hey, I've got a business now. And so even though I'm patient centric and I'm clinical, and I, I love what I do, and I love serving my patients, the people that also get excited about the business side and want to understand.

And, and learn and, and immerse themselves in the fact that they're now a business owner and they've probably got a lot of debt on their balance sheet, or they've got a lot of cash of their own tied up into it. Those people that embrace that side are a lot of fun to work with because you know, my goal is to, is to also teach them, right.

It's not just to hand them a fish , it's to help me understand the business side of what they're doing. And [00:44:00] so we spend a lot of time trying to get kind. Information to them that they can. And, you know, if, if a pharmacist was trying to explain, you know, all the drug interactions and the things that they know to me as an accountant, you know, I would be a little overwhelmed and, and, and likewise, so we, we try to, you know, give them the information that they need to be able to be the business person, without having to do all the minutia and understand everything, you know, at, at the highest level.

So that's the people that we get excited about. The negative side of that would be, you know, a chain pharmacist that comes in and, and pays no attention whatsoever to the financial side. And we sit there and watch their cash tick down month after month after month without responding.

Mike Koelzer, Host: Do you see that where somebody would take on all the debt and all the problems and joys that would go along with an individual pharmacy and not have that thought about I've gotta be a halfway decent business person.

It seems way [00:45:00] too complicated that somebody would jump in without having some of that love or are those skills already. But I suppose they're out there, I guess, where

Rich Danhof: we see that most is, uh, not the people that we work to help buy or start because we ingrain that from the start. And we make sure that that passion is there when they're building their business plan and going through that, you know, getting their financing. That passion has to be there, but we do get stores to come to us in crisis.

Right. So they've been operating for the last 10 years, like I say, for, for eight or seven of those years, it was good. The cash always went up and they never had to, you know, ever look at a financial statement and, you know, the accountant did the taxes, everything was good. But in the last few years, you know, the cash has been slowly draining and now they're getting to a critical point and they've gotta, you know, they may have refinanced, they've got, they've got problems.

And so that's where we see it more, is trying to help somebody dig out of a hole. That's pretty darn deep. And, and so we [00:46:00] we'd much rather get to 'em before that, than, you know, than when it's, than it's, when, when it's pretty late in the

Mike Koelzer, Host: game, they might have come in pretty clinical, but the numbers just worked before and they've never really.

Challenged on the positive side, marketing and growth, and maybe they were in a doctor's office or something on the negative side, they'd never had to deal with the problem. So they've kind of been not coasting, but they've been able to put more emphasis on their clinical stuff or medical stuff than on the business stuff.

Owen BonDurant: Yeah, Mike, um, but we also see kind of two other scenarios where you're right there. You know, a pharmacist is rich and is a servant, right? Like they want to help people. That was why they did it. Um, so there are occasionally situations where they just don't enjoy the financial side of it at all. We also see the flip flop to that, where they try to do the financial side themselves.

So they try to do the [00:47:00] bookkeeping. They try to do too much, you know, everything themselves and cuz they're trying to understand it and they think they can do it. But. You know, our advice to them is always, okay, you need to understand this. You need to know how to use it. However, put your time where you're good, right?

You're really good at building relationships and helping the customer and, you know, being out in the community and serving that community. You just need to understand the financials to, I guess, capitalize off of those relationships and what you are good at.

Mike Koelzer, Host: You guys specializing in pharmacy. That's what I would want coming to someone and saying, look, I don't want to teach my accountant.

And I don't want my accountant to know a handful of pharmacies. I want my accountant to be leading the charge and teaching me because I don't know what the hell's going on.

Owen BonDurant: Absolutely.

Mike Koelzer, Host: It's

something

like, they're not gonna try to send [00:48:00] a human to a certain part of the. Galaxy because 10 years from now you could send a person and they would catch that person in like a year

Owen BonDurant: Yeah,

Mike Koelzer, Host: You can see someone like me who maybe likes some business and maybe likes marketing more, but I might be trying to learn the accrual. I might be trying to learn that for years thinking I'm gonna really gain some knowledge on this. And then it's like, I'm not even up the right tree with that,

Owen BonDurant: you know?

And that's why we have a business is because, you know, we've owned pharmacies and we understand that particular business. And there's a segment of people who, like you said, they don't want to spend all the time trying to figure it out. Why don't you go to someone who knows it? So that way you can spend your time doing the things you're really good

at.

Mike Koelzer, Host: I was working at the store on Saturday and a person came in. Had heard my show and realized that [00:49:00] we didn't live too far from each other. We were 49 years old, worked at a chain pharmacy and said, I'm thinking of opening up a pharmacy. What would you say? 49 year old from Michigan right now we're

Rich Danhof: helping people every year, opening pharmacies.

There's still a, a, a very valid. Reason to go into pharmacy. First of all, chain jobs aren't what they were three years ago either. Right? So those jobs are getting tougher and tougher. There's more demands on yep. On pharmacists and pay is going down. You know, it's not quite the same reimbursement model that it was, you know, three or four years ago or, or the same reimbursement level.

So the, the, the, the money, uh, and the profitability of the pharmacies, aren't what they were. But there's still, there's, there's still a, um, an avenue there, and there's an avenue to ownership, controlling your own schedule, uh, allowing you to do, you know, what you love to [00:50:00] do in your environment. You're probably gonna take a year to year and a half to, to cross over to profitability or to, to break even.

Um, so there you, you, you have to have a business plan. Has something unique in the business plan that makes it make sense. It can't be, I'm just gonna go open a store down the street. Um, there's gotta be some real thought into the business plan and there's gotta be some unique, you know, relationships or those types of things that says we're gonna be able to drive this business because it's not much fun watching the cash, uh, go outflow out of the business for a year to a year and a half to two years.

Right. As you try to get to that break even point. But at the same time, you're, you're typically paying off debt. So even though you're not pulling a lot of cash out of the business, necessarily other than a salary, you're still paying off debt. So you're building equity in the business, and that's really important.

So, uh, you're building an asset basically. Yeah. [00:51:00] So while you're paying yourself a salary, you're not pulling a ton more out, you're building an asset along the way. So there's, there's certainly an avenue that says that, you know, uh, owning and, and, and starting an independent pharmacy still makes sense.

Like, I think the big thing

Owen BonDurant: that I see from potential owners

Rich Danhof: that they're not prepared for.

Owen BonDurant: Okay. I mean, they do need to have a good plan. I think they need to learn business and, and enjoy it and want to do it because you are getting into a business. It's not just a pharmacy, it's a business. But the thing that I see that they're surprised about is, you know, when you have a business, whether you're opening or buying,

Rich Danhof: I

Owen BonDurant: Mean, you become the salesperson that you, as the owner, are now the salesperson and, and, you know, a lot of pharmacists, I mean, they, they, that was never something that they wanted to do.

Right. So [00:52:00] you've gotta tell your neighbor. You know, the person across the street, the grocery person in the grocery line with you, the doctors, like they need to be aware that you have a pharmacy and why you're different, why you should be coming there. And it never, you know, at first when you open a store, it's a whole lot, I mean, that's what you need to be doing all the time, but it never really ends, you know, this, I mean, you've gotta go get new customers and people need to be aware that, you know, you have a business.

And I think that's something people really need to think through and go, am I willing to, you know, just go after getting business, um, cuz if they're willing to and they have a good plan, I mean, they can be successful. There there's ways to be successful in this business. You know, you can, you can figure it out.

You gotta just get a little creative.

Mike Koelzer, Host: It's interesting. You use that word salesperson because I happen to like marketing [00:53:00] and maybe I fell in love with that when times were great at the store and you could just market and say, well, I'm part of this where in fact, who knows why the business was successful, but think with a new pharmacy, I think you nailed it.

You have to be a salesperson which is supported by marketing. So when someone walks in the door, they've already heard your name before they've seen your logo, that kind of stuff, but you've gotta be a sales team. And which is a lot different than marketing. It's one huge step beyond marketing by saying now you're sales.

And if you're not willing to do that, I think that's where the answer is. You've gotta be a salesperson.

Rich Danhof: You're absolutely right. One of the big eye openers for me on that side was, you know, we had 180 employees. We had a bunch of stores. Um, we had some great employees and, and we would watch our script counts and, and, you know, a lot of stores were stagnant and some of them were declining.

And I would look over at Owen's side of the business where he is helping people [00:54:00] start by. And this was, this was before we really got into accounting. And I, you know, I was more operating and, and running our stores, helping run our stores with Owen's dad and, and, and Tim, and you just see a, a vast difference between how an employee in a store runs a store and how an owner who has probably a big loan and their own money investigate, even people that would be go from being that employee to being that owner.

It was a significant difference. You'd see the uptick because they're getting out. I mean, they, they're forced to, you have to, as an owner, you have to get out and yeah. And talk about your store and, and, and market it and, and sell it. And, you know, that was always encouraging to me because you'd watch those script counts go up.

And even now, when you see a, when we see a store stagnant and, and slowing. You know, oftentimes Owen will get on the phone with them and start talking to 'em. Okay. What are you doing from, uh, from, uh, outreach into your community? What are, what [00:55:00] doctors are you visiting? Who are you talking to? What, and, and usually what happens after those conversations is we'll see an uptick in the, in the script counts.

The other thing that they do Mike,

Owen BonDurant: They just watch every dollar a little bit closer too. You know, you know, as an employee, you know, you did your job and you would manage inventory and so forth, they became an owner. It was like, well, maybe we can put off ordering in that bottle more day. right. I mean, it's just another, and, and, you know, going back to your question, the rich side is not just on the sales side.

It's even on the expense side. And, you know, like as an employee, you're like, oh, we're getting really busy. Yeah. Let's hire another tech as an owner. Like, you know, I think we can go another two weeks without another tech. Um, You know, we're not gonna hire because that's gonna come right outta my pocket.

And getting into that kind of mentality is, is the thing that I always try to stress and we try to stress to these people that are getting into [00:56:00] business is that, you know, you're gonna have to think about those things and push it just a little bit further and get a little bit more innovative. Um, and, and you know, that some people are ready to do that.

And some people are not,

Mike Koelzer, Host: The accounting is basically like a non-issue. It's like, all right, let's get it done. The easiest way we can do it. Let's move on. Yeah,

Rich Danhof: absolutely. It's a scorecard to run the business and, and if you're not, if you don't have good accounting and you're using. You know, again, we just talked about script counts or, you know, other metrics that we could, that we could get off the pharmacy system.

And, and we do, and we always, you know, collected that data when we ran our stores, as you're only getting half the picture, right? If you're looking just at what's coming off the pharmacy system and, or you you've gotta have all the data points as many data points as you can to, to make, uh, the best decisions you can about your store.

So that's why we see the accounting as let's get it done. Let's get it timely. And let's use that information along with the pharmacy system data, along with your payroll data, [00:57:00] and you know, how many tech hours are you using? How many pharmacist hours are you using those types of things to make sure of that?

You're you're operating efficiently, like the debt

Mike Koelzer, Host: for accounting. You don't necessarily have to know that debt, right? That's part of that bigger picture. You wanna see what's happening with the pharmacy outside of what the IRS

Rich Danhof: wants, right? Because at the end of the day, uh, you can look and you can say operationally, you know, Hey, I'm making $10,000 a month.

I should make $120,000 a year. But when you're when your payment, um, to the SBA or, or to whoever you, whatever bank you might be banking with is, you know, 8,000 of that, all of a sudden, you know, your 120 went down to, you know, 48. So that's where, you know, outside, when you look at the operations of the business, it may be profitable operationally, but you've still gotta pay back that debt.

And, you know, if you've got significant debt, that number can be, you know, [00:58:00] 10, 15, $20,000 a month of cash flow that needs to be covered by the operations of the business. And Mike, there might also

Owen BonDurant: Be decisions like, Hey, I did well this year. Should I pay down debt? Should I reinvest in something?

Should I, you know, so you gotta have that full picture to be able to go well, actually paying the doubt. The debt for you is probably the best thing to do because of XX and X. So we still need to, we need all those numbers. Again, you need the scorecard and the scorecard doesn't just include financials.

They need timely financials. And then you also need these surrounding things like script count and, um, debt and so forth.

Rich Danhof: Well, and you look at the, you look at, from the debt side again, we'll also see people that have, uh, very short term notes. Their notes might be five or seven years old. And so when you extend those out to 10 years, or if you've got real estate and you can extend 'em out even further to 15 or 20 as a result of having real [00:59:00] estate financed in the deal, there's a huge difference in cash flow.

If you're on a 15 year amortization versus a 10 year or a seven year or a five year. So, and you look at the value of all these E ID loans, right? Because they were 30 year amortizations at, uh, you know, 3.7, 5%. So a 30 year am I, I is a, is a huge difference from even your typical tenure SBA note.

So making sure that you're properly financed, I mean, you don't wanna just push it out for the sake of pushing it out. It's good to get that debt paid off because at that point you get to keep the cash, right. But at the same time, if you're, if you're properly financed and you have, you know, that can save you cash flow in the short term, uh, which may be necessary to, to, to keep going.

Mike Koelzer, Host: It's like a cancer diagnosis. Basically. It's like the goal is try to get six months, you know, try to get another six months out of something because something's gonna happen maybe in those six months where they're gonna find a cure and extend another [01:00:00] six months, you know, same with the pharmacy business.

Now it's like, you know, try to hang on. I mean, if it's bad and you wanna get out go, but if you've got some love for it, still try to hang on because every six months there's some things that are happening, whether it's legally or, you know, I never thought I would say this, but government relief or business climate changes, and it's like, hang on, you don't know what's gonna happen.

Rich Danhof: I was at a large technology company for a lot of years and it was always, you know, there's intense competition and, and lots of challenges. And you know, so no matter where you are, it's a battle. I mean, uh, Apple seems to print money, but the rest of us seem to have to really earn it. Right. And, and it's a, and it's a challenge, but,

Mike Koelzer, Host: but with

Apple, I mean, wouldn't, they have loved to keep their iPod brick, you know, from the early two thousands here's our iPod, you know, it holds a thousand songs and it weighs this and doesn't anybody look, we're just gonna make money at it.

I mean, everybody's gotta, everybody's gotta keep improving.

Owen BonDurant: [01:01:00] Go even further back. I love that. I use that analogy all the time. Wouldn't they have loved to just keep selling computers.

Mike Koelzer, Host: Exactly.

Owen BonDurant: I mean, now they make all their money off phones and music. Yeah. They don't even have the same business model as they did

Netflix.

When they first started, they were shipping you

DVDs,

Mike Koelzer, Host: who wouldn't love to keep things the same.

Rich Danhof: Yep.

Mike Koelzer, Host: That's not life though,

Owen BonDurant: But you gotta have good finances to, you know, figure out where you can change. Exactly.

Mike Koelzer, Host: You gotta know what's going on. You gotta know what's going on. All right. Richen Owen. Thank you.

What a

Rich Danhof: pleasure. Yeah. Thanks Mike. Yeah. Thanks Mike. It was fun. Always fun.

Mike Koelzer, Host: All right. Thanks. You guys. Keep up the good work. All

Rich Danhof:( right, bye.