Introduction
Ryan: I’m your host, Ryan Davies, and I’m hosting today’s discussion on The Importance of Financial Data-Driven Decision Making for Business Owners with JP Rukebesha. Thanks for joining me today.
Rukebesha: Thanks, Davies, thanks for having me.
Guest Introduction: JP Rukebesha
Ryan: I can’t wait to dive into this. This is going to be such a great topic. And we talked before we started recording just how big this can get. So we might have sub-shows coming off of this one, but a little bit about JP, you know, 20 years of experience in accounting and financial management, working with individuals and small businesses. Along the way, he realized fundamental tools for running small and big businesses are fairly the same, except big businesses just have far more resources. Something that’s a common thread that we find, you know, the bigger you get, the more that you can, possibly lean on. His goal is to bring those tools that finance departments have over a one-man show to small businesses by leveraging technology. So he has worked very hard to make that happen. He has worked across different industries as a CFO and has boardroom experience in manufacturing hotels and insurance companies. JP, color us up a little bit more on that. A little bit more about the bio and background and your company out of it, right?
Rukebesha: So, like, as you said in the introduction, I have over 20 years of working with the business. I’m an accountant by background, and I am pretty new in Canada. I’ve been in Canada for 12 years, but when I came over, I started working with small businesses. I’m originally from Rwanda, a developing country. And when I came over, I started working with small businesses. I immediately realized that the way I used to know small businesses is not the same as it is here in the West, especially in Canada, and in the US, I believe it’s the same here. Small businesses have more structure; they have a legal reporting system, which is required by the law, and where I come from, either you are big, or you are informed. So you don’t get to get reporting, you don’t get to report anything, and you just go by, and the government will show up one day and say, hey, this is what we have to pay, which is different here, right? So, by working with small businesses, I could see there is a lot of potential; for example, I give you an example here in Canada, small businesses which are 1 to 5 employees make up almost 90- 80% of the whole incorporated companies like in Alberta, we have over 150,000 incorporated companies, small ones are almost like 130 around that. So, as you can see, they make up a big backbone for the economy, especially since they contribute up to close to 50% of the GDP in the Western world and they employ more than 70% of the workforce. So now, where did they come from?
Challenges in Financial Data Collection
Rukebesha: So, as you know, in most small businesses, everything they do is not recorded like in big businesses because they don’t have the resources and training to do that. Take the example of a guy named Jose, who is a plumber, or he has his truck every morning. He wakes up, drives by, goes by the coffee shop, picks up his coffee, goes to the Home Depot, picks up some supplies, then goes and does his job, comes back home, and all he does with the bills he gets, he just stops them in the box, in order to take them to the bookkeeper or the accountant, sometimes, 46 months after his year, financial year-end. In other words, throughout the year, the only data point he has is his bank account or the credit card balance he has. When money comes into the bank account, all looks good. Very excited. But the next day, the money is gone. You can’t ask him if you made a good margin on that particular job. You did? He may say he made money, meaning money came into the bank account. But when it comes to assessing the profitability, he can’t tell you I did this job because I was targeting maybe 30% gross margin on it. And we know that from your margin, you get the money to pay for your expenses. So because he’s focused on only the bank account, he misses the opportunity to grow his businesses and assess whether they’re doing things right. That’s one area of pricing. Imagine the second issue when it comes to borrowing working capital. He has no idea. So he will feel like he may need money to grow his business, but he can’t tell why. And when he needs it, the only time he gets a loan is when he walks into the bank, and then what he calls his advisor, bank advisor, he will say, yeah, you know what, you qualify for an extra 5000 on your credit card. So he is going to jump on, and he says, yeah, ok, just do it right. So, without really assessing, do I really need to borrow, or would I even qualify, or is it just because we are looking at my personal assets? The other one is about savings. So we know the financial system hasn’t changed for ages; all the way we still talk about saving is the same. I believe it was talked about in the seventies. I was a small kid. I don’t know. But I know that it’s like you work, you take like 30%, you put it aside, and you build your nest, you build your work, and we know that with the cost of life increasing the way it has been going up, savings are practically impossible. You find people with 34 jobs, and they still tell you they don’t have the money, and they don’t even know where their money is going.
The Birth of Rukbe: Simplifying Financial Management
Rukebesha: So, going back to my motive, when I was at the accounting firm, I asked my boss because I could see on the face of some of his clients, a guy we walked in, he has a ten over half a million, but he can’t even show you. He has got 10,000 in his bank account. He has saved 10,000. Then I used to ask him, I would say, what was going on because I could see from their numbers that there were things that we were not doing right. They just do the job because we have to do it. They don’t assess the profitability, et cetera, et cetera. And I asked my boss, I said, can I start something internal consulting with small businesses and see how they do? So he said, yeah, you can go ahead. So, I picked some, and we started working. I realized that we were meeting every quarter. I designed the template to discuss their performances, their operations, and how the business is funded with him. And even a bit, a little bit of their exit. So gradually, I could see that they are getting, they are getting out of their share. Even though they didn’t know about finance and accounting, they started to grasp basic knowledge about income statements, profit, and loss. They started understanding what the balance sheet meant. What is the relationship between my net profit and my cash? So gradually, I saw that they were getting that knowledge, and they started doing better in their business. And even when I was talking to them, they didn’t feel like they were intimidated by those technical words; they could converse, and they were asked really good questions. So I said this is probably an opportunity to do it. So when I saw that, at that time, I wasn’t really particularly interested in technologies, and the idea kind of died off a little bit.
Rukebesha: That was in 2014, and in 2018, I started being interested in technologies, especially digital technologies. With using digital technologies, you can do pretty much anything you can digitalize; you can give it to anybody as long as you package it and structure it in a way that is easily understood by that particular target. And that really resonated with me because I don’t know if you’re aware of it. When I came to Canada in 2011, a lot of my friends here didn’t have a mobile phone. And so it was a shock to me because where I come from, everybody is getting a mobile phone. Do you know why? Because where I come from, people never had an analog phone. So when the mobile phone came, it was this technology everybody could have; wherever you were in the field, farming, wherever you were, you could use it. So those people will never know that an analog phone existed. The same thing is happening in the developing world with mobile money.
Rukebesha: Like in Africa, a lot of people don’t have, have never had a bank account, and they will never have one because there is mobile money, you send him money, he keeps it in his phone, he can pay, he can send to his friends, he can do anything you do with your bank account, just buy a mobile phone, he just make sure he hangs on it. Nobody smashes him. So, when I saw it, I understood that, at that time, people were starting to talk about artificial intelligence. So I started having the ideas, realizing, saying, hey, you know what, I could combine that with the mobile technology and the artificial intelligence and be able to help these small businesses. Now, that’s where I come to data-driven decision-making. So, do we know what big, medium-sized businesses do? They have people comparing data every day about their income and expenses. Yeah, a lot of people have different knowledge in different areas. So now what happens at the end of the month, they close the amount they generate the court, then thereby the mid, month of the following month, you have the management sitting down and going through the numbers and saying, hey, these expenses. Yeah, I think what we are doing here is not right. Why not make the same money as we made last month? Why are these expenses, these travel expenses, going through the roof, et cetera?
Then, they make decisions based on the data. They say we need to do this differently, we need to check this, etc. Now, imagine a small business owner who doesn’t know; his financial interest is very limited, and he doesn’t have a system where he can record that. Even if he could record that, it’s almost impossible for him to make any interpretation. So that’s where I come from.
Rukebesha: And I say we get that we become like big businesses. You bring it to the small business owners because they don’t deal with such complex expense transactions, and then you help them. Instead of always looking at the bank account only how much money they have in the bank, they’re going to start making decisions based on the data they have. If he has to borrow, he will look at it and say, hey, maybe I don’t need to; if he’s not making money, he will analyze a little bit and say, am I charging my clients enough, or are my margins? Am I saving what I’m supposed to save? So, the technology will help him to get away from just making an informed decision based on just the field, how he feels, or how he feels like how he sees. I’m sure you have had that feeling one day when you saw your money in the bank, and the next day, he’s gone. You wonder what happened to it? You can’t have a fear of where he went, but you can’t really do. You can’t have it documented like, say, hey, this is what happened. There are very few people I know who keep a spreadsheet and say; I can know where my money is going now. I’m changing my habits. I usually see it with the engineers; by the way, they are really good with spreadsheets.
Ryan: Yeah. So my wife’s an engineer. So we’ve got, I was going to say, I’m the exception. We’ve got everything on a spreadsheet.
Rukebesha: But exactly. So, you see the importance of driving your business from your data because, with the data, there are things I’m doing right, that there are things I need to change, or I have to walk away for it. I will give you an example: if you get someone to ask you to do a basement renovation, and that is bargaining too hard on the price. But you can only do it if you hit your margins by way of the common mistake with those guys. When they are giving quotations, they forget to price themselves, right? It’s very common for them to forget to surprise themselves. So now, if it’s not hitting your margins, you would have a reason to say, what, I’m not going to do it, right? Because it’s not meeting your target, it’s not meeting what you’re projecting based on the data on the information. So you can make the right decision instead of just doing things because you have to do it or because you feel like it.
The Role of Artificial Intelligence (AI)
Ryan: With that in mind. I mean, collecting and organizing this data is obviously paramount. So you can make the right decisions. What are some of the challenges you see in that, like a commonality, that people don’t collect the full picture and don’t organize it the right way? How do you set them up for success with something like that?
Rukebesha: Let’s break down the issue with imitations. First, the systems like QuickBooks weren’t made with everyday folks in mind. They were designed mainly for accountants and bookkeepers, not the average person who may not be well-versed in financial jargon.
Another challenge is how the financial system operates in North America. It tends to prioritize looking at larger, more complex things, leaving even simple transactions to be handled by specialists. This means that even dealing with just a couple of transactions can be seen as something that requires an expert, adding to the complexity for regular individuals. I often liken it to a DIY (do-it-yourself) approach in the financial system, similar to how we handle things at home, fixing a few issues. There was a time when people couldn’t fix anything at home; they had to call technicians until they realized they could do it themselves. They bought a few tools at Home Depot and managed to fix things. However, some challenging tasks, especially those tied to insurance, might be best left to the experts. Tasks like plumbing and electricity, which can pose fire or hazard risks, are better left to technicians. But changing your door lock or adjusting a knob—like a DIY project—you can handle on your own. People understand this concept well. Now, when it comes to the financial system, we don’t learn the basics in school. Unfortunately, we only grasp it when we’re adults in the workplace, picking up bits and pieces from various sources, Yeah, after making mistakes. So, that’s the only way. So, I wondered, why can’t we ensure that everyone learns the basics of financial management? It’s not just about telling me to save because, remember, saving comes after making money and covering expenses. However, without a reliable system to track this, sticking to it becomes challenging—it’s like going to school. In school, you read books and do exercises, and that’s how you become proficient.
Rukebesha: Similarly, understanding the financial system requires practice. How are you expected to master it if you leave it solely to specialists without dealing with the fundamentals? You have got like five or six different expenses you deal with every day; actually, that’s too much. Then the rest are just bills that come once a month, like telephone, internet, subscription, etc. So you could really learn those basic things. It’s just a matter of designing a system. So, coming back to the system to record that because they were not built for the regular people. When you open a quick book, you find all of these fancy technical words, which are as an accountant. It’s very easy for me to figure out what it is. But I can see it for a normal person to say what is this? Sure, I’ll just wait for the bookkeeper. What I did was redesign an accounting system for everyday people, using straightforward terms like spending and income. I created a user-friendly interface that anyone can easily navigate. The challenge I’m facing is getting people accustomed to using it.
Here’s a funny story: one of my clients, a senior lady around 75, had an interesting experience with it. She was still using those old ledger books before the software became common. I encouraged her to try the software, and at first, she doubted her ability. To everyone’s surprise, she learned to use it, and I told her if she could, anyone could. That’s her ongoing joke. It made me realize the need to create a system that isn’t intimidating for anyone. Then, the AI part is just like a conversation in regular conversation, like someone talking to each other, and it is very personalized. It is going to suggest things like borrowing on savings and pricing your product based on your situation based on your data. Because if you don’t get to participate in keeping your records, you are not going to have the benefits of making decisions based on your financial data, right? There is no way you can stay in behind. So I’m targeting more, especially the millennials, the people who are upcoming at schools. Our system, by the way, is built to be used for personal and business purposes at the same time. And it’s free to use the accounting side because I realized if I had to pay for it, it’s going to. It’s self-defeating for my financial literacy goal. Yeah, because it really feels bad for me. It’s quite a little bit personal, by the way, because we really need to get people to get that basic knowledge. And that’s the only way we can fix the financial system like we fight for everybody to know how to read. You should be able to read those financial reports. Simple ones. If it’s complex, that’s fine. You will stay with the specialist. So technology allows us to do that.
Conclusion
Ryan: I think that’s just, that’s perfect. Exactly what you said: when you get bigger, and you need specialists. But right now, for small business, as you’re growing, as you get through, start-up through small, medium enterprise, or even personal, as you just mentioned, right there is a huge impact on goal setting, and you don’t know where you’re going. Suppose you don’t have the financial data-driven ability to decide what that realistic goal is for you. In that case, you don’t have operational efficiency if you don’t understand where your spending is going and what you’re making. You know what your margins are, and this gives you that connection to your clients and your customers, too, to understand, like, am I giving them the right service? Am I charging them the right amount? Am I spending the right time with them and all of that? So I want everybody to go there and go to your site, give them the information where to go, how to sign up, how to take advantage of this. That’s what you put in place.
Rukebesha: Yeah, it’s just we have the application available on both Android and IOS. You just go to our website, www.rukbe.com/, and you will find a link to download the application. You go through your register when you set up your company; you can set up as an individual. By the way, you can even choose, depending on which country you are in, you can choose which currency you want to work on. We are also working on the language, trying to get some major languages so you can use it in different languages. That’s what it is. The AI part is still in progress, not yet complete, but anyone interested can already use it for record-keeping within a month. The artificial intelligence aspect of the application should be operational by then. We designed it primarily for mobile use since we’re constantly on our phones. For instance, while sitting on the couch, you can easily scan and post the receipts you received during the day. We intentionally didn’t link it with the banking system to encourage manual practice. Doing it manually helps you understand the process better over time.
Ryan: Absolutely. It’s crucial to engage with your finances actively, not just when money is spent or received, but to really see, touch, and feel it. So, for our listeners, you can find www.rukbe.com/ on the Google Play Store and the App Store. It’s a free platform, essentially a bookkeeper in your pocket, providing tools to unlock your financial data. The AI is gearing up to offer insights, and there are calculators to make sense of everything. To get in touch with me, JP, personally, feel free to reach out. You might need more financial insights or want to explore our services. Just connect, and let’s discuss how we can assist you.
Rukebesha: Yeah. You can send me an email, personal email, jean@rukbe.com; you can even contact me on LinkedIn. Yeah, I wish we had more time to delve into topics like borrowing and savings because there are crucial aspects we really need to educate people about, right? Our goal is to empower users to be the driving force in their financial lives. We want them to feel confident when dealing with financial planners or bank advisors, asking the right questions without intimidation. Understanding their numbers is key. This way, when they engage, they’re making informed decisions and not being pressured into choices they haven’t considered. This is especially vital in the realm of borrowing, given the concerning impact of debt in North America. A significant portion of borrowed funds often goes towards consumer goods rather than creating assets, contributing to our ongoing struggles, particularly when compounded by inflation.
Ryan: I sense another exciting podcast episode in the making, JP! Especially when looking at it from a business owner’s perspective, as you mentioned, where people often borrow not to build assets but to cover expenses, a recipe for failure, right? Today, we touched on a broad overview of various topics, and I’m thrilled to introduce you to the TB R audience. There’s so much more to explore, and I believe we’ll be hearing from you again soon. A big thanks, JP, for this insightful podcast on the significance of data-driven financial decisions for business owners. It went even further than expected, as you pointed out. Thanks a lot for being here. And to our listeners, your support means the world to us. We can’t do what we do without you. Until our next fantastic TB R episode, this is your host, Ryan Davies, signing off. Take care out there!