JONATHAN GALLO, PRINCIPAL & FOUNDER, GALLO & COMPANY CHARTERED PROFESSIONAL ACCOUNTANTS
"Business and Life as Separate Entities: Advice from Jonathan Gallo"
Dear entrepreneurs: Your business is your asset, not your life.
If Jonathan Gallo were to write a letter to Canadians in the midst of starting or running their own businesses, that is how it would begin.
“Many people don’t differentiate between their passion and their capital,” Jonathan says. “Entrepreneurs often mix their personal and corporate lives to the point they can’t differentiate them from each other. To protect yourself and your assets, separate who you are from your professional life.”
It’s advice that comes from many different facets of Jonathan Gallo’s own life and business. The 43 year old married father of three is a CPA who is the founder and principal of Gallo & Company Chartered Professional Accountants. He is also the owner and manager of a commercial real estate company that has holdings of over 200,000 square feet of retail and office space. He is also a retired infantryman and officer who spent 16 years in the Canadian Armed Forces.
Between 1992 and 2008 Jonathan served in Afghanistan, Bosnia, and Croatia, seeing most the world and meeting his wife Kaja along the way. After gaining his CPA and working for a large multinational accounting firm, he started his own firm with offices in Edmonton and Sherwood Park.
“I am an entrepreneur at heart, but I’m not unique as an accountant or consultant in that way,” Jonathan says. “After any time of significant conflict there are a plethora of veterans who leave the forces and settle down because they want to start families. We start up independent businesses at about three times the rate of other populations.”
The entrepreneurial spirit itself might not differentiate Gallo & Company from its competition. It is Jonathan’s outlook on how business can, and should be, conducted that is unique. That can mean providing a little tough love along with accounting services and business consulting.
“The reality is that accounting advice is a commodity, consulting is a commodity,” Jonathan explains. “In a way, we offer services that are the antithesis to the entrepreneurial mindset. Entrepreneurs often tend to just want to move forward without addressing all of the structural issues necessary to grow a sustainable, tax efficient, regulatory compliant business. Clients often require someone to grab them by the collar to tell them what they need to do or not do to set the course for the next phase. We take great pride in speaking the truth, and calling them out if need be. I expect senior leaders to challenge me and I challenge them too. That is a lesson I learned in the forces. A successful unit uses all its resources. That is what’s unique about us. We challenge our clients to do better.”
What are the first challenges a new entrepreneur should learn from? Jonathan has some advice to get the would-be self-employed started off on the right foot.
1. Pay yourself first
Most entrepreneurs are self-financed at the early stages and their start up efforts are built on sweat equity.
“You’ve got to get yourself on a personal budget,” Jonathan says. “You don’t want to put yourself in a position where you are putting all of your time, energy and capital into a job that isn’t paying you!”
A business, at least in the early stages, is a job you have created for yourself. Your time is an operating cost in the same way an employee’s salary would be.
“I often run into newly self-employed business people, often they’ve opened kiosks or seasonal pop-ups in shopping malls,” Jonathan says. “They are working every moment to bring their idea to fruition, but they don’t know how to grow and expand the business and everything they earn is going back into the enterprise. They need a strategy and a structure that will both grow the business and sustain their lives through their work.”
2. Make sure the businesses is always ready to sell
Remember Jonathan’s first lesson for would-be entrepreneurs? Don’t confuse your passion and your capital. Your business is not you and not your life. The business is a revenue-generating asset that will be bought and sold.
“Businesses are sellable, just like a car,” Jonathan says. “When you have it valued, you want to make sure your structure and operations haven’t left room for any efficiencies. That’s how you leave money on the table.”
The implications of building the business as an asset that can be sold are long term and far reaching.
3. Think long term
You might just be starting out, but decisions you make in the very beginning can impact how much tax you pay, when you pay those taxes and what assets you acquire to support your business’ operations and a host of other issues.
“You achieve compliance in your operation, you structure your management and processes, and you might buy additional assets to support operations or even create another business that operates alongside your current enterprise,” Jonathan explains. “Often people will buy their businesses within a property and that has implications for estate planning, transition planning and succession planning as you sell or pass your businesses on to the next generation. Your property can even be your pension. You might sell the business and then rent the property to either the new owners of the business or another one.”
4. Embrace tech, but don’t be lulled into a false sense of security.
Embracing technology enables maximum efficiency when it comes to tracking spending and incoming revenues. That efficiency does not necessarily lead to higher profits if you are missing opportunities about your transactions and how they happen.
“The software is there to help you track and compartmentalize, but you’re leaving money on the table if you aren’t contextualizing spending and earnings to learn more about what conditions contribute to additional cash flow or rising expenditures. There are also opportunities to inform risk assessment. That means, again, separating personal from business and finding the grey matter you need to help you analyze and contextualize. That is why we exist. You make the money and we’ll make sure the back end is secure. If you focus on your people and processes in delivering your core competencies, then we’ll worry about the financial side.”
Starting a new business is a huge risk. Bringing your own ideas to life is a privilege that makes that risk rewarding, even invigorating. Entrepreneurs should focus on managing the risks and rewards of building their business, not the additional complications of GST and payroll deductions, among other issues of taxation and compliance.
“We have the education and experience of working through those problems,” Jonathan says. “We use those specialties to enable our clients to focus on their businesses and on their lives.”
Kate Baggott's technology and business journalism has appeared in the Technology Review at MIT, the Globe and Mail, Canada Computes, the Vancouver Sun, and on the Business to Business News Network.
Gallo and Company Chartered Professional Accountants
Sherwood Park Office Suite 221, 65 Chippewa Road Sherwood Park, AB T8A 6J
Edmonton Office 6, 12415 Stony Plain Road Edmonton, AB T5N 3N3
780 - 417 - 7530 info@galloandco.ca