Wealth Strategies of the Totally Not Famous
The Most Electric Accountant (REALLY) You'll Ever Meet
I’m thrilled to share this conversation with Susanne Mariga, a passionate and mesmerizing accountant. TRULY. Susanne and I shared a long car ride to Philly this summer, and I was ENTRANCED by her discussion of—of all things—accounting strategies. Stay with me here. Susanne’s passion is helping people, particularly minority business owners, grow wealth. She did it for herself, using a strategy called “Profit First,” and then taught the same strategy to her clients, and then wrote a book about it. From Susanne’s POV, no one’s coming to save us. If we want to grow wealth, we need to do it ourselves. And we can. Here’s our conversation.
You are the most passionate accountant I've ever met. How did you choose it?
I was born into it. My parents had me in college. My mom was starting her sophomore year, my dad was learning accounting— all while having a newborn. He was balancing balance sheets while holding a child.
Balancing a baby and a balance sheet at the same time!
Exactly. When I was 14, he hired me. It was quasi-childcare, quasi-helping him. If it takes 10,000 hours to become an expert, then when you start at 14, you're an expert at 24.
When I had my daughter at 32, I started my own business. At some point, I had too many clients, so I brought in somebody else. We just kept growing. Clients don't go away if they like what you're doing, so you keep building.
What gives you the passion?
Helping people get to their goals. My clients-- small businesses-- loved what they did. They were good at fixing chimneys, or construction. They were like craftsmen. But they would come to me to get their taxes done, and they would have no money.
They thought I was doing a great job because they were getting refunds. When your expenses exceed your revenue, that's loss, and you qualify for earned income credit. At first I was excited. "We're getting big refunds!" But as the years go by-- you've got a loss one year, another year. By the third year, I'm getting worried.
This big refund is not a good thing.
It's not. How are you going to retire one day? And I saw them working hard-- it wasn't like they were goofing around. But they had literally nothing to show for it.
Money is a mixture of psychology and physics. An action creates another reaction-- you add a dollar, you get another dollar. But it's also behavior change.
Say more.
When I started my business, I was like, "Let's just be the cheapest tax preparer out there and do a really good job." I remember one person asking, "How much do you charge?" I was like, "Oh, $75 an hour." He was thinking, "I'm going to get this tax return done for $150!" I thought, "I guess that's kind of low." But that was my price.
When you're the cheapest in town and you are good at what you do, you just get more work.
$75 probably sounded like a good hourly rate.
Until you start hiring people, and they want $30 an hour, and they need health insurance. Then $75 ends up being running at a loss because of the overhead. Eventually, it caught up with me because when you're the cheapest in town and you are good at what you do, you just get more work.
One day my back muscles just would not flex. My doctor had me on ibuprofen and muscle relaxers, and I couldn't get out of bed. And I was like, This is terrible. I was part of this entrepreneurs' chat group, and I was telling them, "I can't get out of bed. The tax deadline is Monday, and I don't have any good help." When you're not charging a premium, you hire what you can afford-- I hired people with "potential." I was constantly fixing their work. Somebody said, "Read Profit First." It changed my life.
What changed for you?
I realized profit had to be intentional. If you focus on revenue-- you can make lots of revenue charging $75 an hour. You could probably do tax returns around the whole country! But when you factor in the costs-- more people, more hours, more overhead-- that just means you run at a bigger loss.
What did you start doing differently?
You know the envelope system? As a kid, my mom kept envelopes for cash. Time to go to grocery store? I got my envelope. And when the grocery bill exceeded what's in the envelope, she said, "Can we scan some things back?" Profit First looks similar, but instead of envelopes, we keep bank accounts. You have a bank account for every purpose. All your revenue comes into one bank account, and then you allocate to other bank accounts based on a percentage you've already determined.
First, a certain percentage goes to profit. That's the first thing.
So you identify a percentage of your revenue and immediately put that in the "profit" bank account.
Yes. Then you allocate a percentage to your owner's pay.
As a business owner, I kept my salary the same for years, even when our business was growing. My dream was to get to $100K. And when I got there, I stayed there, no matter how much revenue I had. What employee would not let you give them a raise?
So in this percentage-based approach, when your revenue goes up, your profit goes up, and your owner pay goes up. In absolute terms.
Exactly. And you’re rewarding yourself now, and it's correlating with the results of your company, which is really good.
And then you allocate a percentage to a tax account, so you’re not worried about how to pay taxes on April 15th. The last account you fund is your operating expense account. That's the money you’ll use to decide if you need a bigger office space or an executive assistant--
Everything else has to come out of that amount.
Exactly. It forces you to stay lean, which is what I love.
If you've got one bank account where all your money's going in, on a day when you get paid, it feels like you could do anything! Hire that assistant, get that office space. But come payroll time, you're sweating bullets.
Could these principles be applied to a family, or W2 income earners trying to stay afloat and acquire some wealth to pass on to the next generation?
Absolutely. I do it in my personal life. I have a college tuition account. I have my personal savings for my retirement. I like vacations so I fund my vacation account. I literally have transfers to fund these accounts. If you're getting a direct deposit, you can say, "Send these amounts to these different accounts."
How did you get started working with minority-owned enterprises?
I grew up in a lower-middle-class, even poor neighborhood. People struggled. When I went to work for Andersen in Chicago, one of my new coworkers said-- and he meant well-- "You want to live in Lincoln Park or Lakeview. Whatever you do, don't live on the south side or west side of Chicago."
I spent the last of my college dollars to fly to Chicago. I got an apartment where Lincoln Park ends and Lakeview begins. You looked out the window and you couldn't tell where the lake ended and the sky began. It was just so blue.
And I felt uncomfortable getting on the bus in that neighborhood because—no offense, Jess— the people looked like Barbie and Ken.
Not offended. Don't worry.
I could put my purse down on the bus seat next to me because nobody would sit next to me. I had this 30-day bus pass. One day-- I was brand new to Chicago-- I said, "I'm going to get on a bus, and when it ends, I'll take the next bus, and I'll just go where the good Lord takes me." My mother probably would kill me!
I get on this bus. We go through beautiful Lakeshore Drive, which is serious retail therapy. I catch another bus. I keep going. And the neighborhood starts to change-- windows missing or boarded up, people pushing shopping carts. There is no commerce. It hits me: how do you change these neighborhoods? By creating profitable jobs that people can be proud of.
I have seen businesses at $50 million in revenue run a loss.
You use the word "enterprise" instead of business. Why?
It's an official government certification in the U.S. If you're 51% owned by a minority, you can be designated as a "minority business enterprise" and get certain contracts with the government. Government contracting can be really good, but it's very tricky. Just because you see millions in revenue doesn't mean you're going to have millions in profit. I have seen businesses at $50 million in revenue run a loss.
Why?
Because they didn't know how to bid, or they saw it as an inroad and they'd eventually raise their prices, or they thought because they were doing a large volume, things would turn around and go into the positive. But when you keep adding negative to negative, it doesn't turn positive ever.
Is there potentially a risk for minority-owned enterprises to focus on government contracts?
The government always goes for the best value, which is a combination of the best quality and the lowest price. If we have a passion, we are giving you the best quality. But that quality has a cost. Part of it, for people of color, is building that internal confidence-- to turn down unprofitable opportunities.
It's such a deep topic because there's intergenerational trauma. But the reality is, we don't have a lot of time.
When your benchmark is poverty, your expectations are lower. But now, because you're charging less, you can't hire the best and brightest.
How does intergenerational trauma affect something as concrete as how someone might bid on a contract?
When your benchmark is poverty, your expectations are lower. But now, because you're charging less, you can't hire the best and brightest. You can't scale. You can't build the business that you have the potential to build.
Wow, that feels very deep: when poverty is your benchmark, your expectations are lower. It seems like you're trying to change the benchmark for your readers, for your clients.
Exactly.
Say you are a second generation entrepreneur: you've inherited a business. It has customers, revenue, processes. You just need to continue. You can make bigger investments because you've got cash flow, profit. If you're already making $10,000 investments, and you've seen those investments pay off, you're willing to make more.
Someone else may have started their business for $500. It was their only $500. Making a thousand-dollar investment seems like a lot. If you need to hire somebody good, and they are $85,000 a year, you're going to do it yourself. You're going to burn out working 80 hours a week versus paying $85,000 to someone who will do it faster and allow you to focus on other things.
Because you're in scarcity mode. You want to preserve versus expand and take risks.
Seeing a $10,000 investment as a bet on future growth versus a cost seems like a very big shift in thinking.
It is. And what they don't understand is that it's not a bet. It's a calculated investment. If I'm going into a new line of business, how has that line of business performed historically? Are my current customers asking for it?
If the market won't bear the price you need to bring your goods and services at the quality you're going to be proud of, you're in the wrong business.
Tell me more about how someone's benchmark affects how they price their services.
Because of self-esteem. I have so many entrepreneurs saying, "I can't raise my prices. People won't buy from me. They'll go to somebody else. The market won't bear that."
And the reality is, if the market won't bear the price you need to bring your goods and services at the quality you're going to be proud of, that allows your employees to keep their heads up, you're in the wrong business. It's okay to say that.
That's a huge mindset shift.
It is.
What allows people to make that shift?
Allowing yourself to grow with your success. Instead of having that $100k owner's pay that I made 10 years ago, it's going to be a percentage. So when my company is half a million and I'm making this percentage, and then my company is a million, I'm making the same percentage, but you see that feels different? Your benchmark elevates.
You make these concrete accounting decisions first. Your mindset shifts second.
Exactly.
In the Jewish faith, there's this idea that actions come first and belief follows. Even if you don't have a strong faith, you still do the commandments, you do the rituals, and your beliefs will come in time.
It sounds like what you're saying is similar: you don't necessarily have to have the highest self-esteem to start out with. You just have to choose a percent of your revenue to designate as profit.
I love that analogy. We build the faith. That's exactly what happens.
What happens when that mindset shifts?
Personal wealth is what happens. They suddenly see themselves owning their own building.
Their vision for what's possible for themselves changes.
When Ed and Jane started their business, Jane was working in a shoe store. Her hobby was creating wigs for herself—she had alopecia. She learned on Youtube. One day a lady comes in and goes, "I love your wig." The lady was going through chemotherapy. Jane's like, "I don't sell these, but I'll sell you mine." And the lady's like, "I'll pay anything." That's what launched it. This is now a seven-figure wig business. They bought their own building. They've become the first millionaires in their family. It changed their legacy.
I've gotten criticism for only focusing on the success stories-- people of color who became millionaires, with million-dollar businesses. But we need to focus on what we want to mimic and duplicate.
I keep thinking about how psychological all of this is. You say money is part physics, part psychology. People might not even be aware that they have a belief that they don't deserve to make more money, or that the market won't bear a high price.
Do people realize they have these beliefs, or are they subconscious?
At that moment? It's their truth. They are absolutely right when they say the market won't bear it. Because if you go in selling a product for free, and that's what you believe, it's worth exactly that. Until you start to see yourself as unique and gifted in what you do.
What other mindset or habit shifts can help?
Early on I was at a golf event at one of our large minority business chambers. Everybody always has nice cars at these events. I had this 10-year-old Honda CRV. It was a clunker, the kind of car that had a good side and a bad side. You made sure you parked it on the good side.
I'm going to this posh country club, and these were cars you would see on Rodeo Drive. Mercedes was the low end. And I remember thinking, "I am not parking up here." I drive to the end of the lot, and there's a parking lot and another and finally a lot that had beat-up Fords. I park there. It's a 15 minute walk in the Texas sun. At least nobody sees this walk of shame.
Later, I got to know these folks because I eventually became the tax accountant for a lot of them. And they would literally be getting earned income credit. They had losses on their books.
I was feeling terrible about my Honda CRV, but that car was paid off. My house was debt-free.
The same people who had these fancy cars.
There was no cash to buy these cars. They were all on payment. They didn't own their own homes. There was a gentleman who died of cancer-- his family couldn't even afford the funeral costs. I was feeling terrible about my Honda CRV, but that car was paid off. My house was debt-free. People driving these fancy cars were running at a million-dollar loss.
Why do you think they decided to put the money in the car?
For a lot of us who don't come from a lot of money, we just want to feel like we've made it. Sometimes that car is retail therapy: "Yeah, I have a car payment, but at least I have the car."
If you're building wealth, one of the important things is embracing delayed gratification. The way millions are built, it's $1 at a time. Maybe some people sign million-dollar contracts, like athletes, but most of us build it $1 at a time.
This method of allocating a percentage every time-- you build in the delayed gratification. Your system creates delayed gratification for you.
Exactly.
What you say to someone who is a first-time entrepreneur, who might not have the high benchmark starting out? What advice would you give them to be as successful as they can be?
Get around those who do have the experience. Get the mentors, get in those rooms. Look at how they think, how they grew their business, how they're making decisions. Read their books. Eventually, you might have to hire coaches. I've had different coaches for what I am trying to learn at this particular moment— getting that knowledge quicker. Really successful entrepreneurs prioritize getting to that point quicker.
And one of those shortcuts is you talk to people who've already done it and find out what they did.
You buy the one-on-one if you have to.
As women, we can undervalue ourselves because the world undervalues us. We don't see our time as as valuable as men's time. We start to internalize those beliefs.
Or we're being a "nice girl" and "We should negotiate so we're all happy," which means they're happy. We will give this time. Our time is next time
How can we as women learn to value ourselves appropriately?
Jess, it's what you said earlier. We have to do the actions and the faith will follow.
When we met, I shared my experiences of bias in the workplace-- being talked over, having my successes attributed to "luck." You said, "I haven't really talked to a White woman about this before." How can we make it more possible for Black women and White women to share our experiences?
I think it's creating rooms where we actually intermingle, creating environments where we intentionally get to know each other and have those conversations. Successful women of color, and I would bet successful White women, we're still trying to figure out where we belong. Let's just share stories.
This newsletter is free. The End of Bias: A Beginning, my book about how people have measurably reduced bias and become more fair, just, and humane, is now out in paperback.
