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Navy veteran starts own firm to get small business clients smart with healthy financial habits

How does someone go from running a power plant aboard a U.S. Navy ship at sea to guiding small businesses in Nebraska through their bookkeeping snags?

Russ Cowan knows.  As the owner of Money Smarts Inc., in Lincoln, he offers custom-tailored services to help area entrepreneurs think beyond the numbers on the balance sheet to make better business decisions for long-term success--all within his customers' tight budgets.

"We've seen some success stories when some businesses are on the verge," Cowan said, "They come to us knowing that they have to fix something or close their doors, and many have been able to turn things around, and are growing, so it’s kind of fun to see it all actually work."

Finding his way from a Navy career to a financial business

But when Cowan enlisted in the Navy more than 20 years ago as a machinist mate, then a boiler technician, he had in mind making the next stripe over poring over spreadsheets matching revenue and expenses.  He attended the University of Nebraska at Lincoln as part of the Navy ROTC program, but he hurt his knee which cut his career as an officer short.  Still, he graduated with a degree in natural resources sciences, with an emphasis in hydrology.

During college, Cowan picked up a job in retail management, and later worked at H&R Block doing tax returns for five years.  Something clicked as he discovered something he liked to do, and eventually, he earned a degree in accounting from Doane College.

After working at a Lincoln-based CPA firm, Cowan moved on to serve as an accounting manager for a real estate company before moving up to operations vice president.  But something bothered him.

"Most accounting companies will handle their small business clients by an hour worked being an hour billed, so each time you call, meet with or have work done by your accountant or the staff, you pay for it," he said. 

Mentoring small businesses to success

So about five years ago, he asked himself: "What would happen if I opened a company that gave out information to its clients without constantly watching the clock?"  Too many times, Cowan said, business owners will not ask questions or discuss their thoughts about their operations to their advisors simply because each answer is billed by the hour.

"Because of that, business owners are forced to go it alone, learning the hard realities of bookkeeping and tax compliance on their own," he added. "Over the last two decades while working at other firms I had watched many small businesses fail due to a simple lack of knowledge."

Cowan discovered a business model of his own, where instead of seeking clients who could pay his per hour rates, he would work perhaps an hour or two a month for each small business customer and make enough on volume.

Money Smarts often will pick up a client's customer data and prepare monthly, quarterly or annual reports as needed, and personally review them at their customer's location. If a small business doesn't have time to meet with Cowan personally, he has set up a web-based management system that allows customers to view details on their account, download and upload important documents, or just as ask a question or two.

Turning to an SBA microlender to help grow the firm

Money Smarts proved so successful that by the end of the 2009 tax season with 34 clients and more referrals coming fast and furious, Cowan, who already had hired a bookkeeper to help, realized that he would have to bring aboard an accountant to continue to grow the business.  He turned to Community Development Resources (CDR) in Lincoln, an SBA microloan program participant, for a $5,000 loan for working capital to help pay for the new employee and for additional licenses for the software the firm uses.

The SBA's Microloan Program provides small, short-term loans to small businesses through specially designated intermediary non-profit community-based organizations such as CDR with experience in lending as well as management and technical assistance.

As a result of the microloan, the company doubled its client base in one year and expanded its staff to five people.

"Sometimes it’s having enough money to relax, focus and continue to move forward," Cowan said.

In 2012, Money Smarts took out another microloan, this time for $3,500, helping to bring aboard an administrative assistant and to allow them the ability to serve more small businesses with accounting needs.  Two months later, Cowan claimed the company grew by 20 percent, and expects nearly 50 percent income growth for the year.

"We’ve managed to double our clientele almost every year," Cowan said. "I expect some year it’ll taper off but it hasn’t yet."

If it seems as if Cowan runs a tight ship with his business, that's no accident.

"My goal in the service was to be a surface warfare officer and eventually have a ship of my own" Cowan explained.  "When I was an employee in different industries, I would tell people nothing equates to having your own thing.  That's what this business is, this is having your own ship.  What I draw from that experience for the business is that there's a right way to do things and a way to get things done. It wasn’t about giving orders, it was about putting yourself in a position to be respected by your peers. I don’t boss people around, they see the work I do and they respect me for it, and it makes it easier to run this company."