00;00;00;00 - 00;00;24;11

Unknown

Welcome to the Profit First for Real Estate Investors podcast. This series is the simple CFO Case Files, where our CFOs break down real client scenarios, financial systems and practical decisions from inside the business. Enjoy the episode.

00;00;24;13 - 00;00;52;03

Unknown

All right. We're back. Christina Gutierrez here with simple CFO. We are here opening up the simple CFO case files once again. And we're pulling back the curtain on exactly how we help real estate investors and other, you know, clients in the business. Trans completely transform their business. And we're hearing it directly from the CFO that actually does the work, actually uses the system, actually uses our tool and walks through our processes every single day to transform these businesses.

00;00;52;04 - 00;01;18;17

Unknown

Today we're here with Tommy Robinson, who has been a CFO with us for since January of 2025, a little over a year. Tommy's amazing. Not only does he live close to me in the same area, I do. He has been completely instrumental in simple cfo's processes to the theme that he follows everything to at. He is the perfect example of how we use our tools and processes with clients.

00;01;18;22 - 00;01;37;24

Unknown

He has quickly become a lead CFO for us and takes place in all the training. He is just a true example of how we use these tools and work with our clients. So Tommy, thank you for being here with me today. Thank you. Christina, glad to be here. And thank you for that wonderful introduction. I'll try to live up to it.

00;01;37;26 - 00;01;59;22

Unknown

Absolutely. I know that you will. All right. So to start to start living up to it, give me a 62nd version of no names here, but the type of clients that you work with and what you've seen our systems do for them. Okay. Well, most of the clients I work with, their real estate investors or developers or they have construction businesses.

00;01;59;22 - 00;02;17;29

Unknown

And so they've usually built a successful company, but the financial systems have not kept up with their growth. So they're generating revenue, but they don't always have a clear visibility to profitability or cash flow or how to scale safely. And a lot of times you'll hear that saying, well, I know I made a lot of money. I just don't know what happened to it or where it went.

00;02;18;01 - 00;02;45;20

Unknown

So what we do here is simple CFO install financial operating systems for their business. Things like the proper first cash management system, clean financial reporting, and we institute dashboards to help owners take control of financial decisions instead of just using guesswork. Goodness had it better than myself. That's exactly what we do. And, you know, real estate clients. What type of clients would you say?

00;02;45;20 - 00;03;12;01

Unknown

You see, most of flippers hold wholesales. What's your what's your bread? And I have my bread. And butter is probably those who are in the flipping business, followed next by those who do long term rentals. Okay. We see a lot of those come in. All right. That's awesome. So now you see you see the what type of clients he works with.

00;03;12;02 - 00;03;33;19

Unknown

And of course, it doesn't matter what type of business you have. Right. Everybody shares the same pain. Everybody shares the same feelings when we all become entrepreneurs. So your first call with clients and which we often call the battle plan call, what do you see is their financial pain. What are they. What are they going through that you see kind of like a recurring theme for everyone.

00;03;33;21 - 00;03;55;28

Unknown

Well, you know, I think before the actual reach out and they get to us, they're going through a lot of anxiety. So that first call for them usually moment of relief for the client because by time someone reaches out to us. They typically built that successful business, but they feel like their finances are in chaos. Like as I mentioned before, a lot of things that they'll tell me is or making a lot of revenue, but we don't know where the money is going or I can't predict the cash flow.

00;03;56;02 - 00;04;19;08

Unknown

My books don't match. I don't trust what's in my books or hey, tax season is always a scramble for me. So that very first call is really about diagnosing what those pain points are. And we'll walk through things with them, such as how the business actually makes money, what their biggest financial stress points are, whether their books are reliable and what the cash flow cycles look like.

00;04;19;09 - 00;04;28;20

Unknown

And so from there, I can start building a plan to help them get that financial clarity that they want and develop financial controls.

00;04;28;22 - 00;04;48;11

Unknown

Yep, that's about right. They all have that financial pain and we want to come in and get those systems working right. So that's a you know that's a good thought. You know because some of them come in with accountants, bookkeepers. They you know, they're like, oh yeah. Well I've worked with them. How come they didn't tell me. So what's so different about what we do?

00;04;48;13 - 00;05;12;05

Unknown

They, they versus, you know, their typical accountant bookkeepers that they've worked with before. Sure. So most accountants and bookkeepers, they really focus on just recording the, the data and, and focus on what's already happened. And that is really important. But it doesn't help the owner make any better financial decisions. And so what we do at simple CFO is we help them focus on developing financial operating systems for their business.

00;05;12;05 - 00;05;37;05

Unknown

So that includes things like implementing the profit first cash management system, putting in CFO dashboards for them, budgeting and cash flow forecasting, as well as financial planning and modeling for them. So instead of just reporting history, we're helping the owner control what happens to them. You know, it's important because we are somebody that have has experience in in the financial world and in the business world.

00;05;37;05 - 00;05;58;05

Unknown

So it goes a step beyond just relying on the bookkeeper or even just going into ChatGPT and, you know, searching real quick about what's wrong with my business, because ChatGPT has never really experienced business. And as CFOs, we have we all have a diverse background and worked in the financial industry for a long time, especially with those in the real estate industry.

00;05;58;05 - 00;06;21;17

Unknown

So we are able to give them first world insights. Absolutely. You got that right. Because, you know, bookkeepers just wrap it up. But, you know, give them credit. Right. Let's give them credit. Because without proper financials and proper, you know, history recorded, we can't do our job. So going into that like that's kind of what we do in the first 60 days.

00;06;21;17 - 00;06;36;24

Unknown

So we have to assess it. We have to figure out what's going on. So talk me through how you work with your clients in the first 60 days. Okay. But first, 60 days are really about building this foundation for them. And there are three major areas that we focus on. First one is the data cleanup on a financial clarity.

00;06;36;24 - 00;06;57;09

Unknown

So we make sure the financial data is actually reliable. So those very first meetings I'm reviewing the books, the chart of accounts, all of their financial statements, the statement of cash flows, the balance sheet, the income statement, identifying errors, reconciling accounts and then establishing accurate financial reporting. Because if those numbers aren't trustworthy, then the owner can't make any good decisions.

00;06;57;11 - 00;07;19;12

Unknown

There's an acronym I like, G.I. Joe, which I pronounce giggle and really stands for Garbage in, Garbage Out. So if the numbers aren't accurate and then then none of the reporting is either. So that's the first thing we focus on is that data cleanup and the financial clarity. All right. Second thing is establishing baseline metrics. Once we have clean data we establish the baseline financial metrics.

00;07;19;12 - 00;07;43;10

Unknown

Things like revenue trends, gross profits, operating expenses, cash runway debt exposure. These give us a clear picture of how the business is performing financially. And then then it's time to have the initial profit first rollout. So with the proper first system that includes setting up dedicated bank accounts. And Jeremy, I like to have six accounts I set up for my clients.

00;07;43;14 - 00;08;07;14

Unknown

We'll have the income account, the profit account and owner's pay account taxes, operating expenses. And also I'd like to have the reserve account. And I tell my clients this, it's kind of like back, back on what our grandparents were trying to budget back in the old days. You know, they got a paycheck, they cast their paycheck, and they brought out five envelopes gamely labeled each one.

00;08;07;14 - 00;08;26;15

Unknown

One envelope was for the mortgage, and they had one for assurance, one for utilities, one for food, and then one for rainy day funds. And this is exactly what we're doing. But on the financial sets, we're we're using bank accounts instead of envelopes. And we're earmarking this, these funds. So they go for one purpose and one purpose only.

00;08;26;15 - 00;08;43;14

Unknown

And this immediately changes how Cass rose through the business. So instead of profit being an afterthought, profit becomes a planned allocation. Three those counts that I mentioned, the owner's pay account, the owners profit count, and the owner's tax account. I like to call those the Holy Trinity, because those are the three main accounts that owners will forget about.

00;08;43;15 - 00;09;05;17

Unknown

Or when building a business get neglected, the owner sometimes is the last one to get paid, and so we want to make this a focus, not an afterthought. Amen. And that's true because, you know, a lot of people that come to us and, you know, I can say this from being, you know, sales calls, listening to a bunch of I feel like I know every client because I see all their names that are familiar to me.

00;09;05;17 - 00;09;21;00

Unknown

But, you know, a lot of them, they don't pay themselves. They don't even know what they need, and then they just take out money when they need it. And then, you know, you can be really drain your business taking that money out. And you don't see that, you know, they don't realize it, you don't see what you're taking out.

00;09;21;01 - 00;09;40;13

Unknown

So that's like the the best thing you can set up for them is making sure that they pay themselves. Why out start a business, right. If everyone else. Exactly. You know, it's funny because when I, when I first joined, when I first joined simple CFO, one of the folks we used to tell people, and I still I use the same scene myself.

00;09;40;13 - 00;09;55;06

Unknown

There's a lot of times when we meet with an owner, 1 or 2 things will happen. Either the business is robbing from the owner or the owner dropping for the business, meaning that either the business is taking all the money and the owner works for free, or the owners just taken out way too much, not leave it enough left for the business.

00;09;55;07 - 00;10;21;20

Unknown

So we help fix that. I like that. Okay. Well, that's you know, that's a great segue to this question because a lot of people are like, yeah, I've read the book. You know, that's a good question. You know, or they come to us because they read Profit First for Real Estate Investors, the book that David wrote. So when they think, you know, we want to set owners up to where they can read the book and maybe chai and set it up for themselves, but it really is not a one size fits all.

00;10;21;20 - 00;10;41;19

Unknown

So how is it different when they come to us versus a DIY? I can do it myself way. Yeah, it is different and the book is a great concept and I love the book. And of course everyone that comes to us, we recommend that they actually read that book as well first. But implementation is where most businesses struggle because every business is different.

00;10;41;19 - 00;11;03;04

Unknown

As you just mentioned, there's different revenue cycles, different cost structures, tax situations into obligations. And so what we help do is as the CFO, we help engineer a custom profit first system that fits into specific business needs because it's not a one size fits all. You know, there are round blocks and square pegs and square holes, you know, so we help we help address that.

00;11;03;04 - 00;11;28;13

Unknown

For example, you know, real estate investor with holding costs has a very different cash cycle than a service level company. So we design allocation percentages and bank structure. So so that the system actually works for that particular business. Yeah I love how you said it's not a one size fits all. And I always say, you know, and sometimes people think that because some people are turned off by like, oh my God, I have to open six accounts.

00;11;28;13 - 00;11;47;20

Unknown

I'm not doing that. That's so difficult. It's really not. It's really simple to do. It's just like opening one account because you're only transferring it to where it needs to go, and then that puts you what I always say is like it puts you in control of your money, not your money and control of you. Exactly right. And a lot of those customers actually already have multiple, multiple bank accounts.

00;11;47;20 - 00;12;01;09

Unknown

So at that point in time, we just evaluate what they have and see what can be repurposed. So instead of saying, hey, you're going to have to open up six new bank accounts, I say, hey, I see you have four accounts right now. We're going to repurpose four of those accounts and just open up two additional ones. That's smart.

00;12;01;09 - 00;12;21;24

Unknown

And that's a good way to say it because the we that's why we're called simple CFO. Right. We want to be simple. We don't want to make it difficult for you. So yeah, that's you know, that's our that's our system. That's why we built it. That's why we started the tools in the process. So when we, we kind of engineered it to where simple CFO has a process, right.

00;12;21;26 - 00;12;39;07

Unknown

David wrote the book. We started profit First. We found how important it is and how how good it worked to actually use that good old envelope system that Tommy mentions. So then from there, we know that a lot of people use the same software. QuickBooks online is a huge software. We've seen other ones that are pretty well known.

00;12;39;07 - 00;13;09;23

Unknown

But then the dashboard was created. So talk us through, how do you use the dashboard? What do you track? How does it help make help clients make decisions and you help them make decisions. So it's give me a specific example. Sure. So you know the dashboard is is the one area where there's a unified reporting tool. So instead of having ten different Excel workbooks that someone's got to flip between or flip between Excel and QuickBooks, it's one one dashboard one.

00;13;09;24 - 00;13;35;19

Unknown

It's actually it's the dashboard that it's set up in is a Google Doc, but it connects directly to QuickBooks so that the QuickBooks data feeds into it and updates it every single day. So our dashboard focuses on key drivers of the business, things like revenues, gross profits, cash balances, cash runway and key operational metrics. The goal is to turn financial data into something that the owner can actually use to help making decisions.

00;13;35;23 - 00;13;58;04

Unknown

For example, one client is focused on doing more deals, but the dashboard show them that their margins were shrinking. And so what we did is instead of just increasing deal volume, we started adjusting pricing and looking at ways to increase margins, to improve the cost structure, to improve cost, to improve profitability. And that's the kind of insight that turns financial data into strategic decision making.

00;13;58;04 - 00;14;20;24

Unknown

And so that's something that they don't get from just the bookkeeper. Right? It's it's having the CFO being able to help them interpret the data and use the dashboard as a tool to get that data. Yeah. Yeah. It all right. So I like our challenge. You hear a little bit with that because you know clients can they can go in their dashboard.

00;14;20;24 - 00;14;35;28

Unknown

Right. Because it's a CEO dashboard not a CFO dashboard. Now they use us to understand it, but they can access it. Like instead of going into QuickBooks and saying, okay, I got to go to reports, I got to pull this report. You can actually just pull up a Google sheet and see everything. You don't even have to go into QuickBooks really.

00;14;35;29 - 00;15;04;17

Unknown

So but not all the sheets in there are as intuitive to a client. So tell me why it helps to have a financial advisor CFO on your side that can actually walk you through what the dashboard does for them. Sure. So the dashboard does have more than just the the spit out reports that QuickBooks provides. You know, there's also reports in there that that we, that we use, such as the action plan where the CFO has an action plan that is within a dashboard to one of the first halves.

00;15;04;17 - 00;15;25;27

Unknown

And we actually, you know, set up what the goal is, specific goals that we're going to that we need to meet with that client, what the action steps are, who the owners are, and then the notes going towards that going forward with that. There's also a stoplight report where it key key components of the business. And we diet those on a easy to understand red yellow green basis.

00;15;25;27 - 00;15;44;11

Unknown

So if it's green hey that component of business is doing well. If it's yellow then that means to have has some concerns that need to be addressed. And if it's red then hey, that's a very serious area that's going to affect the business that we need immediate attention on, and we help evaluate those components with them on our meetings.

00;15;44;11 - 00;16;15;07

Unknown

Every, every meeting, we can go through those with them and create action items. That's not something that they can just get by looking into QuickBooks or by reading doing the reports. Also, we also have our goal tab and our our forecast or cash cash forecasting tabs. And so we can literally, you know, create the budgets for them, put them into the dashboard and then have a cash forecast tab that takes that budget and updates it with real time, real time reporting.

00;16;15;07 - 00;16;41;10

Unknown

So as each month goes by, it fills in with the actual numbers. And then we can also make manual adjustments to that as well. Moving forward on the forecast portion so that they can see a living breathing cash forecast week to week as they meet with us. And they have different information, new new data points or things that might change in terms of in terms of revenue coming in or the cost of goods sold may change.

00;16;41;11 - 00;16;59;18

Unknown

They might have they might have decided to change their marketing spend for the remaining portion of the year. And we'll go in there with them and we'll go through and make those changes in the forecast so that so that their cash forecast can be dynamic and they can see three months, six months down the road what their cash should look like, what they should have in the bank at the end of each month.

00;16;59;21 - 00;17;20;23

Unknown

I like I said that, so I guess you would consider our the forecast like a rolling forecast because, you know, business is volatile and real estate is even more volatile. So we need to make sure that we're in there adjusting it. And they may not catch everything. So it's good I know, and it's something that I tell each one of my clients from the very first call we have.

00;17;20;23 - 00;17;48;05

Unknown

When we have the battle plan call, I tell them we're going to end every single call going through your cash forecast and make it updates so that every time we meet, we have the most accurate data moving forward to make a decision with I like it. Yeah, it's accurate data. I always say like, you know, sometimes people make mistakes, but it's as long as you're directionally accurate and you're leading them in the right direction and where they're going and making strategic decisions, then that's important.

00;17;48;05 - 00;18;13;15

Unknown

But we don't want completely wrong data either. So something we need to constantly stay ahead of. Right, right. Absolutely. All right. So if you had to pick one client success story that demonstrates, you know, how simple CFO system works, full transformation. I know you've done a lot of 60 day clients and kind of really set some people up with this business in a box and, you know, set them up with something great.

00;18;13;15 - 00;18;35;11

Unknown

So give me that story of how they came to simple CFO, what you did with them and how they ended up turning out or even where they are now if you're still working with them. Sure. Well, let me give you a little montage instead, because because success can look different for different clients. Sometimes a client implements the system and continues independently after the days are over.

00;18;35;12 - 00;19;02;12

Unknown

Sometimes they retain us for ongoing projects. So they do the 60 days and they're like us so well that they maintain us practice these days on a recurring basis. Sometimes they launch a new business using a profit first from day one, after they started with us during a 60 day program. You know, for example, I had a I have a client that starts with me as a 60 day client, and we implemented the profit for system for 60 days, and it really helped them out.

00;19;02;12 - 00;19;26;07

Unknown

And you saw right off hand how great it was. At the same time, he was launching a new venture with a partner. And so he decided that as soon as the 60 days were over, he was going to roll into a reoccurring CFO meeting. But for the new venture. And so for a new venture, we actually helped set up the financial modeling budgets, cash flow planning and implementing the profit first structure immediately so that this new company is now past the planning stage.

00;19;26;07 - 00;19;52;02

Unknown

And it's an initial rollout, and it's been designed from the beginning to operate with the profit first principles. I have another client that decided they were going to go ahead and switch industries, so they started in the real estate industry and we implement a cough at first for them. We got them working on a proper financial structures, had proper first allocations and cash flow claiming set up for them, and then the business started changing it shift.

00;19;52;07 - 00;20;14;27

Unknown

This business shifted and he decided to switch industries. And when he decided to switch industries, he said, hey, you know what? I'm going to start my new business. It's not going to be in real estate, but I need to have this CFO support from day one in the very beginning. So from day one, we actually set out to make sure that his business had the proper first principles established from day one.

00;20;14;27 - 00;20;35;28

Unknown

So we started off with with basic financial modeling and financial and financial cash flow projections and set up everything from the very beginning, from the first day one bank accounts, so that he had profit first, implement it right away. And now his business just opened his doors 12 days ago. It's he's he's very happy and feels he's on the right path already.

00;20;36;01 - 00;21;10;17

Unknown

And then we know that it's great. And then my full transformation story, I, I have a I have a client that I currently still have and they came to profit. They came to a simple CFO. They had a very strong flip business and also a construction business as well. The construction business really was in business only to support their their flipping business, and they didn't really take any outside clients, but they had a lot of issues, such as unreliable bookkeeping, finance reports that they could not trust because unlike bookkeeping, there was no visibility into cash flow, extreme high levels of debt.

00;21;10;17 - 00;21;40;18

Unknown

And it was a pattern of filing taxes late. So they were always left with IRS penalties for filing the taxes, backing up cover instead of instead of filing taxes in April or making their estimated payment in April. They'd wait until October to figure out what they owed and have to pay penalties on that. So during their first 60 days, we focused on creating financial clarity for them, and one of the biggest steps was identifying all of that outstanding debt and building a comprehensive debt structure that allowed us to begin developing a debt reduction strategy with them.

00;21;40;18 - 00;22;00;24

Unknown

We also permitted the profit first system so that every dollar in the business had a purpose. We created structured allocations for profit owner compensation, taxes, operating expenses, and cash flow forecasting so that we actually were forecasting when they were going to get paid. They actually could see now that they were going to have that they were going to have a regular paycheck.

00;22;00;25 - 00;22;25;27

Unknown

This allowed the owner to begin receiving those regular scheduled payments. And then we started focusing on financial infrastructure improvements. So initially, as I mentioned, they didn't trust their bookkeeping. But what we did is we try to work with the existing bookkeeper for the first 120 days. And so we went and did the financial assessments. We went and told the bookkeeper what we had found in areas that we thought that they can approve on to make changes on.

00;22;25;29 - 00;22;51;26

Unknown

The bookkeeper was slow and unresponsive software by 120 days with after discussions with the owner, we transitioned them into the simple CFO bookkeeping that allowed us to clean up their books, reconcile all their accounts, and produce reliable monthly financial statements. All right, so then once we have those statements produced, we are able to implement that simple CFO dashboard so that now they can track revenue, profits, cash balances and financial health metrics.

00;22;52;00 - 00;23;13;27

Unknown

And now we just rolled out to them one of our new dashboard tabs, which is our Project Cash Management tab. And that is so exciting for this client because they do a lot of because of the flips they do. They're able now to track project budgets, cash inflows, cash outflows, capital and capital requirements, allows them to forecast cash needs before problem ever occurs.

00;23;14;00 - 00;23;40;23

Unknown

And now today after being with us for it'll be a year in April. So about 11 months. The business operates with clean of the monthly financials a profit first system, regular owner compensation debt reduction strategy that's in place that's been paying down debt project level financial tracking. They can actually log on and see a Pal by project, a balance sheet by project, which they can never do before.

00;23;40;24 - 00;24;04;29

Unknown

We have annual budgeting and cash flow forecasting. As I mentioned, we update that cash flow forecast every single meeting that we have. And now, for the first time in the history of their business, they filed their taxes on time for for their for for their business. And which means they're going to be able to file their personal taxes on time April 15th and not have to pay and repellents with IRS for the first time ever as a business owner.

00;24;04;29 - 00;24;23;06

Unknown

So that business went from financial chaos to operating with clear financial system, that support group for them. So we were pretty happy with that. That is so awesome. And I can tell how excited you are. All right, so the question of the day though, did they have the money put aside into the tax account to make that tax payment.

00;24;23;08 - 00;24;47;05

Unknown

They believe they do. So that's the coolest thing about it. Yeah we'll see because everyone is different. So when they go to the CPA they'll have to look at their they're different deductions they have and whatever they qualify for with their kids home with their kids, and they get deductions for home office and the looks of things. But the end of the day, they believe that they'll have that set aside and be able to make that payment in April without penalties and interest.

00;24;47;07 - 00;25;05;06

Unknown

That's awesome. And doing it on time. Like, what a relief that you can actually get it done on time. You know, you're not waiting. Usually it's because you're waiting on somebody else, or you need a K-1 or you need something. But if it's all rests on you, like get down, get out of the way so you don't have to pay a ton of money because diaries isn't going to let it slide, you know?

00;25;05;08 - 00;25;22;07

Unknown

But no one wants to pay the IRS if we don't have to. So that's such those all those stories are awesome. Like, I, I love hearing these stories and I love seeing like our CFOs and been so passionate about what we do and actually helping the businesses so I can see it. I hope everyone else can see it.

00;25;22;08 - 00;25;44;27

Unknown

You can see that excitement of like just the transformation. It's clicking with clients. They're making money, they're paying their bills timely. They're paying off debt. Whatever it is that it's just, you know, pretty cool to see that and then go through that. It is really cool to see them do that. And, you know, I really believe that one of the biggest things that we see emotional entrepreneurs is that they don't have a revenue problem, they have a financial systems problem.

00;25;44;27 - 00;25;57;02

Unknown

And so once we get the right system in place, profitability becomes even more predictable for them. You got that right. Yeah. Predictability is key because less stress.

00;25;57;05 - 00;26;18;27

Unknown

Awesome. I love the stories. Thank you for being here Tommy. That's awesome I it's been a really good podcast and lots of good stories, lots of good content. I mean, if you're listening to this podcast right now and thinking, what are the key things, you know, hey, I have a lot of debt to pay off and I don't even know how to pull out under this rock, or I have no financial systems in place.

00;26;18;29 - 00;26;41;26

Unknown

A bookkeeper is not going to do that for you, your basic bookkeeper that just aligns the historical transactions. Your CPA is just going to file taxes for you. So, you know, think if it resonates with you and you really want to find out more information, just head over to simple CFO and you can book a discovery call. Find out what we do, find out if we have the ability to help your business, and we can turn your chaos into clarity.

00;26;41;28 - 00;27;01;24

Unknown

Thank you Tommy, I appreciate you being here. Thank you guys for listening and we will see you all in the next episode. You're welcome. Have a great day. Thanks for listening to the simple CFO case Files on the Profit First for Real Estate Investors podcast. If you found this helpful, make sure you're subscribed so you don't miss our guest interviews featuring other real estate investors and our Profit first chats with David Richter.

00;27;01;26 - 00;27;08;28

Unknown

If you're ready to bring clarity and structure to the finances in your business, visit profit. To apply for a free financial discovery, call with our team.