00;00;09;21 - 00;00;33;21

Unknown

Welcome to the Profit First for Real Estate Investing podcast. Every week we bring you top investors and experts sharing how they create clarity, cash flow and consistent profit. This episode is brought to you by simple CFO. Profit first. Profit always lets go. I don't expect an owner really to know that because they're doing what they do best. They're going out there getting the deals, they're closing their deals, they're keeping the business alive.

00;00;33;22 - 00;00;50;03

Unknown

Maybe adding 1 or 2 more people that they need, you know, to close the deals. But I don't expect them to know the money should go here, here, here and here. And this is going to be the best use of it. That just leads to stress, right? You need more deals. And now you're stressed out because you want the deals, but you don't know what to do with the deal.

00;00;50;03 - 00;01;19;11

Unknown

So the CFO like intimidates people because it's this three letter word that's like, yeah, that's that's a lot. That's that's going to be way too much for our business. I don't have time for that. I don't need that. You know, whatever the excuses are that we know we've heard them all, but it's someone that really is just just just literally wants to make sense of your financials, wants to break it all down for you, wants to support you and all your financial decisions and carry you through and just kind of sit right next to you and explain everything to you and say, this is what's going to be best.

00;01;19;11 - 00;01;45;09

Unknown

And then you start to see your business transform more and more move in the right direction. We are back with another episode on the CFO podcast series at simple CFO. Here it is myself, David Richter, and we have Christina Gutierrez, my business partner, and we are recording a lot more content together because we see so much happening out there in the marketplace, and so many people that come to us with the same types of issues today is a different one.

00;01;45;09 - 00;02;05;17

Unknown

Today is a little bit more controversial because it's something that we believe that goes against the this pretty standard wisdom out there of what people say. And it's something that a lot of people think. But what we think is cash is not king, and we don't even think cash flow is king, which if you're in real estate and you're hearing this from the profit first people, you're like, okay, what the heck?

00;02;05;18 - 00;02;30;24

Unknown

Like, turn you guys off. Know there's another portion that most people don't think about cashflow management, how you manage your money. That's what we believe is king. Because I could go into story after story, and I'm sure you can to Christina of where people have cash and they might even have cash flow from rentals, but they are still they still feel poor, they still feel broke.

00;02;30;24 - 00;02;53;03

Unknown

And that like a good broke, like, yeah, I'm saving so much on my taxes. I'm like broke on paper, but I've got lots of money. So I believe and we believe that cash management is keen. So do you have anything on that, Christina. Because like I said, I could talk on this myself for probably the entire time. So yeah, I mean, then it's also like you have a bunch of cash and you don't know what to do with it.

00;02;53;04 - 00;03;12;02

Unknown

What I always tell people with the whole opening bank account and following profit first and trying to figure it out, it's not it's accounting. It really is a cash management tool. Let's be honest. So they think it's overwhelming to have all of this. But there's a part of it. The Cash is King is great. Except your cash is it controls you.

00;03;12;05 - 00;03;31;26

Unknown

And so I think that's the key thing is that you let your cash control you because you're just dipping into whatever you need, whenever you need it, and then you're freaking out because there's no management in place. Whereas if you have buckets and you know exactly where you need it and you put it aside so your money is there for the exact need that that is intended for when you actually need it.

00;03;31;27 - 00;03;46;24

Unknown

And you're you're managing it by winning it now you're controlling it instead of I need cash. Cash is kind of controlling me to I'm controlling my cash. I know what it's there for. I'm going to go pick it, and I'm going to use it for this purpose. And I'll never I'm not going to go broke doing it either.

00;03;47;00 - 00;04;02;28

Unknown

I really like that angle. I don't know if I've ever thought of that. Where if you don't have a system in place like profit first, then cash controls you. Even if you have a lot of cash in the bank, you don't know what to do with it. You don't know the best way to deploy it, and it can very quickly go out the door.

00;04;03;00 - 00;04;21;13

Unknown

If you don't have a system in place for your cash, even if you have a huge rental portfolio bringing in tens of thousands or even hundreds of thousands of dollars in the door, if you don't have a system in place, it can all go out the back door or through the buckets or through like just the maintenance and CapEx and all the things that can come up in a rental or buy and hold business.

00;04;21;13 - 00;04;56;15

Unknown

But if you have a system that changes the entire equation, cash now is a tool that you manage and control versus something that controls you. So no matter how much or how little you have in the bank, if you have a system, you can at least know what to do with your money. I see it's like we've those dots have been connected other places, but now that we're talking through it, I really like where that perspective, where the common sense wisdom says cash is keen, but it's only keen if you are controlling it and you're the one in control, not if it's controlling you.

00;04;56;17 - 00;05;15;19

Unknown

Same thing with cash flow and your business as well too, because you need both of those things. Cash is the lifeblood of the business, and cash flow, especially in the real estate business, is the lifeblood, and making sure that you do have the cash flowing in frequently, and that's where you need to have that in place. But it's the management of it that makes it all work.

00;05;15;20 - 00;05;47;27

Unknown

And honestly, it's the difference between if you play the game. Cash Flow 101 by Robert Kiyosaki. It's the difference between staying in the rat race and trying to land on little green spaces that say big or small deal, and just being really good at landing on those spaces and doing the deals versus managing your money to get you to financial freedom or to like in his game, he's got the rat race wheel that you spend 90% of your game there, but you're trying to get to the Financial Freedom tracker like the fund track he calls it.

00;05;47;27 - 00;06;09;20

Unknown

So that's really the difference here is if you manage your money and have a cash flow management system that's really keen because it touches every single thing you do in the business, and it helps you get to where financial freedom really is. So, Christine, do you have any thoughts on that? Yeah, I mean the game says it all the I, I.

00;06;09;22 - 00;06;26;08

Unknown

Funny enough is I've never played that game. I have it and it sits on my shelf. Right. My dad actually had it because my dad's really big in real estate, flipped houses and stuff, and he gave me the game. He's like, I'm not going to play it anymore. Take it and play it. And it's literally been sitting on the on our shelf.

00;06;26;08 - 00;06;40;21

Unknown

But we always tell our kids, you know, everything's a lesson to them, which we always tell them, what do you do with that? What do you do with that? And we used to say, invest a dollar with the Bank of daddy and use your cash wisely because you know they want to get the next the best next thing.

00;06;40;21 - 00;06;59;23

Unknown

You see it. You see it at retail stores. People wait in line forever to get things. And that's the mentality of a lot of people. Just like a house, you're waiting on an auction site going, I have the cash to get this house. I have the cash to get this house. But you do that five times. Then you just look at this big bucket of cash and you go, I got the money, I got the money, I got the money.

00;06;59;23 - 00;07;17;27

Unknown

I got to go pay for this right now. Cash. You think I'm in such a great spot because now I can buy houses for auction for way cheaper that require cash. But that doesn't really. You're just. Now you're throwing it out there. Well, now you have an asset sitting, and now you need to make a decision on what I'm going to do with it.

00;07;17;28 - 00;07;35;29

Unknown

How much more money do I need to put into it? Where is that money going to come from? Like, it's not all just cash. Having cash doesn't help you make decisions. You can have millions of dollars, but it doesn't help you make strategic decisions. You just you. All you want to do is spend it. It helps you spend it.

00;07;36;05 - 00;07;58;11

Unknown

Yeah. Because what is that? The the theory. What's the theory now like if you have toothpaste. Oh and you'll squeeze it till law. Yeah. Yes. Yep. Parkinson's law. So it it's along the same thing as the same thing as expenses. If I have the cash, I can add the subscription. I can add this without without managing it. While you're not managing your cash, you're not managing your expenses.

00;07;58;11 - 00;08;22;16

Unknown

And if you're not managing cash, I have a pretty good feeling that everything else that needs to be managed in your business kind of follows that same suit. Yeah, could be wrong, but since cash is so important to a business, you're just rolling the habits that aren't good for the business. So that's a really good way. It's a really good tell to where people can make great decisions to get deals in the door.

00;08;22;16 - 00;08;56;21

Unknown

But that's just one aspect of being a business owner. A business owner says, I need to know all these areas, at least from the ownership level of like, okay, I need to be able to control my money. Like that's the whole point of the financial department is to make sure not just that we don't go bankrupt, but that we get what we want from the revenue that we that we get inside the door, that if we're going to go out there and we're going to bust our butts and we're going to go out there and talk to sellers and take the phone calls and the people that send us, you know, the dirty messages back

00;08;56;21 - 00;09;15;02

Unknown

of like, no, I don't want to, you know, don't buy my house and don't contact me again. You're doing all that work. But at the end of the day, do you really have what you want? That's what we're trying to challenge here. Is that conventional wisdom of yeah, cash is keen and cash flow is king. It's like, yes, those are great statements.

00;09;15;02 - 00;09;42;01

Unknown

But that's not the sum, the whole point of it, getting cash as a real estate investor or as a business owner is to have it work for you, and you being able to control it is a skill that you can learn as an owner. Christina, I think this is true to that. As business owners, usually most people don't want to touch the financial aspect of their business because so many people think they have to be right, that people think as our owners think.

00;09;42;02 - 00;10;01;26

Unknown

They have to be masters of the accounting and the numbers. And I think there's a difference in being a casual management expert of like being able to think strategically when it comes to your money versus just knowing where something's supposed to sit on a financial statement or even diving deeper into those. It's like, those are that's another set of skills to be able to learn.

00;10;01;26 - 00;10;31;23

Unknown

But if you don't have good habits with your money, then just because you know the PNL, the balance sheet and all that, like even if you know that, but you can't control your cash, that's where most people need to start. And it's not as difficult as the accounting industry makes it out to be. Like. I think that's another thing that bothered me for a long time, was that I felt, as a young entrepreneur in the real estate world, when I would talk to my CPA, they would almost talk down to me like, how do you not know this?

00;10;31;23 - 00;10;50;27

Unknown

Or like, this is the answer? Or just like blowing it off where I needed to learn, not just about, okay, where does it go on this, this financial statement, but how do I make this business run profitably and actually have cash in the bank that's ours to be able to either grow the business or take money out consistently?

00;10;50;28 - 00;11;20;20

Unknown

That was something I never really got. And that's why that's why, honestly, we have a factual CFO service because a lot of people ask CFO type questions like, where is my money going? Or where did it all go? Or like, how do I take more money out? And that's really a a higher level business management question where and it's attainable to you having a system in place like Profit First or something like that is what we're trying to provide as from our industry and from what we do specifically as fractional CFOs.

00;11;20;22 - 00;11;42;07

Unknown

You know, you say CFOs, you say you don't want over complicated or it should be simple. You never understood it. CFO is a CPA. All of these like designations and these three letter words intimidate people. Yeah for sure. So like it's just like, oh, I don't I can't afford a CFO. I don't know what a CFO even does that's so high level.

00;11;42;07 - 00;12;06;24

Unknown

My business is even to the point where CFO could help me like it's it's really just a three letter word. But the point is, is financial. And it should be like a CFP, like a chief financial partner, or let's just say a your financial partner, like someone that's going to come into your business and be like and something so simple as, hey, I close on this Flipboard that money go this month because I don't see it.

00;12;06;29 - 00;12;25;22

Unknown

Someone just to come in and stand beside you and say, let's look at it. Let's look at how your bank, let's look at your closing statement, let's look how everything shook out, and let's see how we want to use that money. And what's the best use of it is because I don't expect an owner really to know that because they're doing what they do best, they're going out, they're getting the deals, they're closing their deals, they're keeping the business alive.

00;12;25;23 - 00;12;42;03

Unknown

Maybe adding 1 or 2 more people that they need to close the deals. But I don't expect them to know the money should go here, here, here and here. And this is going to be the best use of it. That just leads to stress, right? You need more deals and now you're stressed out because you want the deals, but you don't know what to do with the deal.

00;12;42;03 - 00;13;11;12

Unknown

So the CFO like intimidates people because it's this three letter word that's like, yeah, that's that's a lot. That's that's going to be way too much for our business. I don't have time for that. I don't need that. You know, whatever the excuses are that we know we've heard them all, but it's someone that really is just just just literally wants to make sense of your financials, wants to break it all down for you, wants to support you and all your financial decisions and carry you through and just kind of sit right next to you and explain everything to you and say, this is what's going to be best.

00;13;11;12 - 00;13;36;27

Unknown

And then you start to see your business transform more and more, move in the right direction. So yeah, don't I could say that to everybody listening. Don't be intimidated by those those words or think it's out of the room for a business. Yeah, because you need a bookkeeper. But if this is like, let's equate these financial roles to like someone that's sick, if you go to the hospital, you know, like you've got a nurse and she's going to take care of the day to day and make sure your charts good.

00;13;36;27 - 00;13;55;09

Unknown

That's like a bookkeeper. That's like the day to day stuff that has to be done and making sure that you're not, you know, like that you've got everything in place and your numbers are there. Then you've got like, I like to say that the tax specialist, you know, or like the CPA or that accounting role specifically is almost like someone in another wing of the hospital, but you're going to go get your leg cut off.

00;13;55;10 - 00;14;11;19

Unknown

They're like a specialist for like, you know, surgery and like making sure they go in. And for this one area because they're really good at this one area. A CFO doesn't even work for the hospital, like for the IRS. They come to your house and like is a private doctor and says, how are you? What are you doing to stay out of the hospital?

00;14;11;19 - 00;14;30;27

Unknown

And like, what are you doing in order to be healthy as a business owner? That's really what a CFO is. And that's why for at least what we've built with simple CFO, we wanted to create different levels so it could be attainable. Like a lot of people are too small for a full time CFO that costs several hundred thousand dollars a year.

00;14;30;27 - 00;15;04;27

Unknown

But a lot of people are also too large, like they're actually doing 100,000 or more like six figures plus, and they're too large not to have some financial planning or some financial partnership in place to say and systems and like something like Profit first or knowing those numbers because you know what happens. Let's just say you're a six figure business owner, you're making $100,000 a year, and you have some bad financial habits now that are keeping you where you're doing deals, but you're feeling broke and there's never money at the end of the month, you know, there's too much month left and you're like, what's happening?

00;15;04;27 - 00;15;23;08

Unknown

If you don't get that figured out and you scale to seven figures to $1 million, do you think that those those magically go away just because you have more money? No, it's because now you just have the same habits, only now they're magnified. So if you have bad habits with money at 100,000, a million does not take care of it.

00;15;23;08 - 00;15;44;20

Unknown

But most people think it does. They think more money solves the problem. It doesn't. It's knowing what to do with the money that solves the problem. That's why I open this up with cash is not keen because it's the cash flow management. Because if you know what to do with the money, you can solve the bad habits you might have with money.

00;15;44;20 - 00;16;02;19

Unknown

So that way when you're a bigger business, you don't. You are not hitting your head against the wall and saying, why in the world are my problems ten times bigger now? So that's really what someone like this, that's the private doctor that comes in to say, you know what, I see some things here that if you get taken care of now, will help you down the road.

00;16;02;19 - 00;16;19;07

Unknown

Your future self will thank you. If you start getting on the treadmill now, like if you go out there, if you pump some iron, or if you go out there and you invest in yourself now at this level, before you get to, you know, that million dollar business and you're wondering, why does this big ship have all these leaks?

00;16;19;09 - 00;16;34;00

Unknown

You know, like, where are these coming from? I'm trying to put as much, you know, in here as possible, and it's all going out the back door. That's not what we want for you. So that's where I'm going to just give here. I love this little widget thing. If you've ever listened to our podcast, this little widget here.

00;16;34;00 - 00;16;58;13

Unknown

So if you want to book a call, there's a little QR code. If you're on YouTube right now, if you're not on YouTube, you can also go to let me get a banner here. Simple CFO. That's where our website is. Simple CFO. Com if you want to get someone at least to diagnose where you are, we're very we're very much like a doctor on that call that private doctor on a phone call to diagnose where are you right now?

00;16;58;15 - 00;17;13;01

Unknown

Like where? How are you feeling about the business? What are the different things that you need from there? We just want to see okay. Are we a good fit now or do you just need is your bookkeeping a mess and you haven't filed taxes for ten years? Then there's a different issue that we need to cover right now.

00;17;13;02 - 00;17;35;20

Unknown

You know, it's like we've seen all the different areas. But I do believe Christina, in tandem, you can work on your money habits even if you've got some other big holes in the business. That's one thing that can be taken care of with a lot of the stuff in tandem with that as well. To. I agree. And I was going to say, though, you say that you make a lot of cash, make a lot of cash.

00;17;35;23 - 00;17;54;10

Unknown

The more cash you make, the more opportunity for there to for it to leak out and for it to hide. Yeah. And if you think everything's okay because you have the cash and you can get the next deal, but you don't see the leaks, they're harder to find. The issues are harder to find. So I think it's really just magnifies things if you don't really know.

00;17;54;12 - 00;18;21;15

Unknown

I mean, like you have the perfect example, a client that I worked with that it kind of scared him to have too much cash. But it was being we were starting to manage it well, but never had the feeling of like having cash. And then when I started to be managed very well and the cash started rolling in and all the bank accounts started growing, where cash is exactly what you needed when you need it and they start growing, it's like, oh my gosh, I don't know what to do with this, but it's a perfect system that works.

00;18;21;15 - 00;18;42;14

Unknown

And really, worst case scenario is you're letting money sit without having interest on it. Yeah, right. Yeah. That's how I see it. Yes. Right. And I love that as a worst case scenario versus we've run out of cash. Now what do we do. You know like where do we go and like getting into major debt. Because a lot of those calls I have up front with people, they have some type of debt that they got into.

00;18;42;15 - 00;19;04;01

Unknown

And I just call recently with someone who built a lot of debt, but only in the last couple of years, like they had good cash reserves before, like in their personal life, but then their business got away from them. They had some bad deals go sideways, they had a contractor take advantage of them. And it's like now they need to pay down this debt and they just need these systems in place.

00;19;04;01 - 00;19;20;07

Unknown

But they want financial security, like they want to make sure they're paying themselves, but they want to make sure they're paying down this debt. And they knew they were like a missing pieces, having these systems in place to make sure I don't get back into the same situation again. So they understood. So that was a really fun call because I'm like this.

00;19;20;08 - 00;19;39;23

Unknown

These people understand what is really the important thing here is cashflow management versus just having a ton of cash, because the more cash you have, if you don't have systems in place and the disciplines in place, it's really easy for that cash to slip through your fingers. So that's where we believe cash is not keen and cash flow is not keen.

00;19;39;23 - 00;20;06;11

Unknown

But cash flow management is keen and having a system in place. So if you do need that help you could go to simple CFO. That's where we help people. This is where we want to give. Just just tell it like it is of and also give you examples. People. If you're thinking that you're listening to this podcast and like, oh, I'm a unique case, I promise you, lots of people are in the same boat that they don't know where their money is going.

00;20;06;13 - 00;20;22;14

Unknown

They don't have it all together. I admire people who step up and say, I need help, or I need to get a plan in place for the finances, because then you want to be a business owner who's responsible and goes out there and doesn't just sweep it under the rug until that rug is eating you alive, you know?

00;20;22;16 - 00;20;42;21

Unknown

And like the monster under the rug is bigger than, you know, the whole business there. So that's where we want to help you get that plan in place and really help you. So, Christina, any other parting words here before we let them go? No, I mean, I just we've seen it all, so don't feel like you're unique or they can't handle it, or I'm too small or I'm too big.

00;20;42;22 - 00;21;04;20

Unknown

There's we have levels to work with anyone, and we definitely have all the CFO on our team that have such a high desire to really help people. So it's a definitely we've attracted the right people on our team who really care and want to go above and beyond. We were literally talking about this right before this call where see if it was probably going way to above and beyond for someone.

00;21;04;20 - 00;21;25;28

Unknown

It's like there's some scope creep there. We've got to just make sure it's in our scope of work here. But we have people that are hungry to help business owners not be trapped in the rat race, in that business rat race that is so much worse than a W2 rat race, because it can get very hairy very quickly and it can turn into a nightmare very quickly.

00;21;25;28 - 00;21;46;08

Unknown

And we want to help you. We want to help you get right into the right place by cash management and a system, and really helping you master money helping you. What to know as a business owner. Thank you for listening. Like again, we said you could reach out to us simple CFO. Com and that's where you can either schedule a call or just see some of the resources we have there.

00;21;46;08 - 00;22;04;03

Unknown

But if you make money but feel broke, then I promise you the missing piece is cash flow management and having a system in place for your money. It's not because you're not doing enough deals, it's not because of other things, or because of all the. It's because the cash is controlling you and you need to take control of your cash.

00;22;04;03 - 00;22;26;02

Unknown

So simple, CFO, we can help you. Thank you so much for listening. And Christina, thank you again for being here. So we can play off each other and have a great episode together. That's it for today's show. Be sure to subscribe, review, and share this episode. If you're serious about financial systems and keeping more of your profit, visit Simple CFO to take your free discovery call today.