00;00;05;19 - 00;00;25;29

Unknown

You're listening to the Profit First for Real Estate Investors podcast. This show is all about helping real estate investors and entrepreneurs bring clarity and structure to the financial side of their business. In these sole episodes, we focus on practical financial strategies that real estate investors and business owners can actually implement, whether it's profit, cash flow forecasting or mindset.

00;00;26;00 - 00;00;57;26

Unknown

The goal is simple to help you run your business with more confidence and less financial stress. Enjoy the episode. If your business and personal finances are not separated, they're going to collapse. Okay. Here we go. I get it. I'm a business owner as well. It is so easy when you're first going out there, and especially if you've gotten in the habit of, well, you know, I have a business account, but, you know, I'm out here and I don't have the right card, and I'm just going to pay for the personal and I'm going to put it on this card and then pay for it out here.

00;00;57;28 - 00;01;24;13

Unknown

You're breaking the corporate veil right from the very beginning. It's like, why even have a business at that point? You need to keep it separated as much as humanly possible, like to where you have it locked down. And you don't use a person of cards for anything business, and vice versa. You don't use the business for anything personal, because number one, it might get you into trouble, and you might be able to not have the liability protection that an LLC or an S Corp or C Corp provides.

00;01;24;13 - 00;01;54;27

Unknown

It's you're literally putting yourself in a very risky position. But most people know that. And so I'm just reiterating what, you know. But then there's another aspect of it that most people don't think about. It's are you robbing Peter to pay Paul? That might be in your own business, where maybe you have different exit strategies, or you have different businesses that you run, and maybe one is hurting and the other one is like doing well, and maybe you're co-mingling different business funds together just because one business is hurting and the other one is healthy.

00;01;54;28 - 00;02;16;25

Unknown

So now you're just putting on a life support, something that's actually not getting you closer to your financial goals. This is where I don't want you robbing from Peter to pay Paul. Whether it's your personal finances to your business where some people are like, hey, I've got some personal reserves, I need to put them in the business. But then you have no plan to pay yourself back from those business funds that you make and from the sales that you do.

00;02;17;01 - 00;02;32;26

Unknown

And then you're just like, hey, I'm just going to reinvest in the business. And then one day your personal reserves are gone and the business is eating them all. Now the business has eaten everything that's in the business accounts and you're like, well, that's it, game over. Bankruptcy time. I don't want that to happen for you. I also don't want you robbing Peter to pay Paul on the other end.

00;02;32;26 - 00;02;46;25

Unknown

It's like, hey, I want the Maserati, I want the Lamborghini. I want the biggest house, I want the plane. And so you start robbing from the business into your personal life, and you wake up one day and all the business money is gone. But you have all these things that are depreciating assets. Both things are going to hurt you.

00;02;46;26 - 00;03;03;20

Unknown

That's why I said, this is where if you don't get the personal and business thing, whether you're co-mingling or if it's just robbing Peter to pay Paul, those are things that can end up tearing down one or the other, or both, often together. That's where you did not start your business. For it to become this cash eating monster, you did not start it.

00;03;03;20 - 00;03;19;21

Unknown

For it to be able to go out there and be like, okay, I just need to float this and then this, float that, and to go back and forth and play that money shuffle game. You started the business for financial freedom, that financial freedom. What does that look like? It looks like doing what you want, when you want, with the people that you want at any time.

00;03;19;24 - 00;03;39;28

Unknown

But if you're just robbing Peter to pay Paul, it's just a house of cards that one day we'll all fall down. So what can you do? Number one, have separate bank accounts, business accounts, personal accounts. And I would even say don't even have them at the same bank. If you can, if you can help it. Or especially the same login, they're in the same log in.

00;03;39;28 - 00;03;57;27

Unknown

And you could just go back and forth and transfer real easy. It's too much of a temptation for most entrepreneurs. If it's that easy to move the money, that could be a level of discipline that you instill inside of, like your banking process. Another thing that you can do is have accountability. Is there someone on your team? Is there someone on your staff?

00;03;57;27 - 00;04;15;24

Unknown

Do you have maybe an operations or a CEO or an integrator or someone that's a high level team member that could look over your shoulder? Maybe it's a CFO. Maybe you have a fractional CFO who says, hey, you're mixing the personal and business. This is going to hurt you. Do you want to continue doing this? Because if you do, it's like, why do you even have me on staff?

00;04;15;24 - 00;04;33;13

Unknown

Like, because I'm going to tell you that this is going to hurt you and this is going to eventually you have this house of cards fall down. This is where you might need some accountability. So number one, it's like getting the separate accounts, making sure that you can separate them out, building out in a level of discipline and accountability for yourself.

00;04;33;20 - 00;04;49;09

Unknown

And a level there where it's like, hey, I know if I'm going to go in and just be able to transfer really quickly, then I need them at separate accounts. And that they don't connect to each other really easily. Then having that accountability in place as well to where it's like you might need someone to take you by the hand and be like, here's how you separate it out.

00;04;49;15 - 00;05;07;27

Unknown

Here's where we're going to do this, here's how we're going to track things on the personal side. Here's how we're going to do it on the business side. That's something we do with a lot of our clients. Like we have to make sure you're separating those out. Lots of people come to us more than I care to admit, and they're already co-mingling, or they're doing some form of that, or we see it behind the scenes and we're like, we got to help you get out of this.

00;05;08;04 - 00;05;21;28

Unknown

There's no shame in that. If you're like, oh, shoot, I'm doing that. You're raising your hand like a CFO or fractional CFO should be a safe place to bring that up and just be like, I need help. I need help to get out of this because just because you've done it doesn't mean that you're ruined for the rest of time.

00;05;21;28 - 00;05;41;12

Unknown

As a business owner, what you need to do now is take someone, either someone help you get out of that situation, or you say, enough's enough. I'm going to separate this out and make sure that they don't co-mingle I'm also going to make sure that I'm making enough on the business that I don't need my person to float the business, or vice versa, that I don't have a lifestyle that exceeds my business income.

00;05;41;12 - 00;05;58;02

Unknown

So that way I have to keep feeding the lifestyle and robbing Peter to pay Paul. That is never a good formula for that business. And that's where it comes down to the financial habits. So if you implement something like a cash flow system like profit first, so you can see where every dollar is going in your business, that can be another level of accountability as well.

00;05;58;02 - 00;06;17;26

Unknown

Two of every dollar has a name and you know where every dollar is going. That's just another level of their of personal and business and making sure you know where the dollars are and that you're not co-mingling things and that you're not robbing Peter to pay Paul. There are some practical steps to be able to not co-mingle anymore, and making sure that you're just not traveling the money around.

00;06;17;28 - 00;06;36;10

Unknown

Thanks for spending time with me today. If this episode gave you clarity or a new perspective, be sure to like, subscribe, and comment below if you're ready to apply what we talked about today with real guidance and accountability, visit profitrei.com to schedule a free discovery, call with us to create your path to financial clarity and freedom.