00;00;05;21 - 00;00;26;01

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;02 - 00;00;46;27

Unknown

The goal is simple to help you run your business with more confidence and less financial stress. Enjoy the episode. You can't produce well from a business that does not produce excess cash. How many business owners out there where you're like, I'm making money, it's coming in the door. But I have never I never have anything. At the end of the day, I can't pay myself.

00;00;46;27 - 00;01;05;24

Unknown

I don't have reserves. I definitely don't feel financial freedom of like, I can go out there and do what I want, when I want to. I want you to have a business that you love, that you know where all those dollars are going and that you, as a business owner, can understand that the reserves and paying yourself is not out of reach.

00;01;05;25 - 00;01;25;29

Unknown

Lots of business owners, they think that they have to be this financial guru or financial wizard in order to pay themselves, or in order to have that excess cash. Honestly, you're just a couple bank accounts away from true financial freedom. What do I mean by that? There's a system out there called Profit First that helps business owners keep more of what they're making.

00;01;25;29 - 00;01;44;09

Unknown

And what's the practical steps behind profit first? I'm just going to cut to the bottom line. Profit first is a built on like the envelope method. Dave Ramsey has made it super popular in the personal finance space. So this can also be a system that you use in your personal finances. If you need help with the habits of building wealth in your personal finances.

00;01;44;09 - 00;02;05;13

Unknown

But it's also a huge wealth builder on the business side, because I would have you set up bank accounts and understanding where every dollar is going in your business, because if you track the profitability and the cash and the cash flow and the cash movement, it's crazy that what you focus on expands, right? Whatever you're focused on usually gets your attention, your time and dedication.

00;02;05;13 - 00;02;20;21

Unknown

And in a for profit business, don't you think that the profitability of the company should get your time and attention? And so how do you do that? How do you focus on it without looking at a bunch of numbers, a bunch of spreadsheets and saying, I'm focused on this, but nothing's really happening? What's a system to build the wealth?

00;02;20;21 - 00;02;37;14

Unknown

Profit first, I believe, is that answer, especially for a business owner, because you don't need spreadsheets, you don't need, you know, to know QuickBooks. You don't need to be this financial wizard. You just need to know how to set up some accounts. So what are those accounts? There's five fundamental accounts, five fundamental business checking accounts that I would open up.

00;02;37;16 - 00;02;55;19

Unknown

There's income and opex. So you know what's coming and going out. Income would be everything that you make comes into the income. And then opex would be everything you spend. Then I call the other three the Golden Trio because they help you keep more of what you're making. Profit owner's cop and owner's tax. This is how you're going to keep more of what you make.

00;02;55;19 - 00;03;13;28

Unknown

How do you have excess cash? You have a system that helps you keep more of everything that you're making. So if you have right now one big bank account where all the money is coming in, all the money's going out, and it feels like this swirling vortex of doom or a big black hole bank account. Then you need some accounts that help you keep more of what you're making.

00;03;13;28 - 00;03;28;21

Unknown

So that's where I tell people. Set up a profit account, set up an owner's pay account to make sure you're paying yourself in a tax account. So that way you can pay the taxes and you don't have to have like an old crap moment of like at tax time. I don't know where I'm going to get the money to pay these taxes.

00;03;28;21 - 00;03;49;06

Unknown

So how do you have excess cash in your business? You make it a system where every sale that happens, you have the profitability built in through your bank accounts, not just from QuickBooks and not just from the numbers and not just from a dashboard, but from the actual cash that's flowing through your bank account. If you say, that sounds great, David, where can I start?

00;03;49;06 - 00;04;07;23

Unknown

I would say set up the bank accounts, but I would say at least start with owner's comp. At least if you can start to pay yourself something. If you're not consistently paying yourself now, or you're not consistently paying yourself what you really need or want, then I would say start with the owner's cop account, set up that account, and then from every sale that closes, you put a little bit into the owner's comp.

00;04;07;23 - 00;04;28;27

Unknown

So that way you can feel some excess cash and you're going to throw off some excess cash. If you're like, hey, David, I'm spending more than I'm making. How in the world can this help me? I'm not profitable. I would retort with, like, hey, if you're not profitable right now, then something different needs to happen. So we need to set up these accounts to get you in the habit of everything that comes in does not just go out the back door.

00;04;28;28 - 00;04;43;04

Unknown

That might mean you have to let some people go. You might have to do an expense analysis on the business and say, what can I get rid of? So that way I do have some excess cash. But this is where if you need to help deeper dive than just setting up the bank accounts, you might need a fractional CFO.

00;04;43;04 - 00;04;58;20

Unknown

And what does that mean? What the heck is a fractional CFO? There's someone that comes in as a financial leader that is focused on the profitability of the business. So helping you set up those cash flow systems, helping you know that if your numbers are accurate and what do your numbers really mean? And setting up things like dashboard.

00;04;58;20 - 00;05;25;11

Unknown

So that way you can see the numbers right in front of you and make decisions. But at the end of the day, they're really there to help you be held accountable to. Are you getting what you want from the business? How do you have excess cash? It's by having a system. It's following that system repeatedly. It might mean having someone that's there holding your hand during that process, because if you know, hey, I'm going to set up these accounts, but I'm never going to touch them or I'm never going to transfer money into those accounts, or I'm going to try it for a month, and then I'm just going to go back to my old

00;05;25;11 - 00;05;44;23

Unknown

ways and my old habits, because this is where you might need that accountability. You might need someone to help you make sure you have the excess cash. Lots of businesses are more profitable than they think, but they're just spending all their profitability because they don't know what to do with that cash. Once it's in the door, they don't know how to analyze the cash.

00;05;44;23 - 00;06;12;09

Unknown

They don't know what to do with it. They don't know how to name the dollars. They don't know how to live off of less in their business when they really could live off of less, but they don't know how to do that or how to make it a system. So you could either do it yourself and set up that one bank account, or if you want, the full system, and if you want that accountability, if you want the numbers, if you want someone dedicated on your team to making sure you have not only excess cash, but you're really getting what you want from the business to go out there and build, you know, like the

00;06;12;09 - 00;06;26;11

Unknown

business you want and scale up profitably. Or if you want to have those vacations or if you want, if you want the size business you have right now, but you just want financial freedom from it and you're like, hey, how do I start to buy back my time? How do I start to actually get the benefits of this business?

00;06;26;11 - 00;06;45;13

Unknown

But I don't feel like I'm actually keeping the money. That's where you could hire someone in-house to make sure, like, hey, or you could hire a fractional CFO, or you could hire someone to make sure that you have that accountability, or you could start to implement profit first. But having the system from every deal, from every sale is what brings that excess cash, because it's not going to happen by accident.

00;06;45;13 - 00;06;58;09

Unknown

You're not going to do some deal in the future where you're like, oh, I did this deal. All my money problems are solved. That has not happened. One time in the hundreds of business owners that I've talked to over the years where they're just like, oh, yeah, I did that one deal. I never had to worry about money again.

00;06;58;10 - 00;07;14;22

Unknown

It's like, this is where that consistency, I do a deal, I put some money aside, I do a deal, put some money aside and make a sale. Put some over here in this account. It's that consistency that builds the habits, that builds real wealth and gets you out of your rat race and helps you build that financial freedom that you've always been looking for.