00;00;00;08 - 00;00;25;14

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 solo episodes, we focus on practical financial strategies that real estate investors and business owners can actually implement, whether it's profit, cashflow forecasting or mindset. The goal is simple to help you run your business with more confidence and less financial stress.

00;00;25;16 - 00;00;58;21

Unknown

Enjoy the episode. Downturns don't fill businesses. Unprepared owners do. I know that might be very hard to hear because I'm sure you've heard other business owners. Maybe you've had friends relatives go through a very hard cycle where maybe it was 2008, nine, ten where real estate went upside down, and then they they went upside down. A lot of business owners put themselves in that position where as long as the sun is shining, everything's going to be okay.

00;00;58;24 - 00;01;25;09

Unknown

But as soon as anything happens, whether personally or professionally or in the market, then that's when it's stress tested and it breaks. And that's just it. It's not just market downturns that kill businesses. It could be a personal downturn. What if you got hit by a car or something and you're in the hospital for two months? Could your business survive, whether it be financially or whether it be operationally?

00;01;25;11 - 00;01;44;10

Unknown

This is where preparation is key, because what is it? An ounce of preparation is better than a pound of, you know, like the I forget what the after effect is. And this is where if you are going to be a true business owner, you need to prepare for those downturns. That does not mean that that's all you have to focus on.

00;01;44;10 - 00;02;07;00

Unknown

It just has to be part of your system of operations. Now here's a couple of key things you can do going into your business, whether it's right at a downturn or if you're trying to prepare for that downturn. Number one, I would have a system for your money, for your cash. I am a profit first fan. I wrote profit first real estate investing.

00;02;07;00 - 00;02;23;10

Unknown

So we teach people that with every dollar that comes in, you should give that dollar a name and you should be able to pay yourself. You should be able to build cash reserves and you run your business by percentages. So when it comes to your cash, you know where every dollar is going. You know what you make, spend and keep.

00;02;23;10 - 00;02;38;10

Unknown

You know what goes out the door. You know, knows what comes in and what is coming in the door. And you know how much you get to put in your pocket. Like that would be a huge thing in order to prepare. Or if you know, a downturn is coming, it's managing that cash. Another big one is managing expenses.

00;02;38;11 - 00;02;55;26

Unknown

Do you know every dollar that is going out the door? Do you know if you're getting a return, if it's marketing related or do you know that, hey, I don't know if I'm getting a return because it's not marketing related, but is it saving me time energy? Is it saving me on headaches? Or is this something that's just sucking the life out of you?

00;02;55;27 - 00;03;18;02

Unknown

So that would be another thing. The expenses also I would have, especially if you're doing the preparation phase on a quarterly basis, I would do an expense analysis. That sounds horrible, doesn't it? As a business owner, there's no way I want to look at my numbers or want to look at all my expenses. I suggest once a quarter printing out the expenses of the business and just marking it is a PR you.

00;03;18;03 - 00;03;45;24

Unknown

Is it profitable, replaceable or unnecessary? Profitable would be. I'm getting a return. If it's like an admin or finance task. It's taking. It's taking time off of your plate. Like whether it be, you know, something that is a lower dollar per hour task that you don't have to do. So P would be profitable or would be replaceable, meaning that expense could be replaced with something that can help you do it faster, better, or cheaper then unnecessary is just like, why do I still have this thing?

00;03;45;24 - 00;04;05;23

Unknown

Whether it be a subscription, whether it be something that you're still paying for years later, that you forgot about, whatever it might be. That's one other thing that I would do that's very tangible in preparation, because how many times have you heard we need to lean the fat in the business or, you know, now is a downturn, so we need to trim the fat here.

00;04;05;24 - 00;04;21;19

Unknown

I want you to be able to trim the fat when the going is good. This is when discipline kicks in to be able to say, I do not need all of this, and I don't need to expand as much as I thought, or I don't need to spend all this money that I have in my bank account right now.

00;04;21;19 - 00;04;39;15

Unknown

I want you to have years of plenty, but you will also have years of famine, because if you do not prepare for them, then you'll say, oh shoot, I wish I would have leaned it out back then versus now. I have to actively. Now I have to actively cut things in my business. I don't want that for you.

00;04;39;15 - 00;05;08;10

Unknown

I want you to do that proactively versus reactively. So those are two huge things. Number one, managing the cash. Number two, managing every single dollar going out the door. Another thing to to look at that usually is sucking a lot of the cash out of the business is debt. It's whether might be credit card debt. It could also be debt like from if you're in a real estate industry, properties where maybe you have a short term loan, but then you had to take that property you thought was going to be a flip and turn it into a rental.

00;05;08;11 - 00;05;25;00

Unknown

Now you need long term money on it because the short term money is killing you. You're paying X amount of dollars per month just for that one property, and now you need a long term loan. So you're not just forking money over all the time. And it's totally killing your cash flow in the business. So how you manage debt as well.

00;05;25;01 - 00;05;42;00

Unknown

Two I would reach out to creditors. I would reach out to your lenders just trying to get the rates down as much as possible with managing expenses, reaching out to vendors to try and cut rates as much as possible as well. And then on the profit first side, we need to get the money in the door. But then once it's in the door, we need to tell where to go.

00;05;42;03 - 00;06;04;05

Unknown

You also need to, during downturns or in preparation for downturns, lean into the things you're really good at that make the money the real money. Not what you think makes the money, but from dollars and cents and numbers that tells you if we spend this much, this is how much we get, or this age of tragedy gets us this return where this other one we thought was the better one, just because we get bigger chunks or whatever.

00;06;04;07 - 00;06;21;26

Unknown

It's not really as efficient as maybe because a lot of people go into fixing flip and they think, I'm going to squeeze all this lemon, you know, the lemonade out of the lemon here. And what ends up happening is that even though they might make more on the deal, it takes them three times as long and it takes them four times as much manpower.

00;06;21;26 - 00;06;42;21

Unknown

And then at the end of the day, they would have been better just wholesaling that deal off. So really knowing your numbers, knowing where every dollar is going. Managing your expenses and your debt. This is how you can prepare, whether you're leading up to a downturn or when you're in the midst of a downturn. Some of the things that you can do to get back on track, to keep the money you really want to, and to be able to come out the other side.

00;06;42;21 - 00;07;01;18

Unknown

Because all you want to do in that scenario is survive. You want to be able to survive. Now, if you can thrive through it, that's probably because you prepared before the downturn. But if you want to survive, those are some of the things right now that you can be doing in preparation for any downturn that might come personally and professionally in the marketplace, whatever it might be.

00;07;01;19 - 00;07;20;14

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.