The first one is a 2-million-dollar business that we started working with about 18 months ago. When we started working with them, their books were in chaos. They had a very complicated business, not because they were making it complicated, it literally has some interesting moving parts that nobody seemed to be able to fix.
Every month this business owner did not know…
- How much money that was in their bank account
- How much money that was their cash flow versus going, to pay the employee
- How much money that was for future contractors for the work being done
This business was managing…
- 300 transactions per month.
- Reconciling those and making sure those were reconciled every month.
- The payment of 41 contractors per month. The contractors were not sending in invoices. They were tabulating the invoices for the contractors and then paying them based on those invoices. So, they had to track 41 invoices.
The resolution was…
- We had to integrate their CRM, their quick books online and their merchant accounts to make sure this was all running smoothly.
- Take away their manual processes.
When you have 300 transactions per month and you’re tabulating 41 different invoices, on those 300 transactions you can imagine the manual processes that went into it and so we had to integrate it through technology.
We uncovered $5,000 per month in free cash flow.
I happen to have three different surgeons that have a very similar situation to what we’ve dealt with over the last few years.
Here’s a situation of a million-dollar household. That’s a nice income but what you’ll find is that it is even harder sometimes to manage the cash flow because these types of folks have W2 income, they have s-score income, they might have what’s called K1 income, and then third, they have some investment income.
These folks are working ten, fourteen hours a day. They’re doing surgery. They might be doing some consulting and they might have some investment properties.
The biggest problem…
Managing it All!
The surgeons that we have here are making $800,000 to a million dollars in W2 and typically have what I’d call a side hustle. So, they have an s-score or they’re doing some consulting or some outside work and then lastly, some investment income.
One of these gentlemen had two hundred thousand dollars of passive income. The problem with that passive income was he wasn’t realizing the income – it was being used to pay down debt. He was paying taxes on the passive income, but it wasn’t coming into his cash flow.
For another surgeon, his cash flow was all right but he had a huge tax bill because he was taking his income as a K1 in his name. We had to set up a corporation to increase his cash flow.
The last surgeon from the million-dollar cash flow triad was a dermatologist. We were able to put about $65,000 back into his cash flow. Then we added another $100-$200,000 back in his cash flow, depending on the year, by using a captive insurance company.
I want to share with you a quick story about some newlyweds who recently came into our office. They were looking to buy a second home. They were putting their lifestyles together, maximizing what they were making, and growing into what was coming next.
As well as looking at buying a second home.
They brought in their income sheet to us on a spreadsheet. They had about $300,000 in combined income and what they broke down was that each of them had about $2000-$2500 per month that they had in variable spending. That’s $5000 per month
So, we looked at them and said, “where’s that $60,000 going?”
And they both looked at us a little bit puzzled.
Understanding that there’s a difference between variable spending and emotional spending is important. It’s not something you can just change because if you don’t understand it, it can impair your ability to make great decisions.
What we wanted to do for them was put them on the software, and share with them exactly where their fixed expenditures and where their variable spending was going every month, because then they can make informed choices.
I’m not saying you shouldn’t keep spending that, do what you want, but the question is, how do you make those choices?
When I was a bachelor, I remember one time that I was wasting some money. I didn’t know where my money was going. I remember I was in Napa and I sat down in an outdoor little garden, opened my computer and realized I was spending $5000 a month traveling and eating out. It was all variable and emotional spending.
Quickly when I realized that, I started making new decisions. That $5000, it’s not that you should or shouldn’t spend it, but once you know where it’s going, you can make better informed decision.
If you don’t know where it’s going, you’re making an unconscious decision. And there’s nothing worse than being driven by unconscious thought to make unconscious decisions.
For me, I was able to put $60,000 back into my pocket!
For this couple who wanted to buy a second home, one interesting thing about this their decision of owning a second home was that they didn’t understand the variable spending of this new home.
They put all the fixed expenditures on the spreadsheet, and we calculated about $6000 in variable spending every year for that second home that they didn’t have in their calculations.
That $6000, if you weren’t planning for it causes stress and second guessing.
Either you go and do the Cash Flow is King process yourself or you can have us do it for you. But here are the results that you really need to start thinking about creating, whether you do it yourself or we do it for you.
Number one, get a hold of that emotional spending. When you know what your emotional spending is, you can make better decisions. If you don’t know what it is, you won’t be able to make great decisions. You’ll cut down on arguments with your spouse, and your partners in business.
Same thing with variable spending. You know it’s going to happen. You know things are going to happen. So, how do you handle variable spending? And it’s really with a ‘profit first’ mentality. How do you put some money aside for variable spending? How do you put some money aside for when the market takes a downturn? And how do you put some money aside so you can take advantage of situations in your business or your personal life when variable situations come about?
Maximize your revenue. Revenue cures all. You can use the Cash Flow is King process to maximize your revenue. You can use the Cash Flow is King to maximize your cash flow.
Ultimately, what we’ve seen is the 21% or more increase in revenue and cash flow and we typically put $5000 a year or $5000 a month or more back in your pocket.
For the smaller businesses that we deal with, typically, we put $5000 or $6000 back into their pocket every year. The larger the business, the higher the revenue or cash flow.
It’s really about where you’re at and what that means to you. What is $5000 a year to you and what does $5000 a month mean to you? The answer to this question has a lot to do with the size of your business. That’s what the Cash Flow is King process will do for you.
We can manage and help you devise your Cash Flow is King process, customized to serve your particular needs.
We’ll take you through the Cash Flow is King process to customize it to your specific preferences or specifications, to make sure you’re maximizing your revenue and your cash flow.
- We can provide that monthly accounting for you. We will do everything. We will connect you to the software. We will hook up your different accounts. And we’ll make sure that everything is itemized on a daily, weekly, or monthly basis – whatever it takes to help you maximize what you’re doing.
- We’ll provide that reporting for you. Most of our clients like to get their reports on a monthly basis. Some are okay with it on a quarterly. We can even break it down further like those of our other clients who we have a bi-weekly call with to make sure that they’re maximizing what they’re doing in their business each month and each week.
- One-on-one review. Some want just a monthly reporting, some people want a quarterly reporting. A lot of people like a monthly review and a quarterly review and for other clients, we do it on a bi-weekly basis.
- Accountability and discipline. That’s really what we all do. Even I. I’ve been using different workout strategies my whole life and recently, I’ve been using an app. I go to the gym, I look at my app, I know the workout. It’s easy! Why? Because it makes me accountable. It gives me 7 days a week what I need to be doing and I just look at the app and I’m accountable to it.
- Hit your targets. That’s exactly what accountability does. It helps you hit your targets. If you don’t know where you’re going, how are you going to get there? We want to make sure we can find your targets and help you define an actionable plan.
- The Cash Flow is King process
- Monthly accounting
- Reporting, one-on-one review
- How to know what your targets are so you know how to hit them
- Give our office a call 312-330-9054
- Send me an email at firstname.lastname@example.org
- Schedule a 20-minute call to see if you’re a great fit for the Cash Flow is King Process!
Dominate The Day,
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