David Richter: You're listening to this podcast, you might think you're playing the real estate game, but you're not. K? You're playing the game of money. Not only that, they're not playing their own game. They're playing someone else's.
Like, they think they should be doing x amount of deals or Grant Cardone says, the money in your bank is the rats are eating at it. Like, you're an idiot. You know? And, like, go invest in everything. What is it for you that will give you peace of mind?
I go back to that guy where I asked him, would a $150,000 in your bank account give you more peace of mind and sleep better at night or having the equity in the property and being able to do some of the other things owning that asset? And I'm like, that's what it comes down to is, are you playing your own game? Do you know how to play the game of money? Do you know how to win it? Do you have good habits with the money?
But then are you playing your own? Like, so that way someone doesn't come in and they say, well, you should be doing this. What do you mean I should be? Do you really know what my goals are and what I want for this business, or is it just, like, you think this now
Steve Trang: Welcome, and thank you for joining us for today's episode of disruptors where millionaires are made. Today, we have David Richter with Simple CFO and David flew in from Saint Cloud, Florida to talk about how to go from 7 figure years to 7 figure months. Now I'm on a mission to create a 100 millionaires. The information on this show alone is enough to help become a millionaire in the next five to seven years. If you'll take consistent action, you will become one.
And before we jump in, if you're here to learn how real entrepreneurs built real empires, hit that subscribe button because every week, we drop lessons that can create your first or next million. And today's show is brought to you by objectionproof.ai, the only free tool that analyzes sales calls based on the objection proof selling formula. You ready?
David: I'm ready.
Steve: Alright. So it's been, a little over a year, since I've been on the show. And I wanted to ask you, you know, you're working with a lot of business out there. Mhmm. Like, several 100 businesses out there.
Yep. What has changed in the last year and a half that to get people caught up?
David: Man, to get people caught up in the last year and a half. Well, I live in Florida, so I feel like that market has definitely changed over the last year and a half where I literally just bought a house in the area where two years ago, the people got in there and they had that the people that went in there, it was wholetailed to them. But it was the top of the market. It was you know, they were competing and it all the different offers are flying back and forth, you know, like, a a ton of offers being put on this one house. And it was just lipstick on a pig.
They got in there. They did a bunch of work. They updated everything. We come in here a year and a half later, buy the house, and we go to the appraisal because we we actually put in for asking price. We get to the appraisal process, and the appraisal drops at 30 k.
And I'm like, woah. What is this? So then friends in Florida and clients we have in Florida, same thing. We they're feeling the downward effect of, like, okay. It's slowing down.
There's more, you know, houses on the market. I think just yesterday, I think it was what? It's either four or 8,000 houses are sitting in Tampa, like, on the market right now where versus some other markets like Rochester, they only have 500.
Steve: Mhmm.
David: Now it's a a little smaller area than Tampa, but not that much smaller. So it's still a supply and demand. But in the Florida market, we can definitely see the slowdown. So people are pivoting where some of the people that might have lower interest rates Mhmm. They are taking terms deals at this point and those types of things.
And that's where a lot of people that if you're flexible in real estate, that's the great thing about real estate. Right? Is Mhmm. Can have one house and do 15 different things with it just depending on your knowledge base. So
Steve: That's really true. There are all these different ways to get in and out of
David: Exactly.
Steve: So then that house that you I mean, the appraisal came in low. Did you pay less or more than what they bought it for?
David: So we paid less than what they bought it for After
Steve: two years ago.
David: And they they put a new roof on. They did new AC. Like, they did some major upgrades Mhmm. To the house as well, and we still got it for 30 k less from the appraisal, not from us asking or me being a great negotiator
Steve: Yeah.
David: With the appraisal.
Steve: Yeah. It is it's fascinating. Right? Because, like, a couple years ago, it seems like Florida, like, the party would never end.
David: Oh, right. Oh, yeah. Right. Big time.
Steve: And I think a couple of hurricanes, changed the
David: the tune. That can definitely change it. We're right in the middle. So we're insulated. So for us, I think it's just the cooling off of the market in that area.
And I feel like not I feel I know from several other clients, there's different markets that are going that direction. Mhmm. The major one you know, the ones that see wild swings. Do you see that here in Phoenix?
Steve: We see wild swings here, but, I I don't know. Like Do
David: you see any slowdown here
Steve: or more? It's definitely slowed down here. It's definitely slowed down. I mean, I'm hearing, you know, not just here, but, like, across the country, there are a lot of wholesalers that, they're not quite as hunky dory as they would appear on social media.
David: Yeah. Yeah. I actually counsel with someone every month because I'm a bad person. Just kidding. It's because my wife and I have been seeing someone for, like, since the seven year itch.
That's just one thing. We could go down that rabbit hole. I strongly recommend even if you don't need it, talk to a third party with a because our relationship has never been stronger. But we got on there for a regular monthly call, And he's someone that's in this space. He works with a lot of other investors and people in the business world, but he also, like, does personal marriage counseling as well.
And so he got on and said, something's different. Like, just across the board, I'm seeing it from the West Coast to the East Coast. People are just having more issues, more problems in their business at home. Like, he said, I think it's just the general marketplace is just you know, you can feel it.
Steve: So what's weird is I was in a call with some top like, the biggest, like, hard money lenders in the country. It was like a, you know, it was, all hands on deck car. Like, all the Oh, yeah. Yep. You know, a lot of the biggest, hardest money hard money lending companies, a lot of the biggest operators in the country.
And then, I was on the call. And I spoke. Yeah. And it felt like I was in a different world, because the hard money lenders talking about, like, you know, a lot of the challenges that a lot of flippers are going through, which makes sense. You know, what's going through with interest rates and, you know, depending on the day, what's going on with Trump and the economy.
Right? Yes. And the operators. But I felt like I was coming in kind of from a completely different place. It's like, everyone I talk to is on fire.
Everyone I'm talking to is doing great. And I was, like, really confused. Like, what is happening here? And then different client pointed out. I was like, Steve, like, you're looking at the wrong way.
I was like, what do you mean? He's like, everyone you're talking to is doing really well, but you're also coaching them all on sales. Like, oh, yeah. Yeah. Right.
David: Makes sense. That makes
Steve: a lot of sense. Yeah. It's like because, like, I was saying, how can every single person I'm talking to, a lead manager, is, like, setting record weeks? How can every acquisition manager I'm coaching, like, having record months? Right?
And how can every dispo person, like, having it's just super easy.
David: Like Yeah.
Steve: Oh, yeah. There's one thing in common. So, like, it's a completely selfish plug, but, like, I genuinely, like, didn't see it. It's one of those things that you're so close to it. Right.
You don't see it. Yeah. And then someone else points out, I was like, hey, dummy. It's this, like oh,
David: yeah. Yep.
Steve: So so let's talk about this now. Obviously, we're talking about finances. We're gonna talk a little bit more about it. But, so there is a temperature change. There's something different.
So, again, you're working with how many clients right now?
David: Over a 120.
Steve: Over a 120. Yeah. Alright. What are they doing right now to adjust to this environment?
David: To this environment, they're leaning into what they're good at or picking a lane that they haven't gone down. They're trying to also there's a very catch you know, that catchphrase cash conversion cycle, you know, from when you get a lead in the door, when you first touch it to when you actually get the money in. They're trying to shorten that as much as possible. So some are going to maybe creative deal flow. You know, like, if it's a market like Florida Mhmm.
Where they can go in there and say, okay. Can you put money down, do this, you know, and get a chunk of cash up front? Or if they've just been flipping, k, maybe we can do heck. Yeah. Wholesaling or wholetailing.
Can we shorten that cycle a lot? So a lot of people are still burned out because it's like they don't know how to generate the cash quickly or they've been stuck in long term cycles, so we have to try and shorten that for them Mhmm. If they're not already doing that. If they are doing that and it's not working, then it's like, what are the alternatives? Can you put a different tool in your tool belt like creative financing, something like that?
So it's being able to pivot but still maintain a lane, you know, and still be focused and still go down that. They're they're leaning into and sharpening the ax when a lot of other people are cutting expenses. You know? It's like you have to pour gasoline on the things that are working, like sales and like the marketing where that's usually the first plug that gets pulled is, like, anything that's a big expense. It's like, well, hold on.
Is this getting you more deals in the door? Like, if you didn't have this, what would that do to your deal? For asking better questions as well.
Steve: Yeah. Yeah. And one thing that is interesting, so I was just a different mastermind. Just I flew back on for this past week. And in the room, there was a guy who, you know, going over it was a hot seat presentation.
David: Yeah.
Steve: And it was pretty clear he didn't like wholesaling. Right? Because he's talking about every answer he gave, it was clearly that he was doing it. Yeah. He was trying it, but he wasn't getting the results.
But it was clear he wasn't passionate about it. Okay. Right? And now my question is, like, why are you wholesaling? Like, you clearly don't love it.
Why are you doing it? And it's like, well, it's a source of active income. So then the question came out. I was like, well, what are other ways to get some active income? So, like, John Burley, he was on the show.
He's been on the show a couple of times. And one of the things I like about what he does is he pays himself on every deal he adds to his portfolio.
David: Mhmm.
Steve: Right? So he's got a whole bunch of lenders on the back end. Yeah. Right? So you have to have money first.
You have you have to have access to capital first, but he's buying deals with other people's money and then paying himself a assignment fee. He calls it a finder's fee. Right? He pays himself a fee for every property he acquires. So, like, you can continue to acquire properties right now if that's your model.
David: Yeah.
Steve: As long as you find a way To pay yourself. Pay yourself Yeah. Every property you buy as long as it's still cash flows after you pay yourself.
David: Exactly. So if you're that fix and flipper and you take down a fix and flip, but you get at a wholesale price, it's like, do you have an acquisitions company that you can pay? And then you're funding that. Yeah. You're funding
Steve: that upfront. Active income.
David: Exactly. So there are different ways to do that type of thing, and it's like we just have to be creative at this point. I think now I I'm sure on your show someone's had to bring up the book, The Road Less Stupid Mhmm. Keith Cunningham.
Steve: Let's talk about it.
David: One of
Steve: my favorite books.
David: Let's talk about it. Of all time? It's like, yeah. That's my favorite biz I I you know, I should say profit first, but, like, number one is his book, Grow to Less Tube, because it teaches you how to think. Right.
Like, that's what the real people that I believe that are separating themselves from the pack right now Mhmm. They're giving themselves room to think. Like, what should I be doing? How can I make this work? Okay.
If this isn't working, what should I be doing, or do I have the right team in place? You know, asking themselves the hard question. Like he says, the magic question, what don't I see?
Steve: Mhmm.
David: That should be happening. We even talked about this, I think, right before the podcast. Like, you were saying, worst case scenario for, you know, for your leg, it's like, do I need to chop it off? Or, like, what you know, like, what's the worst case scenario, and can I live with it?
Steve: Right.
David: A lot of people say, what's the best case?
Steve: Mhmm.
David: What's the worst case? But they don't ask themselves, can I live with the worst case scenario? And Keith says that over and over in that book. And I went yeah.
Steve: So just for context. Right? So you guys can kinda see, I do wear I'm wearing a boot right now. And the last time you guys saw me, I was wearing a cast. So, I ruptured my Achilles tendon playing basketball now a little less than two and a half weeks ago.
About two and a half weeks ago now. And so I was wearing a cast. Right? And I'm just flying to Charlotte to speak at boardroom, and you have a opportunity to speak on the main stage. It's one of the things you gotta seize.
Right? Yep.
David: Exactly.
Steve: You know, I got over 200 people there. So you gotta seize the opportunity, but I'm in a cast, so I can't really speak. I can't stand. Right? I could be in a bar stool.
I can be in some other thing. But, like, you can't present with the same energy
David: Right.
Steve: Right, on a bar stool or in a nice comfortable chair. Right? I was like, I gotta stand. And so I talked to the doctor, and he advised against transitioning to a boot. But I asked the questions.
Like, okay. Like, walk me through the worst case scenarios, and I'll decide whether I can live with those worst case scenarios. Right? And so it was like, if I go into a boot now instead of in two weeks, which is what I'm supposed to, what's the downside? And the downside is I can re rupture this, you know, healing, whatever it looks like.
It's not great, obviously. It's Mhmm. It's like a perforated, like, tab a piece of paper. Like, what will happen? It's like, well, if you rerupture it, then we're definitely gonna need surgery because I opted for no surgery.
It's like, you definitely need surgery. It's like, okay. So what does that mean? It's like, well, you're basically starting re rehab over. It's like, well, I'm only two weeks in.
David: Right.
Steve: So worst case, I have to get surgery, which I've done before on my right side when I tore my right Achilles. And then two more weeks in recovery time. It's like, I can live with that downside. It sucks. But to speak on stage, I'll live with that downside.
Yeah. But I asked the questions, what's the worst case scenario? Can Can I live with that worst case scenario?
David: Yep. Even while you were talking, I'm like, that that was taken right from the book. You know, The Road Less Stupid. So highly recommend that book if you don't have it already. Mhmm.
I try
Steve: it out on
David: all the time.
Steve: Three top five favorite books of all time. Like, depending on the day, it might be my favorite. But, definitely, top three, top five is incredible.
David: Yeah. It is.
Steve: Yeah. Okay. So then extrapolating from that. Right? So, again, you got over a 100 clients working with you for, profit first real estate investing.
Right? What else are they doing right now? Is it cash conversion cycle is, like, the primary focus? Are they playing more defense? Are they playing more offense, with their finances?
David: If we've worked with them for a long time, they should have a good defense in place. Like, stacking the cash and having that reserve there to be able to make the moves that other people can't Mhmm. And seize on those opportunities. If it's someone coming in, like, right now, people's hair is on fire. There's so many people that are coming in now, and they're like, can you do a deal for me?
Like, I know I need this, and I know I need help, but, like, you know, cash is tight right now. Mhmm. Like, I totally get that. So that's where if they've been working with us for a while, it's like they've played defense enough to be able to now play offense in whatever market that they're in. Yeah.
So it's like, that's what I like to see. It's like they've stacked the cash. They've got that there. Now on the flip side, we have to make sure they do have a good defense in place because if they're gonna go out there and they're gonna take the risks, then we have to make sure what is the downside Mhmm. And do we have enough cushion to prepare for the downside?
Or if you take this deal down, let's talk about this flip you wanna take down. If you have to put your money out or if you're gonna be out there, let's say, six months, let's project this to nine months. Like, how long can you sustain this type of flip? And just being able to project with them longer out to see, like, this might take longer now because of the cooling off. And maybe you're in an insulated market.
I used to live outside Chicago, Northwest Indiana where, you know, like, if Phoenix is like this and if Orlando's like this, then, you know, like, you know, Northwest Indiana was like this, like a very, very
Steve: Very insulated.
David: Very insulated. And that's where if you can feel that in those outer markets, like in Orlando or something like that where it's going crazy, those other markets we're telling too, it's like, you might not feel it right now, but you're going to feel it, like, in the next month or the next year Mhmm. Because of what we're seeing out there with supply and demand. So that's where we're just it is defense, but it's positioning themselves to be able to take the offense of, like, okay. Do we need to pivot?
Do we need to do a different marketing campaign? Do we need to go out there and you know, is it the team that's top heavy right now
Steve: or whatnot? More explicit here. Yeah. So when we're saying play defense, play offense, let's describe what is playing defense mean?
David: Defense to me is anything that saves you time or money. So to me, it's like, okay. If I am able to understand where my cash is going, I can either save time or money by putting a person, process, or system in place Mhmm. There, or I can take the money that I have saved and play defense with and pour it into a channel that's working. Mhmm.
So that way I can flip it from defense to offense. To me, offense is being able to use the dollars to get money in the door right away. It's the revenue driving activities. Right. So it's being able to produce revenue or it's being able to protect the revenue that you're already making.
Yeah. So those are the two.
Steve: Would it
David: be like defense.
Steve: Because in my in my mind, if you're already doing it, right, it's not necessarily playing offense to continue doing it. So we're saying, like, we're doubling down, or we're talking about adding marketing channels or adding other markets? Like, what does it mean to play offense?
David: To me, that's taking the defensive actions of analyzing. Okay? What's working, and do we double down on this one or and cut all the other things? There's a guy that I know out of New York where it's like TV was going gangbusters for him for, like, three months in a row, but then it just fell off a cliff. And but he still kept pouring into him.
Like, dude, like, how much do you we need to set a limit right now. How much do you want to keep pouring before you'll pull back? Because you've got these other two channels that are working really well. Like, direct mail is still going really strong for you, and you're getting a good return and these other you know, this other one, your cold calling, whatever it was. So then he said, you know, I'll do it one more month.
I'm like, okay. We have to see x amount of return before this next month or we're going to pull that channel, and we're gonna take that 10,015 whatever it was a month and put it into this other channel. Mhmm. So for us, it's like, okay. What are you doing here, and can we put it into one that's already working and doubling down?
Or if you've already tapped it out, you know, because, like, you know, that's the decreased returns the more that you pour into it. Do we need to open up a different channel or a different exit strategy that you have the same amount of deal for, but now you're able to offer something different, pivot to the wholesale, you know, the wholesale, whole tail, you know, creative type structures.
Steve: So, like, when I think of defense as well, I kinda look at, like, you know, Warren Buffett. Like, I think he's sitting on way,
David: way Yes.
Steve: Way too much cash. Or not not too much cash. But he's sitting on a lot of cash.
David: Yes. He is.
Steve: Right?
David: Is there too much?
Steve: Yeah. And I don't know what the number is, but it's something absurd. Yeah. And he's just waiting. Now I think small business operators, we don't really have the luxury of just
David: Not just yeah.
Steve: Waiting and just opting out of the market. But, I mean, I don't know if that's playing defense or is that just buying I don't know what that is. What would you call that?
David: For well, this is not apples to apples. You know you know what I'm saying? Like, for him for him, he's seen the marketplace and he for I think he just wants to take the opportunity. I think he's also stepping down. Right?
It's like Mhmm. He might be sunsetting. You know, more of, like, I've done it. Let me just pass this on. Like, I I've I've more than enough.
He probably doesn't even have to play offense, defense anymore, you know, at that point. Okay. Good example. Yesterday, a guy literally was on the phone with us for, you know, what we're doing with Simple CFO, and he crazy. This was one of the phone calls that I usually don't get.
He had stacked cash. He's almost got 7 figures stacked right now because he's already implemented Profit First, and he's got that system in place. So for him, he's waiting, But he's also still in the process of doing deals and buying the things that he wants to buy. He's still using other people's money or, you know, investors and hard money, private money. On the real estate side, he's also got a marketing business too.
But he said, I've got enough runway for this year where I could literally see how does the market go these next few years, and I can pivot along the way. Mhmm. So I love that. And I was surprised, like, okay. Usually, we see people's hair on fire and, like, you're coming in and you're good.
Like, what do you want? He's like, well, I want forecasting and but I don't have a even have a business budget, you know, or anything like that. He's like, I want to know my business more. I'm like, you have good principles. It sounds like you just want to be a better business owner like the Keith Cunningham book.
Like, being able to ask yourself better questions. So for him, it was more about, I'm stacking cash because I have good principles of money in place, but I'm going to use it in order to fund what I believe is the next opportunity for my business. Mhmm. So for him, that might be a little bit more on the scale versus, like, Warren Buffett. Like, I can't tell you what this guy this guy has been, what, investing since he was, like, 10?
Yeah. And he has time on his side. He's done a different asset class. He's got great principles. And some of those same principles that he uses can be applied Mhmm.
To small businesses like stacking cash and making sure that you're not always using your own money. Okay. Here's the thing I see lots of flippers do is a great deal comes along, and I'm going to take that down no matter what. Even if I have to drain all my bank accounts, I've got Profit First set up and all the different account. I'm gonna steal from all of them.
We're gonna take this deal down. Now might not be the time to do that. Like, where who can you call? Who's in your network? A lot of people forget they have a network.
Like, if you're a part of a group Mhmm. Or you've got some good people in your corner or you've got a coach that you have, it's like, what connections do they have? Ask a couple more questions before you just drain your resources dry. Mhmm. Had another call this last week where a guy was like, I'm sitting on a house that is in my personal name.
It's the first one I ever did. And but I've got a lot of equity, like, a $152,100 k in there if I sold it today. He's like, what would you advise, you know, to do? Or what would you do if you're in my situation? I'm like, no.
No. No. Let me ask you some questions. Like, would you having the $150,000 in your bank, would that give you more peace of mind, or do you like having a property there that you could potentially pull against or do a line of credit or, like, just having that in your portfolio and cash flow? Because he was cash flowing.
He's got a tenant there, and they're paying and on time. So what is more important to you? He's like, right now, I'd rather have the cash flow. Then I might get a no brainer then.
Steve: Right.
David: So you also have to take it for what's your risk tolerance, but also be looking at the market and saying, okay. I can't just I can't do the same things I was doing and expect the same results every single time, especially if those flips start to sit there longer and longer on the market.
Steve: Yeah. And I think what you're talking about is super important is the preferences. Yeah. You know, something that, Paul Sparks and I were doing Certainty Talks for some time. Yeah.
And the things we're talking about is, like, we're all wired differently. Like, we might think, you know, we're very similar and that we have a lot in common, but we are, at the end of the day, wired different.
David: Mhmm. Yeah.
Steve: And so one of the things that, you know, your question I love that you asked this question because, like, you give the account an answer. I know you're not exactly an accountant, but you give the account answer. What should I do? Well, it depends.
David: Right.
Steve: Right? Like and then you start asking clarifying questions. And then once you figure out the clarifying questions, you figure out what what is important to you, what's stressful to you, what do you want, what makes you happy, and so on. It's like, oh, if that's the case, then this is the obvious Right. Answer.
Like, for him, taking money out and putting cash in the bank, that is better. But for someone else, it's better to have as little debt as possible. Exactly. Everyone has different stressors. Right?
I have a nearly infinite risk tolerance. Right? Let's max it all out. But for some other people, that would be incredibly stressful.
David: Yes. Or if you're married to someone who's not on the risk tolerance scale, like, they're to a 100 and to the max, it's like you have to take that into consideration as well. Like, this house that I bought personally, I did not run through the same filter that I would if I'm going to buy an investment property. Like, is this gonna make my daughter and wife happy? Are they gonna like it?
Is it is it going to is it going to hurt us financially? No. So it checks all those boxes. Great. It might not be like, okay.
I got got this smoking hot deal, but it checks the boxes that I want to for what that house is supposed to fulfill versus, like, okay. If you have that house like that guy, well, do you want the cash or do you want this? But being able to clarify, that's the real key.
Steve: Yeah. This is this is check the box for the wife and the kids. Okay. That's more important than IRR.
David: Right. Exactly.
Steve: Return on equity. Yep. Right. Did I win? Did I did I did I get the homeowner to come down to my price Right.
My terms? Right. Exactly. Different, was it, rubic? What's the word I'm looking for?
But it's different metric. Yeah. Yeah. Right? Okay.
So then looking, at things that you're seeing in common right now. Right? Because you're saying that you got a lot of guys that have been playing defense, pretty well. Yeah. So what are those guys what do they what do they have in common right now that you found that now they are ready to pounce in this evolving market?
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David: So besides that, they have been playing defense and they have cash Mhmm. Stacked. That gives them a lot of peace of mind having the options to do something with their cash. So that's obviously a big one is we have to have the reserves in place where if you have that, it's almost like you can taste that financial freedom. So where okay.
I really do have the freedom to make the decision that I want to at this time period in here. The other thing too is a lot of them, we take them down the road. If you know your finances, one of the next things you should do is get the right people and the right team in place to help you make sure you can handle these things or the things that you're not good at. Like, in this marketplace right now, if you're not good at going out there and actually selling, do you have someone in your corner? Do you have a steeper?
Do you have someone either training your team or training yourself to help you, or do you have someone that's their strong suit? Some of the operators we work with are more on the operation side, and they can, like, here, I'll let's put the things in order, and some of them are more on the sales side. Lots of people on the sales side. So it's like, if they're gonna if we have to temper that, you know, between the two Mhmm. It's like, do you have the right people?
Do you have the right process systems, the operations, a lot of stuff that Gary Harper does? You know? Like, do you have those right people in the right seat right now? Because we also have to make sure that your overhead doesn't balloon during this time period as well because it's very easy to go from a healthy margin, you know, or a healthy percentage of, like, payroll 40% to the fifty, sixty, 70, like, where it's getting very unhealthy. So they're also keeping their margins in the profit percentages at the right percentages as well too.
So looking at that.
Steve: So talking about having the right team in place
David: Yeah.
Steve: To effectively run profit first for real estate, who do you have to have on your team?
David: Honestly, my answer if I wanted to sell a lot more would be like, oh, you need all these people. You need the CFO, and you need the bookkeeper, the CPA, and I could sell you all these services. But, no. Honestly, if you just have yourself and a very good bookkeeper, if you aren't money oriented or you don't love the financial side or, like, you're, you know, spreadsheets you're allergic to spreadsheets. Like, if you're one of those people, then I totally understand that I would have at least a good bookkeeper in your corner to make sure that it can be run consistently Mhmm.
That you have something in place. Now if you need accountability and more discipline, that's where a part time CFO would come in place, more of a financial leader to put those, you know, key people and processes and systems in place where a bookkeeper is just going to take what you've put in place Mhmm. And just help you run it, but not improve it or optimize it. They'll just run whatever you give to them. Mhmm.
But that's the bare bones, I would say, especially if you're number phobic or something like then making sure you have someone on your team. If it's a good bookkeeper, they understand profit first. If they don't understand profit first, run. Or if they don't like it, like, this is something that's supposed to help you, you know, as the owner. So that's the bare bones, honestly.
Steve: One thing that kills me is the columns that are opposed to Profit First.
David: Yes. I hear that. I just heard that just last week too again. I'm like, what the heck?
Steve: I don't get it. Doesn't make sense to me.
David: Well, they see it as more work for them. Mhmm. But it's like, this is for the owner and for them to feel good and for exactly. This is you understand that this will help them and help them ultimately have better conversations with you too
Steve: Right.
David: Like, as their accountant. So I just yeah.
Steve: That's a very, very, very fortunate. Yes. And so, really, then you're talking about the the team doesn't need to be really complicated. And then you say number phobic. I would disagree with it's not number phobic.
David: Yeah.
Steve: It's really detail phobic.
David: Detail phobic. There you go.
Steve: Right. Because they like the numbers.
David: Yeah. They
Steve: like it when the bank account is growing. Right? They enjoy that part.
David: Yeah.
Steve: They enjoy going in there and seeing multiple commas. Yes. Right? They love that part. So they love the number part.
It's all the little things that have to
David: have to Categorization and reconciliation and QuickBooks online, like, those types of words to, like, to actually get the the full picture.
Steve: Exactly.
David: Being able to also trace back to the point of origin of what really is at fault here. Mhmm. Because if you can do that from beginning to end, like, if you got a good CRM that's tracking your leads, like, from when you first touch them
Steve: Mhmm. And
David: then you've got a good financial software, which is more like your money CRM, then you can track that dollar literally from day one till you actually close it, then you can look at the details to be like one of the best things I heard from a mentor, a long time ago was, like, don't just analyze when you fail. You know? And, like, everyone analyzes what went wrong and how can we do better. But look at your success patterns too. Like, what has made you successful?
Is there a certain, like, clientele or, like, if you're a flipper or wholesaler, like, do you lean into what you're good at? Mhmm. And how do you keep being good at it? And how do you keep getting those deals? And is there something along that detail line that you're doing that someone else isn't or that's proprietary to you or, like, that is specific to your process and looking for those patterns inside of it as well.
But if you're detail if you're detail phobic, then you can't always find Yeah. The right question to ask.
Steve: Well, because that's how detail phobic because, like, even, you know, I remember years and years and years ago, Kristin Stampini. I don't know. Have you met her? She worked at Sharper as well.
David: Maybe.
Steve: But, she was my coach before I became
David: What's her name?
Steve: Kristin Stampini.
David: Yes. Yeah.
Steve: Yeah. So before I was
David: I just saw her a few weeks ago.
Steve: Yeah. So before I got in wholesale, I was really, you know, heavy in the realtor side. Yeah. And, man, she used to kick my butt all the time. It's just like, why don't you know your KPIs?
Why don't you know your KPIs? Right? It's like, here. Here's a book, Traction. You need to read this book.
And, again, this is, like, 2015, 2014. Yeah. So I read it or really listened to it. I was like, man, that's no. I think I read it.
It's like, man, that's a pretty good book. Did absolutely nothing with it. Yeah. Right? I mean A heavy book.
Yeah. I got that book. You got the four disciplines of execution. You got the advantage. Yeah.
You got all these books that all say the same thing, KPIs.
David: Yeah.
Steve: I was like, those are great
David: in theory. Right.
Steve: Right? But as business owner, most business owners don't take the time to actually compile the KPI, which they shouldn't, but they probably should start at at the very beginning. Yeah. But they shouldn't, like, be doing it on a day to day basis. And I think it's the same, what's Phobia is not the right word, but, like,
David: the resistance too. The resistance. Yeah.
Steve: Right? Yep. It's that well, you know, to take take the time to go in the CRM and, like, actually download the metrics and don't don't do all those other things. Right? Like, if you imagine, like, going to, like, analyze all your PPC leads.
Right? And you went through Right. Goes, like, how many leads did we get? How many leads did we talk to? Like, for an actual business owner to do that, it wouldn't do it.
Well, it's the same thing with bookkeeping. It's compiling data that sucks. We don't mind looking at data. We don't mind someone saying like, hey. The trends are looking like this.
How do we fix it? We'll be all over that.
David: Right.
Steve: Can't wait to fix problems.
David: Yeah.
Steve: But But to actually compile the data to get the problems,
David: That's a different story.
Steve: It's a different story.
David: Which, also, if you present it to them, though, in, like okay. A $10 per hour task might be doing the data entry in QuickBooks, but it's, like, a thousand dollar per hour task to analyze that data. So we have to get something in line up here. Right. So if you're a one man show, it might be worth compiling some data just so you can analyze something so that way you can be doing a thousand dollar per hour task.
Like, obviously, you still need to make offers. You still need to go out there and do the revenue, the front facing revenues type stuff. But then if you can also turn the defense into offense by analyzing it and doing a higher higher dollar per hour task, it makes this this the $10, the little stuff, like, not as, like, nitpicky or resistant if you can put the end goal is I can analyze data, and that's a much higher dollar per hour task.
Steve: Right. Now, I wanna get your opinion on this. Okay? So I personally hate QuickBooks and Intuit. Hate them with a passion.
K. Not the bookkeeping component. That part, I'm just allergic. No. Hate the company.
Yeah. Right? Because they're always adding changes that don't help me and refuse to make the changes that wouldn't That would help you. Right? Absolutely hate them.
So I'm excited. Again, this is probably evil. Right? I'm excited for when they go out of business when AI you can just upload bank statements. Yeah.
And AI just does all that work, and we could just get rid of QuickBooks. What is your perspective on that?
David: Okay. First of all, I am also in the same bucket of I do hate QuickBooks. I hate it for the same reasons, though. Like, I know I own a fractional CFO company, but, like, it's all the CFOs and the bookkeepers, and they all love that stuff. Like me, I love being able to tell you what it provides for you and, like, the actual return that it gets you.
But I haven't I only go into our QuickBooks account one you know, like, every other week when we do our financial means, we have the financial level 10, you know, from EOS and all that stuff. So that way, we go into that. But I I am a 100% on board with, let's get everything that can be done without a human component to it Mhmm. To be uploaded in AI. Like, I'm I I don't mind that because then we get to the fun stuff.
Like, what we do as fractional CFOs and being able to analyze that stuff
Steve: and
David: be able to strategize and be able to say, what does this really get us to? And, like, what do these numbers mean? Plus, if you're at that level and you're uploading through AI and you still need to categorize it, you're still gonna need someone there to do that part, like, to make sure especially the problem.
Steve: It. Yeah. Exactly. Safe. Right?
David: But that's where
Steve: But the bookkeeper
David: I don't care. Yeah. It's we still I think they'll still need someone even on the account side to, like, help them categorize and that type of stuff until unless they can just unless the real estate investing world or someone in the AI world makes it super easy for them to remember every time that if a certain property is attached to this expense or income, like, to attach that there, that's where it's like, is the real estate world always gonna be behind, like, it feels like when you still go to a closing or some of these other things where it feels like it's behind some of these other industries. I'm off industries. I'm right.
Well, now that I've been out there and I've seen other thing, I'm like, wow. They're like, they're able to just do this all virtually. And, like, some of the stuff where they are just all online or some using blockchain stuff, this type of stuff where, you know, some real estate offices, it's still oh, I I did it the other day. I signed 70 pieces of paper. I'm like, really?
We haven't gotten better and, like, more efficient than me sitting down and doing this, like, for 70 times over and over and over again.
Steve: You're fighting a very large industry
David: in that. Exactly. But that's where I think for the bookkeeping and everything, until they go out of business or until there's someone that get like, the AI that is able to put it up, it's still gonna be there for a while, but I'm I'm with you. Like, my opinion is I
Steve: mean, the fact that I still have to go through and, like, Chevron. Right? And it's like, okay. It's under five dollars. It's probably not gas.
Right. Right?
David: Yeah.
Steve: It's probably, like, some sort of food item.
David: Like a drink or yeah. Whatever.
Steve: Right? If it's over $20, okay, it's probably gas.
David: Yeah.
Steve: Right? The fact that I still have to go in there and, like, it doesn't know Right. It can't take a stab. Right? Or, like, a Chevron and I don't use the Tesla.
I don't do this anymore. Right? But I remember back in the day, it's like, everything Chevron in Phoenix or Arizona is probably gas. Yeah. But Chevron in Florida should probably be travel.
David: Right. Exactly. Depending on where you live. Like, it's almost like, can you preprogram AI with some of this stuff in there? And, honestly, some of these some of these programs, you can.
Like, QuickBooks has some of those rule functions Mhmm. That you could go in there, but But it's not doesn't have, like okay. Well, if it's under the $5 to put this and that, like, that would make it a lot easier. The thing that I'm gonna wonder is, like, can AI become smart enough to do an owner finance transaction where, like, one piece of income comes in and it goes to five different and, like, some of it goes on the income statement, some
Steve: of it
David: goes on the balance sheet, and it's like Yeah. If it could go there, then yes. Then QuickBooks will be out.
Steve: Pretty far away from that.
David: But I
Steve: don't think. I don't know. I don't know many QuickBooks for that. Who knows? Who knows?
Right. Right. But like I said, you know, Intuit, QuickBooks, if you guys are listening, I hate you guys. Yeah. There's definitely it's not a love hate relationship.
We just we just hate them.
David: We just hate it. Yeah. That's great.
Steve: Okay. So but going back to, like, trends you're seeing Yeah. Or the successful ones, like, you got again, your clients. The ones that that have been able to build up the defenses, been able to build up the, the cash reserves. Yeah.
What habits are they demonstrating consistently where they're today able to play go on offense because they've been playing defense so well?
David: It is their habits. It's the habits of asking the questions before they make the move. They have the structure in place like what we're talking about with traction or EOS where it is a system to make decisions versus the thing that makes a solopreneur so successful is they can pivot on a dime, make decisions on the fly. Like, this isn't working. Let's move.
But as you grow, those same things become the chaos dragon for you. Like, it just comes in and rampages through the company. So you need a set of controls in place. Otherwise, you just upend everything. Now I'm not saying the decisions you make in those, like, meetings can't upend everything and you say, hey.
This isn't working. We have to go to this other thing, but you have a system for it versus okay. This was great. I was just at an event, and the guy that was up there speaking, he's like, I my team used to call the week after this mastermind the worst week of the entire year because he would come back and have 15 different ideas and want to implement everything. Mhmm.
So that's a very common case of solopreneur mentality in a business owner environment where now you have people and you have systems and you have things in place. So they're not doing that. They're not making the rash things just by themselves. They're also getting their team input and making sure the buy in's there. Because if you've built a good culture and you have good team members, one of the most expensive items is turnover.
Whether it's a property that you're buying and holding or whether it's, you know, a tenor or whether it's an actual team member on your team, turnover is going to kill you. So if you come back and just pulling the rug out from them each and every time, they're not doing those types of things. It's there's another great book, No Man's Land, that's out there that's incredible as well too. And it's like you have to even the face of the storm still provide the motivation, but you can't be yanking the rug out from them, you know, like, during the down times or during the things in the economy. You have to keep that face that saying, here's what we're going to do, but we're gonna do it together, and we're gonna make sure that we're all rolling the same direction.
So I would say they have a good they have good like you said, it it will literally is their habits Mhmm. That they have now that are more business owner oriented versus the solopreneur. My hair's on fire. Like, we all do I need to pull the plug. You know?
Like, here we go again.
Steve: I mean, I remember going to multiple events and coming back. Like, hey. We're gonna do all these things.
David: We'll do
Steve: the a, b, c, d, and e. Right? Looking back, all those ones where I got all massive resistance, I ended up being right most of the times. The problem was I failed to correctly allocate resources.
David: Yep.
Steve: Right? So, like, when we went and, like, hey, we're gonna do this now. So for example, I remember coming back from a Craig Proctor conference. Alright. We're using commissioning now.
Right? It's gonna be $1,500 a month, but we're not gonna get a whole bunch of buyer leads. Right? And we did all that. And there's a lot of resistance to it, but it was the right call Yeah.
At the time. Problem I have as a business owner is that when I say let's let's do this, and I bring everyone with me with with all the other things that were working
David: Stopped working.
Steve: Stopped working. Yeah. Right? And so I gave my company, all my team, a bunch of whiplash. It was the right decision condition upon condition upon having the right resources.
Yeah. I was trying to do major moves with an insufficient, and inadequately sized organization.
David: Yeah. And that will hurt you whether it's a big you know, it's a upmarket, downmarket, whatever, because that's what we went through in the early real estate days, that that when I was first getting into in 02/1314, like, the market was down, but it was on its way back up in some areas. And, like, you could get, you know, dirt cheap deals everywhere. But we grew so much. We were so top heavy that we would fix a problem, but then we would just allocate all the re the all the resources for every department was doing all the different exit strategies, and we were doing, like, seven major exit strategies.
So we were all spread too thin doing lots of deals, and we had to just keep hiring to keep filling in the gaps. So our resource allocation so that's a big one. As you grow, it's not just because you're gonna grow yourself out of business because you're doing more deals. It's because of that resource allocation, but also being able to take these ideas that you get and say, what do I also need to make sure keeps working Right. If I'm going to add on to it?
Now a lot of business owners love to add on and say, here's what we're going to do, but they forget to say, what am I going to also take away if I do this? Mhmm. You know, like, you also have to have the give and take.
Steve: Yeah. That's what we have in our Relationship. Sharper for our quarterly strategy meetings.
David: Highly recommend that.
Steve: And every time right? Shout out to Gary and Susan Harper. Every time we do it, it's like, hey. Someone wanna add their and their answer's great. What are you taking off?
David: Nice.
Steve: Alright. Here's what I wanna do. Great. What are we stopping? Yep.
And it's a question going back to Keith Cunningham. We gotta figure out, like, what's the downside? Like, what am I not what am I not seeing? What am I not thinking about? What am I not concerned about?
But, you know, again, just the the financial habits. I think that's one of the keys here. Right? Because we're gonna talk about, like, you know, going from 7 figure years, 7 figure months. What are the financial habits that your clients are are are practicing on a regular basis on regular rhythms Yeah.
To stack cash.
David: Yeah. I mean, our big one is the system of Profit First. It's literally we fall to the level of our systems. Right? And a lot of people just don't have a good system for their cash.
That's why we recommend Profit First. I mean, I've obviously bit that bullet hard. You know, I have this book out here. It's almost been four years now, I think, that it's been out. Mhmm.
So that's where making sure you have a system. When a dollar comes in, you direct the dollar. So you tell it like, hey. We need to make sure that we're profitable, we are healthy, and we're still building the business after we're profitable and healthy, not vice versa profit last
Steve: Mhmm.
David: Like the parody book that I'm gonna write. So it's like this is where we have to make sure we have that profit. We're stacking it. And with Profit First, it's bank accounts. It's an envelope system.
So you have a reserve vault. You have profit. We make sure that we're getting to that three to six month mark as soon as possible. Like, when they first come on board, that's one of our first goals with the client is can we stack cash to give you three to six months of reserves as fast as humanly possible? Because a lot of the stress that you're feeling now is because you just don't you don't have the commas in your bank account.
Yeah. Like, you have start to have those. You'll see it. That also when you start to see the cash stacking, that does flip the switch of, okay. Like, let me lean into this habit harder.
So So I would say having a good habit for your cash is first. That also means if you're a solopreneur, you can start that with one deal. One deal a year, one deal a month, one deal a day. Like, that's where you can start good cash habits on your own, and you don't need QuickBooks. You don't need to be this financial wizard or guru or anything, and you can start that.
That would be a big one. I would say the other thing too is they have meeting rhythms of looking at the finances, the trends, like you said. Like, going back and saying, okay. Where have we been? Where are we now?
Let's also forecast and, like Mhmm. How accurate do we think this is? And if this deal does get pushed back, what do we need to change? Or what does that mean for our cash flow? Or what does that mean for our resource allocation to make sure that if this deal does get pushed back that we don't hike, oh my gosh.
What's gonna happen here? So it's being able to meet on a regular basis to know what's gone what has happened and what we're going to change and pivot to. And it is having a good system like Profit First in place to stack the cash so you can make those pivots and changes as you need to.
Steve: What are we talking about in those regular, meeting rhythms?
David: So regular meeting rhythms, we focus on three main numbers, what you make, spend, and keep. Usually, that's the first order of business. Like, is it are you having any make issues? Like, is it a revenue issue? Do you have a slow month or slow month or slow quarter or slow half a year?
Like, we need to make sure we get revenue back. So then we look at where have you spent the money and where are your returns and looking at the KPIs. So that's a big thing because a lot of people usually have that issue. Mhmm. Or is this spend issue?
Like, where we're spending? Is it either not returning or have we bloated? Like, do we have any bloat in the business? Because a dollar saved is a dollar to your pocket. That's what a lot of people don't realize that if you make more money, that's great, but usually you're getting a percentage of what you make.
But if you, you know, if there's something you can cut, that goes right to your bottom line. So So it's like, do we have any bloat? So we're looking at that. And then keeping. Are you keeping what you want to?
Are you on track for the goals that we've set? One of our first calls we have is called the battle plan. Mhmm. Call because we wanna set a battle plan. Like, we're on the war path.
Like, we have to make sure that you build your business like, Jimmy Vreeland says, like, if war you know, you've got your war chest and your battleship out there. Like, I wanna make sure you have this in place. So what are first targets for reserves for making sure you're paying yourself? And so that's what we're reviewing as well to keep you know, are you keeping what you want to in that framework? The specific tabs, like, if we go into it, like, that you wanna go is okay.
What's the forecast? Actuals versus budget. What did we say we were going to do versus what we actually did? Did we actually hit those numbers? And if we did, did we take that cash that we said we were gonna make and put it into the actual places we said we were going to?
So it's also holding me accountable too. This is what the business owner says financial freedom is, and let's making sure the money lines up with Mhmm. What they really want.
Steve: Are they doing what they actually said they were gonna Exactly. What they said they were gonna do?
David: What they said they wanted. Because once they see it, then they can also change too. We've had this has been this is why I love this system. We've seen clients when they start to stack cash, their goals have changed. Mhmm.
They've either said, I like this a lot, and I like stacking cash. And I thought I was going to scale up right now, but I want to stack cash for a few more months and, like, not put the pedal to the metal and, like, be able to maybe have maybe go from three to six months to six to twelve months
Steve: Mhmm.
David: Of reserves and stack more and be able maybe do less deals, but be more profitable. But they didn't even have that option till they knew their numbers and had the clarity and had some cash stack to be able to take a breather. A lot of people can't even take a breather to be able to say, what do I really want to do? Mhmm. Because I don't have any option.
Like you had mentioned, the difference between Warren Buffett and the small business entrepreneur is Warren Buffett can sit there for about a billion years, right, and, like, not run out of money where if he just sat on it forever.
Steve: He's got a lot more options.
David: He's got a lot more options and a lot more time that he can buy Right. Versus the entrepreneur that's just living deal to deal.
Steve: Yeah. That's a great point. And then, we got, something you're giving away, a cheat sheet of sorts. Yeah. Tell let's talk about that.
David: The Profit First cheat sheet. Like, I give away my Profit First book at the same at the same link, and I think I've done that for a while. But we put together a cheat sheet. It's a one pager because I know entrepreneurs. Like, this is, like, the manual.
This is the detailed guide if you have the book. Mhmm. But if you just want an overview, like I said, you can start to implement this stuff right away to start building the habits. I'm not trying to get you to do some system so we could come in there and implement and all that. This is where I've seen people be able to have good habits with their money, and you can do it yourself.
So that's what the cheat sheet is. It's literally one, two, three. These are the first steps, how to open the what what is profit first? How do I open the accounts? Like, what do I do with the system?
Where do I go? What banks, you know, are for profit first and that type of thing? So that's what we're giving away as part of that. And, like, the targets is a big thing on that sheet as well too that we give out is depending on the size of your business, where should you be cash wise in these different accounts? Like, there's a profit account and there's, like, the OPEX and, you know, that type of thing, taxes.
So, like, percentage wise, what does a healthy company do? So you can say, how close am I to these target to give you kind of a bench line for yourself to be able to see. So that's where it is at. Do you want me to give the link of where that is?
Steve: What's the link?
David: Simplecfo.com/red,red.
Steve: Yep. And Joe Theriault was just on the show.
David: Joe Theriault was just on. Yes. I that that was the I'm like, Joe must have just spoke because we're getting some people in the door, and they're mentioning him. And sure enough, I saw him on there. He's one of the ones hopefully, it's okay to say because he he wants to say anything and check the little boxes, but he's one of the ones where from 7 figure years to 7 figure months.
Yeah. And a lot of it, he attributes to, like, when we've gotten on the phone, is being able to actually understand the numbers at a deep level and to make those resource allocations to be able to say, where have I been? Where am I now? Where do I need to go? Where where do I need to be going?
You know, in order to get to where I really want to as a business owner. And being a he honestly too has grown a lot in, like, the Keith Cunningham aspect asking better questions, the systems that he has in place, like, being able to get the buy in with the team. He has a great team Mhmm. That he has around him as well too that's really helping him, and they're all together. He just took them on a huge trip that, like, because, like, they set goals together.
So it's a combination of once you know your numbers and you're on the right track, it opens up the doors to how can I also not just for myself and, like, the profit first for me, it's also for the team? Like, how can I reward them and the people that have been on this journey? Once you do that, that unlocks a whole new level of being able to turn those a players into, like, a plus players Mhmm. That want to die on the hill for you to say, what okay. We're having a down month, and they're thinking, what can we cut?
What can we do? Like, what can we pour into? Like, what's working? Where they're on your side and they're treating it like their baby as well too.
Steve: Well, it certainly helped. On the show, he talked about how he's had a million dollars in the bank account.
David: Yes.
Steve: And he attributes a good amount of that to your support. Yeah. That probably helped.
David: That probably helped. I know, honestly, it's because of the principles and starting with simple, like, profit first stuff where years ago, that's not where he was. Like, this is not Joe. Like, okay. He was just a success overnight.
It took those disciplines and habits and stacking them. And, honestly, he attributes it to and it's not even me. He's worked with Christina, one of our top CFOs on the team. She's actually our COO
Steve: Mhmm.
David: Of Simple CFO. Like, she's incredible on the team, and she's been a great accountability partner for Joe to be able to say, are you sure you wanna make this decision? Like, you know, like, let's run this scenario. And if you go down this rabbit hole, this is what it will mean. And being able to just show on paper before he makes the decision so we can have a Keith conversation, you know, Keith Cunningham conversation.
This is the worst case scenario. Are you willing to live with this? Or if you do this, like, this mitigates some of the risk and you still have the same reward. So it's being able to have that crystal ball in your corner, but accountability partner too.
Steve: And a lot of what you talked about in the last few minutes, it sounds like a fractional CFO is a little bit of, like, involved with the marketing side and involved with the sell side. Right? You're talking about the KPIs, you know, the cash conversion cycle you're talking about. Is this dollar you're putting into this marketing channel making more dollars? Sounds like you're kinda like wearing multiple hats.
I know it says strategic CFO
David: Yeah.
Steve: Or fractional CFO. Right? Both of those. Sounds like you're pretty involved with the marketing and sales as well.
David: It's because they touch the numbers directly. We have to see like, in order to see the financials and get a picture as a fractional CFO. Like, if you're a bookkeeper, you're just entering the data. It comes in. I don't need to worry about any of that stuff.
If you're a CFO, that is you have to think of this. A business owner, if they're not a solopreneur anymore, they are more like a CEO. You need to start surrounding yourself with leaders and thinkers and not just doers. So that's what a CFO should be is if you don't have a COO or if you don't have some of those other key leaders, we have to be looking upstream because it affects the downstream numbers of, like, what hits your bank account. So that's where, for a lot of our clients, we have to build that marketing KPI sheet because they have nothing.
Some of the CRMs have it for them, and that's great. But, like, if they don't have it, we have to see what's happening upstream so we can make sure it's affecting them positively.
Steve: Yourself fighting with the marketing department and the sales direct sales directors?
David: Not a ton. No. Because, usually, it's the buying with the owner, and it's more of we want to be on your side, and we want you to be able to pour money into it and really have a good return. We just want you to make the decision from data and not your gut feeling anymore. Yeah.
Like, you can get honestly, I've seen a ton of people get to 7 figures on their gut. You know, like, just the grit, the determination, and, like, that sounds good. Let's do it. But then past seven figures, if you have a sales director and if you have a marketing, you know, like, a manager or whatever, then you have to make sure you're not just doing it from from the actual data. So it's just showing them.
This is what the data says, and this is what we're seeing. This is just we wanna make sure that we're all on the same page before you make this decision because we are not gonna make the decision for the owner. We're just going to present the this is what the numbers say. Mhmm. It's like the Knights of the Roundtable.
We all have to be giving the owner the advice, but still, the owner wears the crown. So it's like making sure they still feel empowered to make that, but now they're more empowered because they actually have numbers that don't just connect up front. Because a lot of marketing agencies or people are, like, the managers and leaders, they usually have the numbers, but not do they don't always connect it to the, you know, the QuickBooks side or, like, the actual ending dollar amount. So that's where we're just making sure not only what is your cost per and everything, but, like, what are you actually making in it? What are those returns?
And what, you know, are the different channels if you don't already have that laid out from your marketing director?
Steve: And then, or what question was I gonna ask? Oh, so we're gonna talk about, you know, how to go from 7 figure years to 7 figure months. But before we do that
David: Yeah.
Steve: A a something I've heard from a lot of entrepreneurs, and I said as well, is, like, I feel like I'm making a lot of money, but I'm not I don't know where it is. Yeah. Right. So let's talk about why that's happening, and then we'll go into the main
David: Yeah. Yeah. For sure.
Steve: Main headline for the show. So when someone comes to you, he's like, David, I know I'm making a lot of money, but I don't know where it is.
David: Yeah.
Steve: What are some telltale signs or things that are happening that are causing that specific feeling to happen?
David: Yeah. I asked them three questions. Do you have a good set of books? Mhmm. Do you have a good system for your cash?
Do you have a good way do you have a budget or forecasting tool? Like, do you have do you know your numbers? Like, do you have basic profit and loss balance sheet? If you do, can you pull them up, or can you understand what they're saying? Mhmm.
Speaker: Do Do
David: you also have a good system for cash management and knowing where your cash is going? Because that's usually one of the key things that they could have no matter what. Even if they don't have this piece over here, if they don't have the budget and all that. So those are usually the three things I'm asking to see. Do you have these things in place?
If you do, okay. Well, then we have to go a little bit deeper is because now your habits are probably not serving you. What you're doing with the money and those systems is probably not putting you in the position you want to be. You're probably the flipper that a deal comes along and you don't care about the systems you have in place. I'm just gonna jump on it no matter what.
Steve: Right. So
David: you don't have that, good friend of ours. It's like making money as a skill set, keeping it as a discipline. Mhmm. Oh, we gotta build that financial discipline muscle for them and help them and kinda be their coach, you know, a financial coach at that point. Right.
Just like a financial, you know, like a trainer, you know, like a at the gym where you're gonna get a lot better results with a with a trainer than you are just going out there. And if you have terrible form, if you don't know what you're doing, you're, you know, you're throwing the dumbbells across the the thing at Planet Fitness and they're yelling at you. You know? Just that's where I'm like, what are you doing with your finances? This is where if they have those three things, we call it the financial foundation.
You need a good set of books. You need a good cash management system, and you need a good, like, dashboard to be able to see my past numbers, my present and future numbers to make decisions from. Mhmm. That's usually what I'm asking. Do you have some just basic things in place like, upright, can you pull up a profit and loss, and do you have a cash system?
Steve: If they picked up your book, would they learn about all this?
David: They would learn about mainly the cash system. And I talk a little bit about the bookkeeping side in there, like, the number system. Another book I highly recommend for entrepreneurs, it's called Accounting for the Numberphobic, which I even referenced that in here. Mhmm. That teaches you as an entrepreneur how to the p and l and the balance sheet side, how to understand that.
If you wanna make decisions from those, you know, from those reports or whatever, like, you could pick up that book, and it's gonna translate it into business owner speak. And that's where, you know, like, if you pick up this book and I would say those two for some of the foundational pieces. Like, this will get you on the cash started, the cash management piece, and that's really where a lot of people have peace of mind once they actually know they have the cash, and they can pull up their bank account like you said. So, aptly, see the commas in the bank account.
Steve: So what's the name of your book?
David: Profit First for Real Estate Investing. So that's where it's I took Mike Michalowicz's original book, Profit First, reached out to him about a year into Simple CFO and what we're doing, and got that book written about three and a half, four years ago now.
Steve: Yeah. He's a great guy.
David: He is.
Steve: I was
David: just texting him yesterday. Yeah.
Steve: I mean, like, between that one, pumpkin plan. Yeah. Clockwork.
David: Fix this next is a huge one that I love. Have you read that one?
Steve: I haven't picked that one.
David: Oh, man. There's a whole can of worms there. The business hierarchy of needs. You're gonna love this. Sales, profit, order.
Always in that in that position. You have to have sales and revenue. A lot of people skip sales and go up to order. Like, they reinvest everything into people and systems, but they don't have any profit. They're not doing it from profit.
They're just doing it all from revenue, and that's why they don't have a bottom line and can't pay themselves. Yeah. So it's like that's the business hierarchy of needs just like Maslow's hierarchy. He does it for a business inside. Mhmm.
That book, it's an incredible book. Yeah. Honestly, for for what you're doing too, he goes into, like, if your sales are struggling, here's what to do and why you should fix that first if it's if it's a revenue issue Okay. Because that's the foundation.
Steve: Book I should be giving everybody.
David: Everybody to yeah. Exactly. Because you have to fix sales first. Yeah. Then you have to have the profit.
Profit is next because people skip that step. Mhmm. And then you're investing in the order that you're creating the chaos from all the new sales and all the, you know, the profit that you're making. And if you're stacking that cash, what do you do with it? Well, invest it into the order of the business.
Alright.
Steve: So anyone that's ever given me any objections, like, well, I gotta wait for this, wait for that. It's like, alright. Just send them that book.
David: Right. Exactly. Say, well, no. If you're hurting here, this is what you're supposed to fix next.
Steve: Mike Michalowicz says.
David: Yes. Mike Michalowicz says, you should fix your sales next. So that's what's broken.
Steve: Alright. There you go. Alright. So then going back to what we talked about the title of the show. Right?
Yeah. So, how to go from 7 figures to 7 figure months. Yeah. So
David: I would follow the Joe Terrio model. Yeah. Literally from when we first were working with him and not even having 7 figure years at that point to where starting with the cash management system, he didn't okay. I believe he's one of the ones he didn't even fully implement it at first. Mhmm.
Like, Christina had to show him on paper for a couple months. Like, if we were to do this, if we were to split out all the money, and here's what it would look like, you know, like and then slowly getting him into, okay. That makes sense. I'll help
Steve: him see the vision first.
David: Help him see the vision. But the first thing I would say is cash management. Like, you have to have the cash under control because if you are making the sales, we have to have profit and a buffer. That margin, you have to and I I love that I'm saying this. It's like you started a for profit business.
We have to think about the profit of the business and the health of it, but a lot of us put it last because we're just grinding every deal. It's the hustle. It's the grind on where hustle should be a season, not a lifestyle. Mhmm. Another thing from a a good coach and mentor, Tom Kroll.
That's where making sure, first cash management, I would say. Then from there is if you are able to then reinvest that profitability into the order of the business, the systems, the scaling, that type of thing, you're gonna love this too. Because in fix this next with sales profit order, you would reinvest into order. Well, if you reinvest more order, you have to go back down to sales Mhmm. Until it's just a cycle that keeps going over and over until until you've tapped out as a leader, basically.
Yeah. And then you can just you could focus on all the legacy and impact, which I think that's the the two next runs, you know, of his pyramid on there that he gives in that book. But number one, casual management and knowing where every dollar is going. That's also having the good systems in place like the books and the numbers and having the forecasting and having the tools. But, honestly, you start with, if a dollar comes in, do I have the discipline not to touch it or not to reinvest every dollar just to cover just to because I'm throwing money out the door and hoping that it comes back.
Yeah. So that's where I would start. Then in order to get to that's honestly the way to get to a 7 figure year where you're not just making seven figures, but you're keeping seven figures. You could do a lot of that with just the cash management piece. Mhmm.
If you wanna go to 7 figure months, you're gonna have to have more data to analyze those details. That's where you actually get to dig into. Like, is this really a sales issue? Well, then I need to hire the best. I need to hire someone that's gonna come in to fix this area right away so that way I can get my sales to increase.
Because if I increase here, I know the increase over here will allow me to hire this person over here in order to create the bigger machine. So it's being able to have dialed in numbers that will get you to from the 7 figure year of, like, knowing where your cash is going and really having a good system for the cash to being able to say, what do I need to reinvest in? What do I need to make sure that we are pouring the money into? Mhmm.
Steve: Is
David: it the people? Is it time for a process, a system? Is it time for a mastermind? And I need to surround myself with a network and need to be exposed or, like, some of these places that you can go and find private lenders and, like, some of those places out there, like, where they do cruises with private lenders, being able to look at what's the next step that I need to take. But, honestly, like, Joe, like, being able to look at any number to say, okay.
What do I need to do this month in order to hit a million? How many deals does that take? Mhmm. What does the team look like at that level? What could I do with that?
And the margin as well too. If I do a million dollar a month, does that make does that mean I make zero, or does that mean I make, you know, twenty, thirty, 40%? You know? And, like, how do we get there? Well, you're gonna have to have numbers, books, and and some type of software system like a dashboard to be able to see that.
Steve: So what I'm hearing is a few different things. First one, obviously, the things we talked about, you know, throughout the show. Yeah. Right? The the,
David: Cash flow management.
Steve: Cash flow management, cash, assistant for cash. And then, you know, there's a lot about discipline about metrics here. But what I'm hearing a lot of really is discipline and restraint. It's what I'm hearing mostly. Right?
It's that you actually have to be not curious about your numbers, which I think most people, unfortunately, are not.
David: Right.
Steve: You gotta be, like, obsessed over your numbers. Fanatical.
David: A little bit.
Steve: Yeah. You have to be fanatic. Right? You have to have that Tom Kroll enthusiasm Yes. Bam.
About your finances.
David: Yes. Indeed.
Steve: Is that more or less what you're saying here?
David: I would say that it's not even that you have to be excited about the finances because, obviously, if you're doing those types of months, it is exciting, but it's more fanatical about tracking everything and knowing what that number represents to get to where you want to go. Does that make sense? It's more about
Steve: how to I mean, just Yeah. Let's be more explicit.
David: Like, let's
Steve: just, like, dive into, like, what does that mean?
David: So that means that if if I want to hire this person in order to take over the acquisitions department because I'm still running it as the owner. Mhmm. What does that mean behind the scenes? Like, how many contracts would I need in a monthly basis, like, to be able to have enough profit to be able to also pay a sales manager Mhmm. Or someone in that seat to run the acquisitions for me or to be there in instead of me?
And if I know my close rate Mhmm. And if I know that they're not gonna close as much as me, like, knowing they're closing, and how does that affect the dollars that actually come in?
Steve: Mhmm.
David: If I'm closing at fifty, sixty, 70%, they close at 20 to 50%. Like, okay. That also means we need to bump up deals by x per you know, x amount in order to get there. So it's like for hiring, being able to look at the numbers that matter for hiring to be able to see how many deals does that translate into on the back end. You know, like, if we that's where if you have cash management and if you have percentages, it's going to be easier to get to that number if you follow the linear track that I'm trying to lay down.
Know your cash in dollars and percentages of where your cash is going. Then if you can dig into the tinier numbers like this is how many deals I need to be able to do in order to hire this person, then you can say that means that this many deals comes in, the percent that I put into the operational expense bucket to be able to pay for this manager, this is how much we need. You know? Like, before, it was only 30,000, but with them, we're gonna need $45,200, like, in order to cover their salary, you know, and to be able to keep the business going just like it is right now and to keep the margins that we have. So does that make, like, diving into a specific?
Steve: For example, I wanna hire a sales manager.
David: Yeah.
Steve: And let's say I'll pay them 60,000 base plus some sort of override Yeah. On commissions. So I'm gonna spend 60,000 here. I need to know x number of dollars coming back. Right?
So 5,000 a month. How much should I, as an owner, demand as far as return on my on dollars? I hire a guy 5,000 a month. How much more should I have the guy be bringing in? I think it's a question that you're asking, and there probably is some sort of answer behind that as well.
Correct.
David: And I would say too, if you're paying them 60 and, like if your commissions, obviously, it's gonna be more than that. But remember, if you're doing 60 and they're on your team and it's w two, it's more than 60.
Steve: Mhmm.
David: Like, it's really more like 70 or 75, like, that you're really paying them. So it's like divide that by 12, and that's how much on a monthly basis you need to be bringing in. But, honestly, they need to be bringing in anywhere from, you know, like what is it? The three to five x? Like, it's almost like a marketing channel.
Like, this person should be bringing in, you know, that three to five x because I don't like all overhead being more than 30 to 40% of the total revenue. That's where you get very out of control very quickly. You get the bloat. That's one of the things that takes the business down the quickest is if your payroll starts to get above that 40% number. So they need to be doing at least, you know, that three x at least to be, you know, on the team.
Steve: Okay.
David: That's harder for admins, though. You have to look at admins differently or bookkeepers or people like that. It's how much time do they save you, the owner, or a revenue producer that is able to now do more revenue production because you've taken something off their plate. Like, if you have a sales manager or a sale an acquisitions person, but you hire a lead manager to make sure that the leads are coming in and they're good and you're sending the the closure out on the appointment and they can go to more because you've hired that lead manager. Well, okay.
How many more deals can they do because you hired this person because it should, you know, inversely increase.
Steve: And that's where things get kinda funky.
David: Yes. That's where you need to know the back end because then you can actually analyze all of that data to be able to see, okay, if we can split this out and this is where AI would be really nice if we could get all of it just done in AI versus a bookkeeper. But if you can track your back end money like you do the leads that come into your CRM, that's where you can really track. Okay. A lead manager touched this property from this point, and then the how many closes did we get from that lead you know, from the when that lead manager touched it.
And if you have a QuickBooks type system, they have tags and stuff in there just like a CRM. So you can tag that from the very beginning when you spent the dollars. It came in from this marketing channel. This property got, you know, under contract if it's a flip or whatever it might be or you assigned it, then it could be tagged to that lead manager as well as the salesperson that close so you can track how many more deals did he do that are attached to that lead manager. So
Steve: there's an exercise. Austin McCurdy's done this a bunch of times with us.
David: Oh. Right? Yeah. He's an he's a numbers guy.
Steve: Yeah. He is. Right? Okay. So the lead came in.
What are all the different touch points
David: Yeah.
Steve: From when I when a lead came in. That's what I like to measure as a salesperson. Marketing. When a dollar went out.
David: When a dollar went out.
Steve: Yep. Right? Let's talk about the the the journey of the lead all the way through until it closes. And there are a good number of business owners that don't even know that journey. Yeah.
You're talking about a different journey. When the dollar goes out, how does a dollar flow
David: Yep.
Steve: Through your company?
David: Exactly. Right?
Steve: So we need to have clear visibility, transparency, and intentionality, what the dollar is doing as it's flowing through the organization. And for every seat it touches in a company, it needs a three to five x. When you put a dollar in a seat, it needs a three to five x. Because if it's not, then you face bloat Yep. In payroll.
And we have bloat in payroll. This is the beginning of the end if it's not fixed.
David: Exactly.
Steve: We don't have to name any names. How many businesses have you seen, like, either go under or face massive, what's the one I'm looking for, challenges Yeah. From bloated payroll.
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David: So that one is a high percentage that we see where that one gets out of hand. That's even what took us down back in the day, you know, know, like, ten years ago in that company where we had to all separate ways and go do our own thing. So to me
Steve: Which ended up being a good thing.
David: Which ended up being a great thing, for all of us. And, honestly, like, this guy is still doing well there. That's where Gary split off as well too and, like, doing his thing. So that ended up being a great thing. But the I I will say it's probably I would say between that and the bloat that can happen just in the marketing that they're not tracking, that they're not getting a good return, but they they're just throwing the money out the door without any return back or diminish returns that they weren't tracking consistently.
Those are the top two. And sick I'd say it's, like, sixty forty because it's like, if you're not watching the marketing, it's very quickly to get out of hand and to go down that rabbit hole. And I would say that's the percentage that takes the businesses down, and that's probably the biggest split between those two that hurt them. I've walked into I was just thinking about this while you asked that question. When I've gone to these masterminds, I've been to lots of real estate masterminds.
And I can count on one hand when a new member came in and they had more financial acumen than the average person, you know, like and they knew their numbers. They came in, and I'll never forget because I I can't. I it's less than five. All of them said that they their margins or, like, their bottom line percentage of from what they were bringing in was not less than 30%. All of them.
And to me, that was that pattern of, like, this is where I have to get and these were operators with, like, two, three people, some of them. Some of them had a lot more. But, like, out of those three or four people, you know, like, one of them was a solopreneur. One of them had a couple people. One of them had, like, 10 people on the team.
They knew their numbers, and none of them had less than 30%. And they weren't worried about that overhead balloon or these because they had a pulse on all those numbers and the margins for everything. And it's, you know, it's if you want another great book, the Dan Ken Dan Kennedy series, the no BS line of books, he's got one called Managing People and Profits. Mhmm. And it just gives a breakdown.
These are the numbers you should know as the owner. If you read the road less stupid, at the very back of the book, it's called the CEO scorecard. And, like, here are the top numbers you should be tracking as the CEO, and it gives, like, a little snippet there. I'll do this. If you guys go to simplecfo.com/red, I put that together as, like, another thing that we do with our clients.
Like, I could send you that one pager of just, like, here's the CEO scorecard and, like, the best things you should be tracking. Mhmm. And if you maniacally track them, it's crazy how they get better. Yeah. So that's where I would say, if you're not tracking the payroll marketing, those two things, probably it's heavier on the payroll than it is the marketing that takes people down, just because that gets out of hand.
Steve: Well, and I can say for sure, like, where I faced problems the last few years, it was the payroll. Yeah. Because I didn't wanna let people go, they were not providing a three x Yeah. ROI from their position. But I held on to it.
I was like, well, let's weather the storm together.
David: Yeah.
Steve: And, eventually, they gotta let go.
David: And we're all closer. Right? As so as these entrepreneurs, we're not out in this ivory tower sitting way up there and, like, don't have direct communication Yeah. You know, with the people that are working with us. So it's harder for that for sure.
So there's that emotional aspect. I've also come to realize the longer I've been in business that as business goes through cycles, your business is going to change. Mhmm. And that's where if you're doing good onboarding with people, you wanna make sure that they understand this is a small business. It's gonna go through change.
We're gonna onboard you for this position and everything, but just letting you know this is not a corporate position. Like, so you can do some of that legwork upfront, but, obviously, it's never a fun conversation if you have to let them go. No. But that's just part of it too. We've seen, you know, businesses go up and down.
We've had the ups and downs of, like, better years and, you know, than others and being able to see, okay. What does the team really need to look like? But we have to make those decisions from the business aspect because, ultimately, if you do go down, the whole ship goes down Mhmm. And then no one has a job, and then you're out you're out looking for another one. We have seen an uptick in that in recent days.
We've reached out to some past clients that we've worked with just to check-in on them where, you know, left on good terms. It was just time or whatever it was at their at that point. And we've reached out to I think we just did a round of, like, 15. And out of those 15, I think it was, like, seven or eight have gone back to a w two. Like, because just in the marketplace and their area and, like, they just didn't wanna keep doing the business, and some of them were just going through tough times personally.
So it's like I've seen an uptick in people going back into the workforce too that were entrepreneurs in this space.
Steve: You know, it's interesting. We do a lot of follow ups. You know, we've got our database, 28,000 people in our system. You know, if you guys are watching, sorry if you're getting spammed by us. But
David: we are a
Steve: sales and marketing company here. Territory. And the number of people are, like, you know, opting out because they're no longer in the business blows my mind.
David: Right.
Steve: Yeah. A lot a lot of people, they're no longer in the business, which, you know, if you guys are watching and listening right now, you guys should be much better positioned.
David: Right. Exactly. Better position. It's really weeding out, like, do you really want to do this? Do you want to do what it takes to do it in a market that's not going to cover your mistakes?
Yeah. That's really the decision you have to make.
Steve: And then you you said something interesting. Good. Diminished diminished returns.
David: Yes.
Steve: So not only are you getting an ROI, are you getting diminishing returns? Yeah. I don't hear a lot of people talk about that. What does that mean?
David: That means that you've been pouring into this marketing channel, and it's been getting let's just say let's go this this one was going gangbusters and getting 10 x. But you keep pouring money into it, and the more money you pour into it, you do not get more than 10 x. Mhmm. If anything, the more money you pour into it now, you're gonna see 98, seven, five Got it. Four, three just because you tapped out at a certain dollar amount that you're able to, on a monthly basis, get the max return for the dollar that you were spending.
Steve: Yeah. So if
David: you just keep throwing money at it, it's not that your percentage goes up. It's that it actually goes down because you're throwing more money, but not necessarily getting more leads in the door.
Steve: Yeah. So, like, a simple concept is like, hey. We're spending $10 a month on PPC, paying a five x return. Let's double it.
David: Right. Right. We should get more or or even if we got a five x return on that, that'd be great. But you see it now go to a two, three x, or one x.
Steve: But as an extreme example, right, for a thought experiment, okay, 10,000 a month, we're getting, you know, a five x return. But we spent a million dollars in PPC.
David: Yeah. We should just go to the moon.
Steve: You're not getting a five x return.
David: Exactly.
Steve: You're spending a million dollars a month on PPC in the Phoenix market. Right. Right. So just simple thought experiment to kinda see diminishing return.
David: That would be a great experiment, though, just to see if you did get it because if you blew past some of the, like, the ceilings that people run into at certain levels, but I don't wanna run that experiment. I don't wanna run that experiment. Yeah. Alright.
Steve: I've done a lot of experiments there. I got a crazy
David: Warren Buffett, I hear, can because he's hitting on a lot of cash. So
Steve: He could do probably a trillion. And so another thing I heard you talk about we're talking about the trends. We're we're, like, 7 figure years, 7 figure months. And eventually, we're gonna have a follow-up series of 7 figure weeks.
David: Right? And 7 figure days?
Steve: A concept of, like, hey. Should we spend this dollar or not? Yeah. Which is a question that's not often asked. We have a lot of guys in our industry, myself included, who wanna just grow and scale and build.
And it's it's harder now to, like, say, hey. Should we spend this dollar or not? Yeah. That question is often asked because the things that we hear, Grant Cardone has this rant. Right?
It was like, hey. Every dollar is in a bank account. The rats are eating at it.
David: Yeah.
Steve: Right? Inflation is gonna kill you. You can't have money in the bank. Money's always gotta work for you. We hear this saying a lot.
But when you were kinda talking about some of these people having success, they're like, well, should we spend a dollar, or should we not spend this dollar? So you wanna expand upon that point?
David: I mean, if we're gonna use Grant Cardone as an example, I mean, he's a sales and marketing to the max guy. So he's wanting to put your money out on the street into his stuff. So, like, I always look at that with a grain of salt. I like the
Steve: Wait. Are you saying
David: an agenda? Right? Like, go go figure. Right? So it's that's where you have to come back to let's come back to a different frame of reference here.
A lot of people think that they're in the real estate. If you're listening to this podcast, you might think you're playing the real estate game, but you're not. K? You're playing the game of money. A lot of people just haven't been taught how to play the game of money.
Not only that, they're not playing their own game. They're playing someone else's. Like, they think they should be doing x amount of deals or Grant Cardone says, the money in your bank is the rats are eating at him. Like, we are an idiot. You know?
And, like, go invest in everything. But what do you what is it for you that will give you peace of mind? I go back to that guy where I asked him, would a $150,000 in your bank account give you more peace of mind and sleep better at night or having the equity in the property and being able to do some of the other things, you know, owning that asset. And I'm like, that's what it comes down to is, are you playing your own game? Do you know how to play the game of money?
Do you know how to win it? Do you have good habits with the money? But then are you playing your own? Like, so that way someone good doesn't come in and they say, well, you should be doing this. What do you mean I should be?
Do you really know what my goals are and what I want for this business, or is it just like you think this now? I will say there is something to be said of pushing you to the level that you should that that you should be at. Like, if you can grow in scale and you're only staying here, but it's and it's out of fear and not a conscientious decision to say no. This is the period of life. Maybe you've got young kids at home.
You don't wanna be rocking the boat as much depending on your current situation. Well, if you're a little bit maybe you're single or you don't have the same types of situations or you have, you know, greater risk factor or your spouse has a greater, you know, like, risk tolerance as well too, well, well, then you need someone to come and kick you in the pants maybe to be able to put that money on the street and actually grow. But a lot of people, that's not their issue. A lot of people
Steve: If you're watching this podcast, it's probably not your issue.
David: It's probably not your issue if you're if you're watching the podcast. So the other side of that coin is, do you have the money right now in your bank account that if something terrible were to happen, like, you got you got your your you know, your leg is chewed off by a, rottweiler or whatever it might be, like and you're laid up. The money that you have now, could it sustain you for the next month, the next six months? Like, what kind of peace of mind do you have from the bank account that would affect your family, that would affect you, that would affect the business and the people if you have a team. You have to make sure that you're making the decisions from your situation and not because especially since we use the Grant Cardone example, not some big guru out there like that who definitely has an agenda.
His agenda has to line up with yours for you to be able to then go down that rabbit hole and say, yes. I want to invest in Grant Cardone stuff, and I wanna invest in his syndications and all the stuff he's doing or his his sales program, which obviously you need to be using Steve. So that's where it's like making sure that you have the business that you like and not someone else's that you're trying to build.
Steve: So I'm hearing again is intentionality. Yes. Put the money to work. Don't put the money to work. As long as you have a plan and you're executing that plan
David: Exactly.
Steve: You're good.
David: And it's your plan. Yeah. It's your plan that you've thought about going back to the Keith Cunningham book, like, asking yourself those questions. Mhmm. Yourself the questions of what's the upside, what's the downside, can I live with the downside, and is this really what I want?
Mhmm. Because that's usually the number one question. That's the hardest question to answer as a human being. Mhmm. What do you want?
Like, really, what do you want? And being able to say, okay. Well, if you don't if you can't just give me an answer like that, I'm gonna have to dig deeper. And, like, okay. Tell me about your current situation.
Tell me about your family. Tell me about what's important to you. Who who does the money affect in your life? You know? So it's like going down that road and really being able to be a good question asker.
I'm at I'm reading another one good. Like, the question the question is the answer or something. It's a really good one, that I just have downloaded it, and someone else recommended to the school that we go to. So that we sent our daughter to. So it's really about asking the the real questions and being intentional, like you said.
Steve: So almost like don't make any major financial decisions until you know what you really want, until you've taken the time to actually sat down and think
David: Right. What you really want. About what you really want. And does this decision that you make serve you and and ultimately put you in a better position? And that does mean taking risk.
I'm not telling you you shouldn't take risk and that you just should sit on cash all the time. I'm just telling you, take one extra step that we don't usually do and just think about it first and ask yourself. It's better questions. That's why we keep circling back to The Road Less Stupid. It's literally, like, 40 chapters of asking hard questions at the end of each chapter versus him just telling you what to do, which is what I love about that book.
Steve: Yeah. It's been over a year. I should go through it again.
David: Yes. I I have it on my desk right here. And, literally, if I have a call or whatever, I usually am picking that up. What do I need right now to be asking myself?
Steve: Yeah. It's good because it's got, like, kinda like choose your own adventure.
David: It is.
Steve: Where am I stuck?
David: Exactly. Here are
Steve: the questions to ask while
David: It is not linear. It's more just what am I facing right now, and where what question do I need to be asking myself?
Steve: Yeah. So speaking of questions, so clearly, you're very passionate about finances. Right? Yeah. I would
David: say so. On the spectrum.
Steve: Why? Why is your why are you so passionate about what you do? Because there's so many options out there. Like, we're we're in CG together. We're in family mastermind together.
We listen to different podcasts. We read all the different books. We have lots of options. Why finances?
David: When I first got into this, it was from that company. We were doing lots of deals. We're doing 25 deals a month, but spending 26 worth out the door. Like and then going to big masterminds as well and hearing that from the other people. And, like, I heard it in over and over again.
I'm like, this is epidemic. And then that forced us to move away from that area and, like, upend everything, move to a different part of the country. Thankfully, I had personal stuff to be able to fall back on and worked with another investor who was only doing one deal a month in the same exact situation. Like, money's coming in. Where's it all going?
I don't understand. I can't pay myself. It's like, it doesn't matter if you're doing 25 deals a month, one deal a month, one deal a quarter. Like, this is what's coming up over and over again. So I saw it was more from a need basis at the beginning.
Then when I once Gary Harper was the one to tell me to read Profit First when I started Simple CFO. So I read that book on his advice, and then I was like, this is it. I could be passionate about this.
Steve: Simple CFO first? I thought the other way around.
David: So say that again?
Steve: I thought you would have read Profit First and then started Simple CFO.
David: Well, no. I started Simple CFO first, which is crazy, and I only had Rich, my first guy that I worked with. He was my first client. He's he's the one that took a chance on me and said, you should start this, and I'll be your first client. He was the one in Richmond, Virginia that just put me on a different life path.
But one of the things he said too once because all I did with him was I gave him the clarity to know what was coming in, what was going out, and really what could you take home. Mhmm. And he said that was life changing. That's what was Simple CFO was born from. Mhmm.
And while talking to Gary and saying, hey. I'm starting this. I've done this with this one guy. He's like, you should read Profit First. So simple CFO came first and then Profit First.
But then every client since the first one, we've implemented Profit First in place. And I'm so passionate because now I've seen the other side where if people actually get this and they actually it becomes a habit and a discipline to be able to stack cash and to be able to know where the money's going and be intentional. And if they are like Joe where they're fanatical with their numbers, you can go from 7 figure years to 7 figure months. Mhmm. And that is fun.
To me, what we touch is true financial freedom. Because even if you get more deals in the door and you're really good at getting deals in the door, but you don't have a system to catch it, you are always going to be on that rat race like in the casual one zero one game.
Steve: Mhmm.
David: Just trying to land on the little green spaces, and you're never building a bridge to the fun track or financial freedom. That's why I'm so passionate about it is because now I've seen people go from going out of business to literally stacking the cash, being able to weather the cycles. Honestly, too, I love it even when we don't work with people, and they come up to me and said, I've just implemented one bank account from the system, and now I have six months of reserves, And I've never had reserves in my business before. I've never had this peace of mind. Like, to me, that is a huge payoff to say, just with the concept that I was able to get out there, it made a difference in their life, and they're tasting what we're all trying to go after, and it's that financial freedom.
So that's why I'm passionate because I touch the keep side and, like, I wanna help you keep more of it.
Steve: Yeah. Were you able to go back and help Wayne?
David: That is so funny. No. I've talked to him over the years, but he's never been a client. We He
Steve: set you on this journey.
David: He did. Gary was a big advocate as well too. He was actually
Steve: I mean, because you got to witness it firsthand. You were in the meetings.
David: Right. I was in the meetings. And, Wayne, I love him to death, but I I don't know if I would have him as a client. There's just trauma from that, from that experience. But, honestly, what he did, though, and what he's doing now is good for him because now he's got a smaller team.
He's able to do what he needs to do. I could I do I wish I could help him and get on that and get all this implemented? Of course. But, no, I have not.
Steve: Yeah. And then pivoting. Yeah. Last question here. Selfish question.
Yeah. So, you saw my daughter over there. Right?
David: Yeah.
Steve: First day
David: of work. Like, this is her first day of work?
Steve: It's her first day of work.
David: Wow. Congratulations to her. Yeah. That's awesome.
Steve: She just turned 14.
David: 14? So now the child labor laws are out. I'm just Yeah.
Steve: Whatever. Right.
David: What are those?
Steve: Rules are for other people. Exactly. This is
David: a small business payment.
Steve: So one of the things we're talking about
David: Yeah.
Steve: Is budgeting as a family. So I got fourteen, twelve, and eight. Yeah. Right? So I'm looking at a few different budgeting options.
Do you have any recommendations for families and apps and whatever for budgeting as a family?
David: You need a budget is something that a lot of people use, the YNAB system. That's
Steve: what we're leaning on or leaning towards.
David: That one seems to be the one that anyone who's implemented profit first in their business, they use multiple people of our clients also use YNAB, the you need a budget system because it parallels a lot of that and can't you can't fit, like, a profit first type thing into it Mhmm. And the percentages and all that. So that's probably the one I lean towards the most, for the budgeting. For my wife and myself, we use, like, a profit first type setup, like, for our personal finances just on a Google Sheet, you know, that we do, and we have a monthly meeting. Like, okay.
What's the next month's budget? What are the different allocation percentages? Boom. Let's run. So we try to make it easy as possible, and we just know the percentages and the amounts that we need in the different buckets.
Steve: Yeah. So, yeah, we started to do that. We're we're set up for checking or savings account because, she doesn't have a say in it. Right? Yeah.
We're creating the accounts.
David: Yeah.
Steve: But, you know, we got we're paying her, and then, 90% goes in a checking account, 10% goes in a savings account, which she can't touch.
David: Good.
Steve: And then out of the checking account, she's gonna have to choose which charity she wants to donate 10% to for a single month.
David: That's awesome. So we're
Steve: starting that habit.
David: It's good to start it now and early Yeah. Because a lot of people think, oh, I'll do that when I have money. Yeah. But that's, like, the same thing of, like, I'll pay myself later in the business when I have money, and then that day never comes either. So Yeah.
Start where you are.
Steve: You're building that discipline now.
David: Good. I love that.
Steve: So, someone wants to find out more Yeah. About what you do, wants to get a hold of you, wants to work with you. How can they best do that?
David: Yeah. Simplecfo.com/red. You get that downloaded on the second page as a book you know, if you wanna book a call with our team, it's right there. You'd also get all that information. I will send you as if you come from that link specifically, I will send you the CEO scorecard, which I really haven't given out to anyone at this point.
Steve: Yeah. Perfect. Awesome. Thank you very much. What are some last thoughts you want to leave all the listeners with?
David: Make sure you have a good financial foundation. Make sure you have if you don't have a good bookkeeping system process person, like, get that $10, $20 per hour task off your plate if you're doing it. Get a cash flow management system in place like Profit First. You and people say, well, I've started it or I've adapted it. There's no wrong way to do Profit First other than you don't set it up and you don't run it.
Do it with one bank account and 11%. Like, just start somewhere. That would be another big thing. And then make sure that profit is a habit, not just an event. Make sure it's not I'm gonna pay myself one day.
Even if you're in a w two or even if you're like, hey. I don't know if I can pay myself. This is where you need to start as low as 1% or something just to make sure that for every dollar that comes in, you're intentional with it, but you're also getting into good habits. What Steve just said with his daughter is perfect for the point I'm trying to get across. Even when you don't feel like you have enough, you have to start the habits where you are.
So start the habit where you can and where you are, and don't worry about am I doing this right? Just start it.
Steve: Yeah. Perfect. Thank you very much.
David: Thanks, Steve. Pleasure. As always, thanks for having me.
Steve: Thank you for watching. We'll see you guys next time.
