Nobody taught you the game you're actually playing

Thank you for having me, Michaelus. It's great to be here.

well, I was in college, but not for the thing that I'm doing today. So I was in college and someone gave me the book Rich Dad, Poor Dad. So that really changed my mindset. so that's was one big domino. I was going to school for secondary education, but then I wanted to get into real estate right after that. So I linked up with a real estate company that is a residential company, kind of like you see on HG TV. They were fixing and flipping houses, doing different types of deals in the residential space and that market. And I got to see that company grow. I started there when they were doing about five deals a month, 60 deals a year, to where we grew it to about a 300 deal year operation, like almost 25, 30 deals a month. And so that was really cool seeing it kind of grow from the ground up. But I sat in lots of seats there. So I got to see a small business from lots of different seats where I wasn't the owner But I got to see the workings of the systems and processes and all the different roles. One of my last seats I sat in, though, was the finance seat. Even though I didn't have a finance background, I was kind of like the utility man, like go in there, fix it, get a process in place, move on to the next, you know, role. So the last seat was the finance seat. And I realized that we were doing like 25 deals a month, but spending 26 worth of deals out the door. So it's like, why are we doing all these deals if there's no money at the end of the day? And That was really eye-opening to me. So then I'm also going at the same time with that real estate company to other real estate masterminds and meetups. And no one says it from stage that they're in the same position as us, but then I get them one on one, you know, like b at the bar or, you know, or like wherever later at dinner. And then they open up. And then they're telling me, like, yeah, we're doing deals and we don't know where our money's going. So that really opened my eyes to be like, okay, I think something's Something's wrong here. Like I I don't think it's wrong with us. There's just something wrong in general, you know, that needs to help. And we all need help as these owners. So that's what like really opened my eyes, says people need help from just a basic financial perspective in as entrepreneurs. And especially my niche is the real estate investing world. So I wish I could tell you, Michaelus, that I went back and like, I fixed that first company, it was amazing. No. I didn't learn a lot of the skills that I have now until I worked with another guy that was doing one deal a month, but he was in the same boat as the 25 deal a month group. And then I knew. I'm like, okay, so it doesn't matter that you are a big operator and you're doing lots of deals, making millions of dollars, or if you're just making six figures and you're just getting started or you're getting up and running, if you don't have some key pieces in place. So I did. I sat with him because during the first five years, like I had learned how to read a balance sheet, a PL, you know, profit and loss, all that stuff from the first company. So then I brought some of those skills to that guy and like, okay, your PL is a mess. You have the wrong bookkeepers in place. Like nothing that you have as numbers is telling your real story because the numbers just tell the story of the business. And so I did. I helped him get that cleaned up where he knew three simple numbers, what he made, spent, and kept. And like then he came he back to me, the second owner, Doing one deal a month and said, Hey, this has been life changing. Like, I know where all my money is now. I'm gonna refinance. He had a small portfolio of properties that a lot of his money was tied up into, but he didn't know where his money was. So he was able to pull out hundreds of thousands of dollars back into his pocket. And that was around the time that COVID was starting. So I was like, my gosh. Like he was said, this has been life changing because I'm sitting on this money and I don't have to worry. I don't have to worry. I can take care of opportunities. I could take care of my family, whatever it might be. That's what started Simple CFO when he said the words, this has been life changing. And I asked him, I said, like, what do you mean life changing? He's like, the fact that I feel like I have control over my money now, that it's not controlling me anymore. And I'm like, okay, I want to give other people that feeling. So that's where Simple CFO was born that day. But Simple CFO would not have been what it is today if I would not have read the book Profit First at the same time that I was opening up my company, where Profit First is a book. To help the entrepreneurs like us when we were doing all those deals actually have a system to keep the cash and keep profits and pay ourselves. So that's another big thing that was introduced to my life at the same time. But that's how simple CFO got started.

It's a it's mistakes that I think all of us make as entrepreneurs if we weren't trained or if we don't have a penchant for numbers or finance. Cause let's just be honest, most owners are not. Like the 8020 principle, it's probably 80% of more the sales and marketing oriented versus operations and finance focused. And that is one of the things that hurts a lot of companies because you have to be, I believe, an expert in all four areas. That does not mean you do all four. But you know how to manage all four sales, marketing, operations, and finance. But if one of them gets neglected and is the redheaded stepchild of the group, it's definitely the finance area. Like that one doesn't get touched much. So to me, a lot of the people that we've worked with, because we've worked with hundreds and hundreds of business owners at this point from a like advisory level. So we know a lot of like that's going behind the scenes, what they're thinking, what their actual numbers are. I would say that it's the number one thing is that. People just don't look at their finances. They either don't know what to do, or they have, you know, what is it, ostrich syndrome, where they just stick their head in the sand and they just don't want to know because they don't want to know if it's good or bad. Cause as long as money keeps coming in. I've boiled it down though, to where I think for any entrepreneur, whether it's real estate or outside of real estate, we get caught up. The root cause that gets us in the trap of I feel I make money, but I feel broke. How we get there as entrepreneurs is We think that the actual thing we do is the game we play. So if as a real estate investor, we think real estate investing is the game I'm playing. Or if you're a restaurant owner, I don't care what it is, like restaurant is your game. But no, there's something that levels all of us as entrepreneurs. It's the game that we really play, and I believe it's the game of money. We're all using different widgets to get to the same end result. And that's where a lot of us have been taught. How to do real estate or how to be the restaurateur or like how to be good at the thing we do. But we haven't been taught how to be good at money. And I think that's what honestly trips a lot of people up. So they don't know how do I actually get good numbers in place? How do I actually pay myself? Reserves, yeah, right. Like I've never heard of those. You know, those types of things that a lot of people run into because they haven't been taught simple, practical steps and disciplines to put in their business. So they don't get up a creek without a paddle because they don't have any money for the things that really matter.

Yes, yes I have, for sure. So since I am a fractal CFO and focus primarily on the finances, if you had to take one thing away from this podcast, that if you're listening to this and you're not a finance professional and you don't know where to start, the place I would start, the 20% that will get you the biggest return and the fastest possible is putting a simple cash flow system in place for you. If you say cash flow system, you're already losing me. I'm talking about something where money comes in, a dollar goes into your bank account. You know what to do with that dollar now because it's a system that you've implemented into your bank account system. So, like for us, what the light bulb for me was the 20% here is the profit first system. Profit first is a book by Mike McCowitz that tells you here's how to pay yourself first, here's how to manage that dollar when it comes in. And A lot of the system is built around a very simple system, the envelope method, where you set up physical business checking accounts and name all your dollars like for reserves or for taxes or for paying yourself. So it's a very simple system. So you don't have to be a spreadsheet wizard. You don't have to be a finance guru. You don't have to have an accounting background. All you have to have is access to bank accounts and intentionality. That's really it to in order to start to control your money. Because right now, most entrepreneurs have one big bank account. Where all the money comes in and all the money goes out, and they don't know what to do with that money, and they don't know if it's theirs or if it's profit or if it's payroll, marketing expenses, whatever it might be, versus having the clarity of this dollar is earmarked for my expenses, or this dollar is earmarked to pay myself, or this dollar is earmarked for the marketing, or whatever it might be. That's where having a simple system in place is the 80-20. It's the 20% that will give you enough fuel to fuel the 80% of the other things. that matter as well too. But if you are going to go out there and put yourself on the line as an owner, like you of whatever business, then you need to make sure you have a system for the money because if you're going to make cash, you have to have a system to keep it. So that would be the 20% for anyone. And that not just because I'm a finance professional, but if I wasn't in this space and I had to start a new consulting company like right from the ground up, I would have a profit first system in place because as much as I want to go out and help and Help other people. I also have to make sure our team is fed and I have to make sure my family's fed. And I have to make sure there's good systems in place for that. And that I'm being a good steward of the finances, especially if I'm going to teach other people to be a good steward of their finances. So there, that's the 80-20. That's how what I would tell people you could do from here. Set up one bank account, call it pay myself or an owner's comp account. Like make it to where from every dollar you make, a little bit goes into that account and you start to pay yourself consistently. And then you just start growing that percentage until it's what you actually need and start somewhere though. That would what I would say is something they could do right from this podcast.

Well, I use it a lot as a business owner. it's more for time efficiency than anything. Where a lot of these systems like Claude is co-work, where it can literally read emails and help prioritize my day and do like a daily read, you know, and all that stuff. So even I still have a personal assistant, but I use the AI to benefit my assistant now, like to put the stuff in front of me that matters. So it's cl you know, combing through all my Slack messages, all the things to make sure I don't miss anything, but also making sure That I also don't have to be on top of everything and feel like I'm addicted to my computer screen or to my phone screen. So I love that. The other thing is in the finance industry, I believe that AI can help us with a lot of the like the some of the data entry type things where it's just over and over again. We've used it sometimes for our dashboard. We build a dashboard for each client that we work with. So we use the AI, you know, tools and software to integrate some of the tools together. make it more readable or just a lot more palatable for people to be able to understand, you know, as a business owner and not as a finance professional. So we're using it like that. Honestly, we have a weekly meeting with our team and we've been training all of our CFOs like, here's how we're doing AI, not just for the clients that we work with and how we can best optimize, but also how are we using it on a daily basis too? So we're trying to train our people to make sure that it's throughout our organization as well.

I have no idea because I'm a fractional CFO company. So mainly I work with over a hundred clients on an an on a monthly basis that are doing anywhere from, you know, a couple of million to a few million you know to five to ten million. So I have never counted it like that, but it could be like that because just because of the number of clients that we have. But we have a lot of clients that are in that industry where they're making anywhere from 500,000 to about five million. We're working with more than a hundred on a regular basis. And we're more of the how do you manage the day-to-day finances and the budgeting and like the forecasting and the reserves and paying yourself more than like I'm, you know, trying to place their money somewhere for

I speak a lot. So as I was talking about Profit First and when Mike McCowitz came out with that book like 10 years ago, I actually wrote a book, Profit First, for the industry I'm in. So I wrote Profit First for Real Estate Investing. So that's opened a lot of doors for the past five years, because now I get in front of people and I speak and do that. We also do like a free plus shipping offer for the book as well that does well. And we've got other things in place, like just I do a lot of social media content. We do a podcast show where we drop three episodes a week where it's like internal focus with our team. One's me just talking for like five to ten minutes just on a topic. And then the other one I interview people as well. So we're doing lots of different types of marketing like that.

Yes. Yep, there it is. Yeah, I'm always looking to make sure our team is fed and that they're getting what they need and like that our CFOs have enough clients and that the bookkeeping team has enough clients as well. But honestly, Michaelis, I love my life right now. Like I am not in I am not in aggressive growth mode at this point. I was about four years ago. We went from about 200,000 in revenue my first year to about two million. The next year, just because of the book and me getting in front of people and speaking almost every other week at different places. But I have a nine-year-old daughter now whom I love dearly and I love spending a lot of time with her. and it's because she loves spending a lot of time with me now, too, as well. So I try and keep a lot of time for her. I have a wife as well. So right now, I'm like, I want to keep enough to where we outpace, you know, like any client reduction, but we I want to retain. And I want to grow, but I'm not like in aggressive growth mode. I'm focusing, I'm actually looking at a couple of different industries as well to niche down in again because we've done so well in real estate. There's a couple of other ones that I'm passionate about too that just really narrowing that down and seeing if going into those other ones would be beneficial. We're looking to ramp up more the bookkeeping side because I actually did it reverse. What most people do, I started with the advisory and then added bookkeeping later versus bookkeeping and then escalating to CFO offerings. So now we're just expanding the bookkeeping more and trying to get that out there too.

Well, if I could go back and talk to myself back then, I would say just don't worry. Like everything's going to work out. Up to this point, yes, there's been ups and downs. And there's been like high highs and low lows and all that. But there were so many times I worried about things that every time we came through them. But it's not because we came through them out of luck. It's because of the principles and the people we had in place. And because I knew the discipline that we had and like we had good systems and we had reserves and profit first. And I might not always have grown like I wanted to, but I would just tell myself to chill out and just be a much more relaxed. Like, hey, it will work out. You're gonna put the work in, it's gonna pay off. It's also going to be, there's gonna be great days. There's gonna be some not so great days. There's gonna be clients that leave you. There's gonna be clients that love you. But at the end of the day, just keep a steady head. I probably if I went back, I would want to calm myself down a little bit because I got too wrapped up into it. But then I would also tell myself too, like, have fun and make sure that, you know, like just I there's not much I would change. There are so many good things happen on the way up. And I like I said, I could tell you all the bumps and bruises too. But a lot of it I needed to learn. Like I had never written a book before. That was a huge freaking undertaking doing that. A six figure plus investment, my first one, you know, like in my twenties. Like, I'm like, what the heck am I doing? Hopefully this pays off. So I I don't know. A lot of it took guts and determination. And I'm glad I took a chance on myself back then. So if anything, I'd be like, do what you did, but just throw in a little bit of like just brevity for yourself and like that, you don't take yourself too seriously and that you don't freak out over every little business thing that comes up.

If you want to do it right, hire a coach or do an actual process that you learn. There's lots of things out there, like I'm sure, AI stuff and whatever it might be. But writing to have someone tell you that, hey, this is in my top three. There's I went through like a 16-week course with a lady that only takes about 15 people on at a time and paid good money to do that. But it helped me as a writer. I was not, I'm not a strong writer on. But she helped me. She helped me put disciplines in place. She helped me to have basic structures, outlines. She also helped me navigate the book world too, which is not the not anything like I had ever encountered before. Like as an entrepreneur, the book world was just radically different. So having someone who's knows that world and knows, like, okay, are you gonna self-publish? Are you gonna try and go through a publisher? If you go through a publisher, are you trying to get, you know, like how are you going to go about that? Are you gonna do hybrid, like a mixture? Where you self-publish, but then try and get in the door with, you know, someone like a publisher. So just having someone that could even ask you the questions you don't know to ask, I would highly recommend that. If you're really looking for a book that has a dual purpose, if you want to change lives and you want to make money, then you have to spend the money in order to grow yourself to be the person that can write a book that people will actually read. And get editors that will edit it so you don't sound like an idiot. Cause like I wrote my book.

In three months, but editing took six months. You know, so it's like that's where I wrote a lot of words, but then I needed a lot of help editing. So I would also say, find someone like I found. And if you want to find her, her name was AJ Harper of Top Three Book, Top Three Workshop. But she helps you with that whole process. She still does that, but she only takes two cohorts a year, like one in the spring and one in the fall. So that to me was life-changing from the perspective of I've never written a book and I got the crash course plus. Tailored advice like for what I needed at that time.

It's definitely a skill.

Sure, go to our website, simplecfo.com. That's where people can book a call, or you could just see all of our content. So if you want to just see how we're pumping out content or what we're doing in this space, you know, in the consulting space for the fractional CFO world, then you can go to simple CFO.com.

Thank you for having me.