Monthly Archives: June 2019

Cash Management: It’s Not About The Numbers

cash management: it's not about the numbers

The vast majority of business owners I know don't want to bury their heads in Spreadsheets, Profit and Loss Statements, and Balance Sheets every day. Or even at all.

Yes, it's important to know some key financial numbers when you own a business. Having objective data that answers our financial questions and helps us make good decisions is more than just helpful, it is crucial to long term business success. But if you are like me (and I like numbers), you don't want to live your life by the numbers.

The financial plan for your business needs to answer your "Why?" and serve you, not be your boss.  

Why did you start your business? What do you hope to accomplish by owning your own company? How do you want to spend your time and energy? What do you want to use your money to enjoy?

Answering questions like these, and then creating a business financial plan around the answers is ultimately why Fit For Profit exists.

My goals for Get Fit NH, the personal training company we sold last year in a seven-figure deal, were very modest when we first started out in the first decade of the 21st century.

I just wanted to find a way to work myself out of a job I didn't want to spend the rest of my life in, and find a viable business model to do what I wanted to do and enjoyed doing; helping people lose weight, get in shape, and feel better.

What we were doing worked, and we started growing outside of my capacity to serve my clients by myself. As I started to hire trainers who had the same mission and passion I did, my goals changed. I saw an industry that was churning through people, good people, at a crazy rate because they had no career path. In our area it wasn't uncommon for a trainer to work at 2 or 3 different gyms, because that was the only way they could make it work financially. Benefits were non-existent. 

My new goal become to provide the coaches that worked for me a viable career; a good salaried position, health care benefits and retirement. And there is a practical side to all this as well, of course. Happier employees stay longer, and employee turnover is a killer to any business.

My question became "How can we as a company make all that happen, continue to be profitable, and still support my personal financial goals as the owner?"

The answer was to create a business financial plan, and support it with a cash management system and strategy that allowed us to incrementally accomplish every one of those goals.

It didn't happen overnight. It took several years until the entire full-time team was on salary, we added a 401k, and finally company sponsored health insurance. All while maintaining profit margins and paying ourselves a market based wage.

That story is not to brag or tell you how great I or my company are. The reality is I could not have done it alone, or without a system that had the configurability and flexibility to support those goals.

Your story is no doubt different, and that should excite you.

Like the gym owner who wanted to take his entire team to the Arnold Classic every year.

And the business owner dad who was getting crushed by tens of thousands in debt, but still wanted to take his family to Disney World.

They both created a plan that worked for them, and both made those things happen.

The point is to create a strategy that makes your story possible, by wisely allocating current resources, creating a sound plan for growth, and preparing for your future and the future of your business.

So you can have a business that means something to you.

And enjoy the freedom that comes with being a successful entrepreneur, no matter what your definition of that is.

Without having to live with your head buried in a spreadsheet all the time.

If you want to get started with a plan like that, I'd like to invite you to reach out. Get in touch with me here, and let's talk about what you want to accomplish with your business. If you have questions, I'm here to answer.

To your best success,


You’re Only Truly Free When You Have Some Rules

road to profits

We all have rules that govern how we live life. Even the freest countries on earth have laws, rules and regulations. I had rules growing up and living in my parents household. Some I was ambivalent towards, some I despised. It didn't matter. I understand now that for the most part they were put in place to protect me, usually from myself. 

It's like the yellow and white lines on the highways. I don't know about you, but I want the guy coming the other way to stay between his lines so I don't get wiped out. And I'll return the favor. Rules like this really keep us not only safe, but alive. I can chafe against the restriction of my "freedom" to drive on the other side of the road if I want to, but it's probably going to get me dead.

And the rules of the road don't mean I have to drive in a straight line. If I find I am not headed in the right direction, or there is an unforeseen obstacle like a traffic accident in my way, I can always change my plans and take another road.

That's exactly the function of a good cash management system. To put a set of guidelines in place so your business doesn't wind up in a head-on "cash crash", while giving you the flexibility to pivot when you need or want to.

And the freedom part?

Look at it this way; would you like to be free to pay your taxes on time every time, and have a way to make sure you have enough put aside as your business scales?

Would you like to be free to make a pay off your debts, build up cash reserves, and take a profit distribution on a regular, systemized basis?

Would you like to have the freedom to pay yourself a market based wage?

From a business standpoint, that's my kind of freedom.

Every year in our business June is filled with all sorts of fun expenses. Property insurance on the gym building and professional and business liability insurance are due. Quarterly Federal, State and Partnership taxes are due. We had some equipment that needed to be replaced. It adds up into multiple 5 figures, which to us is not chump change. My wife Nancy, who is my business partner on the fitness side of things said to me; "Isn't it nice we don't even have to break a sweat about that stuff?"

Yes. It is nice. REALLY nice.

One of the objections to even having a cash management system, which I have heard more than once, goes something like this; "I got into business because I don't like being told what to do", or "I want the freedom to spend my money like I want to." I totally understand where that comes from, because that's me too.

But I got over it.

Because far from being restrictive, the Profit First system makes sure all the "have to's" are covered so I have more freedom to do the "get-to's".  I'll give you an example. One of the principles of Profit First is to allocate a percentage of business income into your Owner's Pay account every month, but only pay yourself a fixed amount from that account each month. This helps cover your pay if you have a lean month, and if that account keeps accruing money, you then have evidence that it's "safe" to give yourself a raise. Pretty smart. 

new motorcycle debt free

The cool part of this story was that I never really paid attention to the "excess" that was in there. It was "my" money in that it was methodically and specifically allocated to my compensation as the owner, but I hadn't touched it. When Nancy and I decided it was time to upgrade to a little more comfortable motorcycle we could do longer rides on, I knew I didn't want to borrow money for it. Instead we "found" the money in the Owners Pay account and used it for its intended purpose - to compensate the owner. I like getting paid in motorcycles. I love it when one of my clients tells me he paid his debt off, or took his entire team to the Arnold Classic, or created a profit sharing program for the entire company. That's the freedom that comes from "staying within the lines".

You have probably heard the saying "Freedom Isn't Free" as it applies to the privileges we enjoy here in the United States. As a veteran with an active duty son, I get it.

That saying applies here too. I see too many business owners make financial decisions in a vacuum, with no guiding principles that act as guardrails. If you want the freedom that comes with a high performing business, you need to make the relatively short-term sacrifice of time and effort to make sure that happens. Build some guardrails, configure them in a way that works best for your business, and stay on the road. It really is that simple.

Look, I didn't invent Profit First, but I have implemented it into my own business as completely as anyone I know, and now I get to show business owners like you how to do it as well. It doesn't make me any smarter than the next guy, but it does give me the peace of mind and yes, freedom, that comes with running a good business.

Most of us start our own business because, at least partly, we want what we just couldn't get working for someone else. Freedom to create, to innovate and to impact. Profit First can help. Profit First will help.

The sooner you get started, the sooner you can make it happen too. Let's get after it!