The most important part of starting a business is getting the finances right but many young entrepreneurs are screwing this up. So let’s dive in and find out why. Learn About Investing Together at https://investormindset.com/invest
This week Greg Crabtree and I dive into why so many business owners get finances wrong and how you can avoid making the same mistakes and turn your business into a wealth building engine. We talk about taking your data and breaking it into a simple and usable model. Think of it as a vehicle – there’s an engine and a chassis. The engine of the business has 3 core components: revenue, direct cost and labour and the chassis of the business is all the operating expenses. If you’re not making an ROI of 50% or more from your business, then somewhere there’s a problem that you need to solve.
Greg Crabtree is a speaker, author, entrepreneur and financial expert. Crabtree has used his entrepreneurial skills to develop Crabtree, Rowe & Berger, PC, a CPA firm focused solely on the needs of entrepreneurs, helping them build the economic engine of their businesses. Working with entrepreneurs all over the country in a broad range of industries, Crabtree has simplified financial reporting and empowered all entrepreneurs to take ownership of their finances. He has pioneered a revolutionary metric for driving business profitability: measuring labor efficiency and developing simple benchmarks for company, team and individual performance.
In 2011, Crabtree published his first book “Simple Numbers, Straight Talk, Big Profits,” in which he shares his core principles of how to turn your business into a wealth building engine.
Crabtree’s community service includes serving as Boys and Girls Clubs of America National Area Council Member, Entrepreneurs’ Organization Global Board (2006 to 2009), ALS Association of Alabama, Boys and Girls Clubs of North Alabama, Atlanta chapter of The Entrepreneurs’ Organization (EO) past board member. Crabtree is a frequent speaker at EO Chapter events, EO’s Accelerator Money Day program and the U.S. State Department’s New Beginnings program for international entrepreneurs.
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KEY TAKEAWAYS
- Take your data and break it into a simple and usable model. Think of it as a vehicle – there’s an engine and a chassis.
- The engine of the business has 3 core components: Revenue, direct cost and labour. Then the chassis of the business is all the operating expenses.
- If you’re not making an ROI of 50% or more from your business, then somewhere there’s a problem that you need to solve.
- There’s two ways to attack return – improving net profit or reducing the input of capital.
- Working capital is a flawed concept.
- The easiest way to scale is to have the least amount of capital drag/input into your business.
- Get so clear about your numbers that you’re able to directly see and understand how much you can pay staff.
- If you’re not at your best right now, it’s because you’ve let staff be unproductive or you’re spending money too far in advance.
- 90% of businesses grow by speculative expenses spent before they produce anything. For example: the cost of hiring someone does not pay off until at least a couple of weeks after they are hired.
- The number one distortive thing that new business owners do to their business is not paying themselves the market wage.
BOOKS
The Passive Investing Playbook – https://investormindset.com/passive
Simple Numbers, Straight Talk, Big Profits!: 4 Keys to Unlock Your Business Potential – https://www.amazon.com/Simple-Numbers-Straight-Talk-Profits/dp/1608320561
LINKS
LinkedIn: https://www.linkedin.com/in/greg-crabtree-baa338/
Simple Numbers Website: https://simplenumbers.me/
Learn more about investing with Steven at https://investormindset.com/invest
