Welcome to a groundbreaking episode of Unstoppable REI Wealth! In this riveting discussion, I, Billy Alvaro, sit down with the brilliant David Richter from Simple CFO to unravel the secrets of managing and preserving profits in real estate investing. Brace yourself for a mind-blowing conversation that will forever change the way you approach your financial endeavors. David, a seasoned real estate investor himself, flips over 850 properties, shares invaluable insights and strategies on ensuring that the money you generate from your real estate ventures stays securely in your pocket. He unveils the hidden truth behind focusing not just on top-line revenue, but also on the amount that truly fills your coffers. Prepare to have your mind expanded as we challenge the conventional mindset of sales minus expenses equals profit. We delve into the revolutionary Profit First methodology, urging you to prioritize paying yourself first and allocate a portion of every sale towards profit and personal financial security. Buckle up as we explore the profound impact of implementing Profit First in the real estate industry. Discover how this system can transform your business, empowering you to make better decisions, cut unnecessary costs, and ultimately drive your bottom line to new heights. But wait, there's more! We uncover the importance of setting up multiple bank accounts, the "golden trio," to effectively manage your business finances. These accounts safeguard your hard-earned money, ensuring that you prioritize your well-being and build a strong financial foundation. Join us on this incredible journey as we unveil the secrets of financial clarity, success, and freedom. Don't settle for mediocrity; let us guide you towards unstoppable wealth. Tune in to Unstoppable REI Wealth and unlock your true financial potential. Remember, success is not a matter of chance but a result of strategic financial management. Get ready to take charge of your destiny with Unstoppable REI Wealth and our enlightening discussion with David Richter from Simple CFO. Don't miss out on this life-changing episode! - Managing real estate profits - David's transition to finance - Implementing Profit First - Importance of financial clarity - Common financial mistakes - Multiple bank accounts for clarity - Setting up the "golden trio" - Implementing practical strategies - Importance of a CFO - Proactive financial management - Importance of a good financial foundation - David's passion for helping businesses - Promoting the book on profit first KEY POINTS [0:6:13] With the Profit First formula, entrepreneurs can expect to dramatically increase their profits by up to 300%, simply by shifting their mindset and prioritizing profitability first! [0:7:5]Discover how the revolutionary Profit First system can help you maximize your real estate investments and achieve financial success with David's "Profit First Real Estate Investors"! [0:11:58] By teaching individuals the essential rules and strategies of personal finance, we can empower them to take control of their financial lives and experience the joy and satisfaction that comes with financial freedom. [0:16:33] Staggering statistics show that a shocking 70% of small businesses fail due to poor financial management, illustrating the dire need for more education and discussion around handling business finances. [0:16:33] Discover how Profit First can give you unprecedented clarity into your business finances, allowing you to make smarter decisions and skyrocket your profits! [0:19:13] "Don't rely on 'hope and pray' strategies to build your business – instead, set realistic financial goals and devise a plan that works around your lifestyle and aspirations." [0:25:37] Transform your business with a fractional CFO and unlock powerful financial insights to budget and forecast with confidence. [0:28:14] Discover the power of a fractional CFO to help drive your business forward: with a tailored bookkeeping system, profit-first strategies, and a dynamic CFO dashboard, unlock the potential of your business today! [0:29:3] David's unparalleled business acumen is evident in his ability to build a team of highly-skilled CFOs to provide essential financial expertise to his enterprise. [0:29:58] Gaining financial freedom is a realistic goal for entrepreneurs who are willing to learn the intricate money game and master the key elements of their business. [0:29:58] The unfortunate reality is that many real estate investors suffer from crippling financial stress due to their inability to prioritize profit and pay themselves first, resulting in a serious lack of net worth. Connect with David at https://simplecfo.com/ And David has a special gift just for you at https://simplecfo.com/gift/ And after that head on over to... https://easysell411.com https://billyalvaro.com https://billyssecrets.com Who knows maybe you will be our next partner? To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
Welcome to a groundbreaking episode of Unstoppable REI Wealth! In this riveting discussion, I, Billy Alvaro, sit down with the brilliant David Richter from Simple CFO to unravel the secrets of managing and preserving profits in real estate investing. Brace yourself for a mind-blowing conversation that will forever change the way you approach your financial endeavors.
David, a seasoned real estate investor himself, flips over 850 properties, shares invaluable insights and strategies on ensuring that the money you generate from your real estate ventures stays securely in your pocket. He unveils the hidden truth behind focusing not just on top-line revenue, but also on the amount that truly fills your coffers.
Prepare to have your mind expanded as we challenge the conventional mindset of sales minus expenses equals profit. We delve into the revolutionary Profit First methodology, urging you to prioritize paying yourself first and allocate a portion of every sale towards profit and personal financial security.
Buckle up as we explore the profound impact of implementing Profit First in the real estate industry. Discover how this system can transform your business, empowering you to make better decisions, cut unnecessary costs, and ultimately drive your bottom line to new heights.
But wait, there's more! We uncover the importance of setting up multiple bank accounts, the "golden trio," to effectively manage your business finances. These accounts safeguard your hard-earned money, ensuring that you prioritize your well-being and build a strong financial foundation.
Join us on this incredible journey as we unveil the secrets of financial clarity, success, and freedom. Don't settle for mediocrity; let us guide you towards unstoppable wealth. Tune in to Unstoppable REI Wealth and unlock your true financial potential.
Remember, success is not a matter of chance but a result of strategic financial management. Get ready to take charge of your destiny with Unstoppable REI Wealth and our enlightening discussion with David Richter from Simple CFO. Don't miss out on this life-changing episode!
- Managing real estate profits
- David's transition to finance
- Implementing Profit First
- Importance of financial clarity
- Common financial mistakes
- Multiple bank accounts for clarity
- Setting up the "golden trio"
- Implementing practical strategies
- Importance of a CFO
- Proactive financial management
- Importance of a good financial foundation
- David's passion for helping businesses
- Promoting the book on profit first
KEY POINTS
[0:6:13] With the Profit First formula, entrepreneurs can expect to dramatically increase their profits by up to 300%, simply by shifting their mindset and prioritizing profitability first!
[0:7:5]Discover how the revolutionary Profit First system can help you maximize your real estate investments and achieve financial success with David's "Profit First Real Estate Investors"!
[0:11:58] By teaching individuals the essential rules and strategies of personal finance, we can empower them to take control of their financial lives and experience the joy and satisfaction that comes with financial freedom.
[0:16:33] Staggering statistics show that a shocking 70% of small businesses fail due to poor financial management, illustrating the dire need for more education and discussion around handling business finances.
[0:16:33] Discover how Profit First can give you unprecedented clarity into your business finances, allowing you to make smarter decisions and skyrocket your profits!
[0:19:13] "Don't rely on 'hope and pray' strategies to build your business – instead, set realistic financial goals and devise a plan that works around your lifestyle and aspirations."
[0:25:37] Transform your business with a fractional CFO and unlock powerful financial insights to budget and forecast with confidence.
[0:28:14] Discover the power of a fractional CFO to help drive your business forward: with a tailored bookkeeping system, profit-first strategies, and a dynamic CFO dashboard, unlock the potential of your business today!
[0:29:3] David's unparalleled business acumen is evident in his ability to build a team of highly-skilled CFOs to provide essential financial expertise to his enterprise.
[0:29:58] Gaining financial freedom is a realistic goal for entrepreneurs who are willing to learn the intricate money game and master the key elements of their business.
[0:29:58] The unfortunate reality is that many real estate investors suffer from crippling financial stress due to their inability to prioritize profit and pay themselves first, resulting in a serious lack of net worth.
Connect with David at https://simplecfo.com/
And David has a special gift just for you at https://simplecfo.com/gift/
And after that head on over to...
Who knows maybe you will be our next partner?
To get some neat (and FREE) Tools | Tips | Tricks to help you in REI!
Billy Alvaro 00:00:16 Welcome to Unstoppable real estate investing wealth. My name is Billy Alvaro, aka the Unstoppable BA former billion dollar mortgage banker gone bankrupt, turn professional real estate investor, where each week you'll learn the tools, strategies, systems, and secrets myself and other highly successful real estate investing entrepreneurs use to start, grow, and scale their businesses, creating massive profits and how you can too. And we'll teach you how to put those profits to work so you no longer have to get ready to finally experience financial freedom and generational wealth. Now, let's get started. What is going on, everybody? Welcome back to another episode. Unstoppable rei wealth. You know me, I'm your host, Billy Alvaro. The unstoppable BA. Got to tell you, I've been in this industry now for 14 years. And the one thing I can say without a shadow of a doubt that investors, new, young, and the ones that are scaling what they need help with is what this gentleman who I'm going to be interviewing today, mr. David Richter from Simple CFO. David, welcome to the show. Before you say anything, what David has is a process and a system to ensure guys like us, whether you're fixing and flipping, whether you're wholesaling or you're developing, that we actually hold on to the money that we're making. And it's not just about your top line. I hear a lot of guys out there, David, talking about, I made $2 million. I made $5 million and $10 million. Well, what in the hell did you put in your pocket? And you are the absolute expert when it comes down to this. So welcome to the show, bro.
David Richter 00:01:56 Billy, thanks for having me. This is an absolute honor to be here.
Billy Alvaro 00:02:00 Appreciate you coming on. So, David, I want to, before we get into your book and get into what Simple CFO actually is, you've been in our shoes. You're an investor for years, right? You flipped over 850 properties, from what I understand.
David Richter 00:02:12 Yeah, I read Rich Dad, Poor dad in college. And that was the end of it. It was like, couldn't think any different anymore. So got my first deal, like, while I was in college. Flipped it, rented it out. I even lived in that house for two years and then lease optioned it because I had learned it that by that point, too. So I was like, okay, this is awesome. Love Real Estate hooked up with a company that was doing like, five wholesale deals a month. Well, we scaled it to about 25 deals a month in Northwest, Indiana, Chicago, Illinois. It was the, Indiana and Michigan market. So we were running and gunning there, and that's where I cut my teeth and got a lot of knowledge in the real estate world. And we did over 800 deals together while I was there for the first five years.
Billy Alvaro 00:02:55 Unbelievable. now you got into this new business, and I'm sure something happened, as something always does in our lives. Something must have happened in your real estate investment life to get you to be like, man, I got to be doing something different. When it comes down to the money, what transpired in your life to get you on this path?
David Richter 00:03:14 The very first thing was I was in that company, and I was kind of the utility man. If there was a process broken, I go in and fix it. And one of the things was the finance seat. Okay, I look like the numbers guy, but I have zero financial background. Not an accountant, not a bookkeeper. I went to college. I went to a private Christian college and got, like, a secondary education degree. So I'm, like, as uneducated as you can be as well. I went there, but then I sat on the finance seat, because I did I like the numbers. I like the story they tell, but it was literally sitting down in that seat and just asking the CPA questions every single day for, like, six months, and, like, okay, now I understand. I understand the PNL, the balance sheet, cash flow statement. Now I can read the story that the business is actually living out right now, and I'm like, we're doing 25 deals a month, but spending 26 worth, this doesn't work. Like, no wonder why we can't give razors or why we feel like we're on the rat race all the time. But then this is what's great. This is why I love this. This is so special to me, this podcast, because I remember Billy from the first time I went to a Mastermind event. My very first Mastermind event was a high level Mastermind that we're still both a part of. And I remember being there, and there were people in the room that were in the same boat as us. Like, they would say, hey, we're doing this amount of deals. But then in the bar later, they're, like, crying in their drinks, and it's like, to me, that was, like, an eye opening moment that this is an epidemic. It's not just us. We're not the weirdos out there doing a ton of deals, but not feeling like any money is going to our pocket. So, to me, when I look back on my journey, that was, like, the first catalyst of, like, okay, there's an actual problem out there that a lot of people go through but not a lot of people talk about.
Billy Alvaro 00:04:56 I mean, you nailed it, dude a lot of people like you, even at the bar sometimes they'll just talk about all the money they're making on the top line. And when you really start getting into the nitty gritty of their business, they're not making money.
David Richter 00:05:08 Right.
Billy Alvaro 00:05:09 Ah, trading dollars for time, man.
David Richter 00:05:11 Exactly.
Billy Alvaro 00:05:11 Money is coming in. The money is going out. They don't have any net worth. They have nothing in the bank. They're not paying themselves first. So let's get into before we CFO, let's get into your book. What's the premise of the book? I know. It's called profit first real estate investors. But you kind of did a spin off of somebody else's book, which was brilliant, by the way. Brilliant marketing, brilliant way to get this done. So the author of the original book that came up with the premise was who?
David Richter 00:05:35 Mike
David Richter 00:05:35 He's the original author of Profit First.
Billy Alvaro 00:05:38 So he came up with this whole explain what Profit First is. So can understand this.
David Richter 00:05:43 There's two pieces. If you get these two pieces, you'll be the expert. Number one, the mindset. A lot of us have a broken formula in our brain as entrepreneurs that we think it's sales minus expenses equals profit. We think that's normal and typical, and it sounds logical. You make a sale, you pay everyone else and their mother, and hopefully, at the end of the day, we have some profit. But that's a broken formula that keeps you in that rat race. That is literally a formula. That's the rat race formula. That's almost the same as go up, get dressed, go to work, do the job for 40 years and come home. If I had to equate that formula. But the Profit First formula flips it on its head and says, no, it's sales minus profit equals expenses. Meaning I make a sale, I take my profit off the table first. I build in safety margin. I build in paying myself first. And then we still have expenses equals expenses. They're still there to grow the business and to invest and do the things that we want to do with the actual business itself. But we're making and placing the priorities on the first things first. So that's the mindset. But Billy, this was what was crazy about Mike's book to me, because I had read Rich Dad, Poor dad and he says, Pay yourself first a billion times in all of his different books. Like the richest man in Babylon. A portion of all I have is yours to keep. You've got all the Napoleon Hill books telling you you should be paying yourself first. This is not a novel concept of, like, paying yourself first. But what was novel to me was picking up Profit First, which is a financial book, but it's written for entrepreneurs. So here he says, Pay yourself first. But then here's a system. Here's the back end of Profit First to make sure that this formula now sales minus profit equals expenses becomes a habit in your business. That profit is a habit now on every deal and not something you're hoping and praying for at the end of the year and that you have some extra money in your account. So that's really the second part, is about the system and making it reality.
Billy Alvaro 00:07:35 It's such a simple concept, but it is profound, the effect it have on your bottom line and how much money you're really making because it forces you to really pay attention to your expenses.
David Richter 00:07:48 100%.
Billy Alvaro 00:07:48 You're taking your profit off the table first. You really have to pay attention to where these friggin numbers at. I don't know what you teach your students and whatnot, but this exercises we go through twice a year in our business. And twice a year, even though we pay ourselves first, we have our tax account. We put the money in the tax account, after we pay ourselves first. But every six months, we're looking at our expense items from credit cards to every single line item inside the business. And we're whacking out the fat. Even though we're still paying attention to everything, there's still fluff in fat that comes in. I just got this exercise done just not too long ago. Initially, I thought it was $249,000. It turned out to be $299,000. Just under 300 grand that I cut off. That was just fluff. You don't need it's. A lot of fucking money, man.
David Richter 00:08:34 That is a lot of money. And that's where in the book and in specific, like, if you just have something like that, a framework that you can go to once a quarter, once every other, biannually like Billy's doing it, where you just sit down. We call it I've actually brought out somewhere, we call it the $1,000 per hour task. Like this thing, if you sit down, you're going to save at least $1,000 per hour because you're going to be cutting things from your bottom line that will go into your pocket. So it's like this is yeah, exactly.
Billy Alvaro 00:09:03 It's right down to your pocket. It's right down to the bottom line, which is ultimately in the business owner's pocket.
David Richter 00:09:08 Yes.
Billy Alvaro 00:09:09 So the book came out, profit first. You read it, you're like, holy shit, I could leverage this thing and bring this into the real estate world. What did that whole process look like? How did you do this?
David Richter 00:09:20 So let's go back. I'll just do the brief bridge from where I was at that company. My wife and I and my new baby at that time moved across the country because it was kind of around the COVID time. And we moved to be closer to family during that time. And I started working with another investor. And I said to him, show me your books. I don't care what you tell me about the business. I know that this is what's going to tell me the real story. I open up his books, and they're a mess. He doesn't have the right bookkeeper. It's like every other real estate investor that is just running and gunning it and like, okay, let's sit down and let's get this in order, because this is not only going to help me know where you stand, this is going to help you make decisions. So I helped him get that process in place. And he said to me later on, this has been life changing, because now I know what I'm making, spending and keeping, and now I know how this can affect my family, and I can make better decisions, and I can actually put more money in my pocket. This was even before profit first. That's when I reached out to a mentor of mine and said, man, I just helped this guy that I'm working with, but I think I could create a business around it, just telling people the clarity, like, giving people clarity on the numbers. And that's when a good friend of mine, Gary Harper, he said, you need to read Profit First. So that's when I read the book, was, like, in that transition period of, like, I think I need to start.
Billy Alvaro 00:10:35 A company, know about the book.
David Richter 00:10:37 I didn't even know about it until 2018 19. And that's when I read the book first, and I'm like, oh, man, what a great framework for the business owner. So I read that book, read it in one night, took ten pages of notes, then immediately the first client that I had said, we're going to implement this. So, uh, from day one in the business, I was implementing Profit First. That's where I saw I had so many stories now of it actually working and putting money in the owner's pocket, of setting up the system, that I went to Mike about six months into it and said, It's working. I have a heavy real estate background. I can speak the language. I am the real estate investor. Like, let me do a version for real estate investing. And he was, like, gave a stamp, and that was the way that the book was formed. But that was the whole bridge. There was just actually going out there and making it happen.
Billy Alvaro 00:11:29 That book really took you off, bro. Like, you and your business have, skyrocketed since that book has came out. And look, you're a really good marketer. You've been out there pushing it. Your own podcast. You're doing interviews. You're a lot of different masterminds. You're really doing the right thing to promote, but your business has grown substantially in the last three years.
David Richter 00:11:47 It's been insane, because, like I had mentioned, this is something that everyone struggles with but doesn't really talk about. And there's not really education out there. There's a bunch of marketing, sales, even more operation training today than there was ten years ago. But still, there's not a lot of people saying, here's how you handle the money. Because most people that's not what's sexy to most people. And I understand that. But now when I get in these rooms and people actually open up and they say, you know what? I am struggling with this. They can identify now because I have.
Billy Alvaro 00:12:18 Enough stories and enough you're looking really sexy right now.
David Richter 00:12:22 Exactly. And they're like, you can actually help me make sure that I actually have the financial freedom, the financial freedom that I've been yearning for, like, being this business owner, this idea that they've had in their head, but literally the money has been stopping them. Here's one thing that I've come upon recently that I think really resonates with a lot of people. I tell them, if you're in the real estate game, that's not the real game you're playing. You think you're doing these deals and the deals are going to solve the problem, but it's not. You're playing the money game and you don't realize it that the property is just a means to an end. And if you don't know the rules of the money game and you don't know how to play it, you will fail. You will be like myself and like a lot of other people that have been at the 25 deals a month and now just add a couple of zeros and add that much more stress. This is where you got to learn that game. And, yeah, the company has taken off because a lot of people realize that there's someone out there that's actually trying to help put more money in your pocket and talk about the things that a lot of people don't and then manage the business, parts of the business that people don't want to manage. They don't want to manage the bookkeeper or the CPA or that type of stuff. So, yeah, it's gone way crazier than I thought it would and has really exploded.
Billy Alvaro 00:13:32 I'm, uhappy for you, bro. Honestly, really happy. I want to dive deeper into the concepts.
David Richter 00:13:37 Yeah, let's do it.
Billy Alvaro 00:13:38 on the book side, because your whole premise, you built simple CFO, I'm assuming, to support everything that you guys were teaching in that book. Now you've built out a whole business with the entrepreneurs. So let's get into some I want you to give some really good bottom line things, nuggets that are in this book that people can take away and say, holy shit, I didn't think about that. And then afterwards, obviously, if they have a hard time doing themselves, because a lot of us do, then I want, at the end, talk about how they can reach out to you about Simple CFO.
David Richter 00:14:04 I'll give you two big points that I talk about whenever I go out there. So hopefully this is they always say two to four, right? That's what we can retain. So, two biggest mistakes I see that people make where profit first. And this concept really helps hone in and put more money in your pocket. Number one, biggest mistake, people build their business on the Hope and Pray plan. We kind of already talked about that. We hope we make enough money and pray there's some leftover at the end of the year and there's no real goal that's ours. You might go to an event or you might listen to a podcast and say, oh, man, Dave was doing 25 deals a month. I know we could do that. We should be doing that, and then that's not built around what your family needs. What is your lifestyle that you want? What does financial freedom mean to you? And you're chasing something right from the beginning. You're chasing something that's not yours. And it's like, what the heck am I doing? I don't like waking up. I don't like the team that I've built. I don't like the amount of deals that we're doing. That's what you wake up to one day if it's not built around your plan. And we call it finding your keep number. Because three numbers that entrepreneurs really struggle with finding is, what do I make, spend, and keep? Do I make enough? Do I spend it in the right place? And am I keeping enough of it? So we say the first number you need to focus on is, what do you need from the business? What is something that this is what you need to take home on a monthly basis to support the lifestyle that you want, not necessarily just scraping by, but why did you start your business? Why did you start in the real estate game? And why did you go down this path and then make that very personal to you? If you have a spouse, talk about this number with your spouse. If you have a business partner, you got to be both on the same page of what you want to keep and bring home. These are the real conversations that need to start. And that's where, right from the get go, sit down and say, what is the number I need to keep? And you could just ask yourself, okay, what is the business providing versus what I actually need? And how Milan will it take me to get there? Second thing is, this is the big one. This is the crux of the profit. First, the biggest mistake a lot of people make is they have one big bank account. And I love what someone said on our podcast. They called it the black hole account. Such a great
David Richter 00:16:13 analogy for it. It's a black hole. Everything goes in, and then you never see it again. You never see that money. Because if you have one big bank account, that's where a lot of people struggle with of, okay, this is how they run the whole business, too. They open up their bank account. They look at how much is in there, and if there's enough money, yes, let's do it. If there's not enough, they're just like, okay, we can't do this. Or what money do I need to borrow right now? They go down a rabbit hole, but they don't know what that money is for. And that lack of clarity creates a lack of confidence and poor decision making. But if you have clarity of where your money is, that's where the better confidence and the decision making process comes into play. That's why it was so important with that first guy that I said he didn't have any clarity in his business. That's why I just wanted that clarity. And that's where profit first struck a chord with me, because it brings so much clarity. Because to counteract the one big bank account and the black hole account is we set up accounts for our business that support our goals and we name them. It's like the envelope method. Whether you love them or hate them, Dave Ramsey has made that very popular in the personal finance world. But it's a good principle. You know why? Because you tell your dollars where to go. You give every dollar a name, and that's the same thing in your business. We should be giving our dollars a name and telling it where to go. Instead of the money game controlling us, we need to know how to play it. And one of the best ways you could do to just start on this road is set up three new bank accounts. Set up three new bank accounts. I call them the golden trio. When I tell this story and present this, most people can see me. So I'm not sure if this will air just on audio or film. I have some video combinations. Okay, good, because if you see me, I do look like the numbers guy. I understand that. I'm definitely the nerdy guy, and I love star wars, Harry Potter, that type of stuff. And that's where all those main big epic movies have three main heroes, right? lukon leia. Harry ron hermione. The golden trio is making sure good wins in the end. Well, your business is your epic saga. I mean, if you're going to go out there and bust your butt and do a ton of deals and make a bunch of money, you need to make sure that you're keeping it. And that's where you get a golden trio of bank accounts that make
David Richter 00:18:23 sure you're winning in the end, that you conquer the forces of evil out there. All the stuff that's trying to siphon the money away from your business. What is that golden trio? It's profit, it's owner's comp, owner's compensation, and then number three owners tax, making sure you have just those three accounts. Because I could go into further in the book and the book goes into more detail, but if I can just get you to set those up, if I could just get you to set the profit account up. The point is, you're building these bank accounts so that when any deal closes, you make a sale. The first portion, the percentage, whatever you do goes into those accounts first. It goes into that golden trio because now you're protecting yourself, your business, and you're starting to pay yourself. You're starting to do the things that matter and placing the priority. Because if you don't pay yourself from your business, everything else is a higher priority than you. Even though you're probably the best employee, even if you're the owner. You're the one driving out there and making sure that you keep growing. So those three accounts help you to at least say from every deal, I'm going to put a little bit away, and if you're like, well, I know I'm not profitable or I'm just starting out. That's why when you first start, just do 1% to those accounts or something. Put something there, anything in there to start the habit. The habit is the goal. The habit is the goal of making sure from every deal a little portion of that goes into those accounts and you're making sure you're building the life and business that you want to and the money is there to support you. So that would be the two big things. Like if you walked away from this, I would say, number one, even before setting up the accounts, find what you need from your business and build it around your life. So make sure your business supports your life versus the other round going the other way. Number two, make sure you set up some accounts in your life so that way in your business life, you say, these accounts are to make sure that I'm placing first things first, and that owner's comp account is helping you get to your keep number. What do I need to keep on a monthly basis? That if I put in this account that I can withdraw and I can actually pay myself so that way I don't have to be living in a rat race all the time. And now I actually am paying myself something from the business. So there's some practical things that you
David Richter 00:20:33 can take from this podcast. Implement them honestly. You could go to Relaybank relayfy.com. They actually partner with profit first. You could have a bank account for your business set up online within like 20 minutes. And then they do like 20 accounts for free online. So it's like there's no excuse now not to do no brainer.
Billy Alvaro 00:20:51 And you touched on the profit count, the owner's comp account, and you touched on one that very little people speak about, which is your tax account.
David Richter 00:20:58 Yeah, exactly.
Billy Alvaro 00:20:59 So I know a lot of dudes, a lot that they're making a shit ton. They never actually take a piece off the top, put it away for taxes, and the end of the year comes and sometimes they extend their taxes out. They're paying them in October and they're like, holy shit, I have $400,000 that I have to take right now. And all their money is either in their business working or it's in deals and they have nothing to actually pay the tax.
David Richter 00:21:23 Man exactly.
Billy Alvaro 00:21:25 Troubling years ago, like 13 years ago, I did that. Twelve years ago. And I'm like, I have a $200,000 tax bill. Like, what in the fuck am I going to do that? And I had no money because all the money was in the deals and it was in the marketing. And it's like you really need to if you're listening, guys and girls, you really need to pay attention to what David's saying. It is simple, as he says. It the simple CFO. It will have a profound effect on your business and on your personal life and on your mental life. Knowing that you have money in the bank and you're able to put your head on the pillow night and sleep and know that you have a paycheck coming and know that you're paying yourself and know you have money for taxes and that you're not growing too fast. Because, look, as entrepreneurs, most of us that are the Type A high driver D, we just like to run as quick as we can. Uh, we don't think about the consequences. Like, have somebody else pick up the mess and figure shit out. But you need to really think about this shit, or you need to have somebody in your team who's going to think about this shit if not you? Somebody.
David Richter 00:22:23 Exactly. No, I mean, this is where so many people fall off the rails because it's not the deal. That's where so many people think that that's the only answer. I am not against sales. Like, you have to have sales because if you don't have sales, you don't need a back end, you don't need.
Billy Alvaro 00:22:38 Driving force of any business.
David Richter 00:22:40 Exactly. So you need the sales coming in, bottom line. But then if you're going to go out there like I said, and bust your hump to get the deals in the door and to close them, then why would you not have a system to catch the dollars to make sure that, number one, you not only survive business for as long as you want to, but that you are actually thriving? That you're going out there and accomplishing why you started your business? Because most people never take the time to actually sit down and say, why did I start this and why don't I feel this way? But they'll feel burned out, they'll feel stressed, but they think it's just if I close this next deal, everything's going to be fine. And then a year down the road, they're still in the same mess even after that deal is closing. Multiple others, too.
Billy Alvaro 00:23:18 this has been so good, man. All right, so now I want to switch gears about the book and about profit. First real estate investors, now your company, Simple CFO. Yeah, uI don't know much about it, so I really want to pick your brain. What exactly is the simple CFO?
David Richter 00:23:33 So we're a fractional CFO company, so part time financial leaders. If I had to boil it down, most people in the real estate world, like, if you're under $10 million, probably don't need a full time CFO on staff. But there's so many people out there that are doing a good amount of deals. Like, we work with people as little as doing 500,000. All the way up to 510 million range. But that just need a financial leader on their team. Because most people have a bookkeeper and a CPA, they're very good at, ah, looking at what you've done, and they're the rear view mirror. The CFO says, let's take that stuff and actually plan for the future to make sure you're ending up where you want to be. It's very proactive and forward facing. That's what a CFO really should be doing. And if you think of it like a hospital, the bookkeepers like the nurse, they work for the hospital. They're making sure, checking your vitals every day, like, making sure stuff is in line. CPA is more like a specialist that works for the hospital. Like, you go there for surgery and making sure that the taxes are done. The CFO is kind of like a private doctor. They don't work for the IRS or the hospital. They work for you. Making sure that, are we healthy overall? Do you have a good plan so we don't have to end up in the hospital a bunch of times and, like, going back there for a bunch of different things? That's where I feel like a lot of people have those other people in their life, but then they don't know how to manage a bookkeeper. They don't want to talk to their CPA, they don't want to talk to the numbers people. And then it's like they want to see them one time a year. Here's the stuff for my taxes. Tell me how much I owe or how much I don't owe, or a, refund because I lost money, and then we can move on. It's like, that's what a lot of people do. And what we want to do is be very proactive here. We want to lay a financial foundation in your business to make sure that you could get where you want to and keep more money in your pocket.
Billy Alvaro 00:25:16 It's smart, dude. If anybody's listening and you're in business and you don't have a CFO because, look, like you said, million dollars, $5 million, you don't really need a full time CFO for that.
David Richter 00:25:27 It's not at all.
Billy Alvaro 00:25:28 But you still need somebody on your team, a fractional CFO, to really understand where you guys are going. And we took in a fractional CFO years ago, and it's been a game changer, dude. Having somebody like you on the team inside the organization is a game changer. Because like you said before, you guys are looking forward. The accountant and your bookkeeper, they're looking in the past. They're looking backwards, man. They're driving, looking in the rear of your mirror. You're driving forward as an entrepreneur, 200 miles an hour. You need to know where the hell you're going. What does my budget look like? What's my forecast? Like, all that stuff is important. I know what we're making this year. I know what we have in the books that's going to be closing in 2024. And I only know that because of the people that I have in my team that give me the numbers when they're readily available. We meet once every two weeks and it's just like, it's go time. This is what we're doing. This is what we're at. This is what we forecasted. We have to adjust so we know if we're going to hit our numbers or not. That's what forced me to go through. I look at my numbers every six months. Like on the expense side, I want to make sure we found that our employee costs were a little high, had to reallocate in the employee side, maybe not higher this quarter because we had to get more revenue per employee inside the business. It's important to know what in the hell is going on inside your business. And I have guys that I just had guys recently. I was at an event and good guys, and we're sitting down, we're talking about numbers. And I was shocked. They did not know David. They didn't know any of their numbers. They didn't know their numbers on their marketing side. They didn't know their numbers on their sales side. They said to me, look, man, we have money in the bank at the end of the month and the end of the quarter. I'm like, oh my God. And these guys are they're not a little group. This is a bigger group of guys, man.
David Richter 00:27:13 Yeah.
Billy Alvaro 00:27:14 So, yeah, it's crazy. I was going to tangent a little bit there. So your system, your simple CFO is fractional CFOs. What does it look like to work with you? What is that like?
David Richter 00:27:23 So the first thing we do with everyone that comes in, we call it laying the financial foundation. So there's three things we always do with every client. Number one, make sure you have a good bookkeeper, good CPA, and good bookkeeping system in process. So you are getting a PNL balance sheet and cash flow statement. Because, Billy, I bet you those same guys aren't even getting those statements on a regular basis or have a good process and don't know how to manage those people. So we come in and say, okay, number one thing is we have to have a good process so you have clarity around numbers. Number two thing we do up front is profit first implementation. So not only on the book side and the quickbook side, we want to know on the cash side, like, okay, where is every dollar going? And, you know, and you can start directing the money more and making ensure that tax time comes and you're not worried anymore. Those types of things that we set up with profit first, the third thing we do is we set up a CFO dashboard so that way we can have, just like you said, you meet Biweekly with your CFO. That's what we do with a lot of our clients is we build a dashboard and say, here's the high level things we need to be discussing on a regular basis so that way we can keep moving forward. And are the decisions you've made and like, the hiring and the marketing and the different numbers that go into the business, are they pointing you to where you really want to be and giving you the clarity to make better decisions? So then we just have the recurring plans, depending on how much you're making in the business to keep the CFO on board.
Billy Alvaro 00:28:43 So question that I have that I know people may ask, david, you said in your opening statement, you're not a financial guy, you're not a CFO. Would I hire you to run my company if you're not the guy?
David Richter 00:28:54 Right, yeah. At the beginning, I didn't even say that much because I was scared of what people would say. Now I'm like you know what? That's fine. You want the truth from me? I have no financial background except for the school of hard knocks sitting in that company, learning the numbers. That's where I learned more of the business aspect of the finances. But I have a team of 30 CFOs that are 100 times smarter than me when it comes to the financial side. I will be very honest, I am very good at being able to say, what's the problem? Who's the solution here? And making sure that we have the right people on our staff to be able to say, this is what you need to do. And I build a good culture of, build a good base here, of just making sure that we have great people that are going to come on your team and say, this is where we need to go in order to get you there. But that's where, with my background, I have more of the I'm you this changed my life, right? This changed my life. Like, profit first and fractional CFO, that type, that whole world made sure that for me, we weren't doing 25 deals a month anymore and spending 26 worth. Like, it changed my life. So I'm like, okay, I got to get this out there. I got to get the knowledge of profit first. And I want to provide a solution for the people that are just stuck, that aren't seeming to get anywhere in their business financially, and aren't keeping the money they want to bro.
Billy Alvaro 00:30:09 I feel your passion coming through the video. Like, honestly, you're great at what you do because you fucking love it all over your face, man. Just your energy. It's crazy.
David Richter 00:30:21 And honestly, I'm excited because I am only 31 at this point. And I feel like if I just stay on this path that, uh, where can this go? Maybe we could have a fractional CFO in every small business and everyone would do a lot better and sleep a lot better at night. Because it's like, this is just caught on and I'm not on super high level main stages yet. I almost feel like I need to show like the prophet, like Marcus Lemonis of going out there and just opening up the idea of there's people out there that can help you, that you don't have to charge. They're not charging you an arm and a leg like a full time person would, but to help you with the leadership aspects. Because there's fractional coos and fractional CMO, like marketing people and operations. But a lot of people need that financial person on the team because they don't like the financial side. So that's where I just wanted to fill that gap. And that's why it's honestly exploded, because we do a great job with people, but then also a lot of people are just hurting and don't talk about it.
Billy Alvaro 00:31:18 Bro this has been honestly, it's been great. How do people first off, your book, it's on Amazon.
David Richter 00:31:22 It's on Amazon. It is there. And it's also on Audible too. So if you want to listen to.
Billy Alvaro 00:31:27 It, plug the book. Give a plug for yourself.
David Richter 00:31:30 Well, how about this? If you're listening to this, I love Billy billy, he is a great proponent of profit first and just getting that out there. If you go to Simpleco.com Gift, I will give you the free ebook so you can download the entire book. Even though this took 18 months of my life, is a legitimate book. And it's not just this big business card I'm trying to get a bunch of business with. It is literally like this is life changing stuff inside of there. Because this is the full system. I give you the full system in the book. So go to Simplecfo.com Gift, download the book. But you could go to Audible or to Amazon if you want. The I like the physics. If I like a book, I'll buy it three times. I'll do Kindle or the ebook to highlight it and take notes from. I'll listen to it and then I'll get the real book to highlight as well, too. So you want to do that, you can go to Amazon there, or you could go to just my site, Too Simplecfo.com. It has the book there as well. And that's where you can book a call too.
Billy Alvaro 00:32:22 And if they want to hit you up for your services, that's where they would go. Simplecfo.com.
David Richter 00:32:27 Simplecfo.com. That's where you could go. It's got all of our stuff on there if you want to just check us out. And then there's a call button on every page. So there you go.
Billy Alvaro 00:32:34 Dave this is your energy. Bro honestly, 31 years old, you're ahead of your time. You're an old soul with a lot of fucking energy. I love it. You absolutely are going to crush it in this industry. You're doing a lot of good for a lot of people. And people are going to be able to sleep at night and have money in the bank and able to invest and go on these vacations because they're educating themselves through David CFO. You guys are doing a great job. I really appreciate you coming on tonight.
David Richter 00:32:57 Now. Thanks for having me. And I 100% agree with you. It's just about unlocking this portion. They're playing the money game. Let's teach them the rules and teach them how to play. Because then it gets fun.
Billy Alvaro 00:33:07 Yeah, it does. Dave, thanks again, bro.
David Richter 00:33:10 Thanks, Billy.