August 14, 2025 • 33 mins
You're making money. So why are you always chasing cash?
Mike Milan aka Cash Flow Mike has built 14 businesses and now teaches accountants and business owners how to stay cash-rich and debt-free.
In this episode:
• Why 90% of businesses don't have 3 months of cash on hand
• How growing fast nearly bankrupted him
• The money rule that separates the broke from the stable
• The single shift that helps accountants get clients to actually listen
💬 Want more from Mike?
Grab his free tools and training: https://cashflowmike.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome back to another episode of CFO
Chronicles the secrets behindsuccess, where we explore what's
really working in the world offinance, business strategy and
bold decision making.
I'm your host, james Donovan,and today's guest is someone who
brings the perfect combo ofenergy, expertise and blunt
truth.
We first met just a few weeksago, grocon in Utah.
(00:20):
He was a sponsor and speaker atthe event and we hit it off
immediately.
Between Between great convosand high-level insights, one
thing became clear this guylives and breathes helping
business owners actuallyunderstand and use their numbers
.
I'm talking about Mike Milan,better known as Cashflow Mike.
He's a serial entrepreneur,author, speaker and the creator
(00:40):
of financial tools and trainingthat actually makes sense to
everyday business owners, andright now I'm holding up his
book Don't Tell Me what To Do,which I've been reading this
week and absolutely loving.
But before we dive into Mike'sstory and strategies, a quick
shout out to our sponsor,billcom.
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Now let's get into the realreason why we're here Cash flow.
Mike, so great seeing you again.
Speaker 2 (01:25):
Hey, live from San Antonio.
Is Cashflow Mike, right?
So I got to tell you.
Rarely do I say I miss somebody, but you I missed you, right?
I mean, it's been like a monthsince I saw you and I'm like you
know what that's somebody Imissed and I was looking forward
to today, so I'm glad you hadme on.
Speaker 1 (01:40):
Awesome.
Hey, you took the words out ofmy mouth.
I'm pumped to have you on theshow and it's great to see you
again.
We had the pleasure of justbeing across the room from one
another with our booth, so gotto chat a lot, which was really
cool.
Let's dive right into it, mike.
First things first.
I do have your book here, as Iwas just showing.
Don't Tell Me what To Do.
It's bold, it's direct.
(02:02):
I love the tone.
What made you write this andwhere did the title come from?
Speaker 2 (02:08):
Yeah, so super interesting, right?
First of all, don't expect thegreat Gatsby, right?
Because I'm not that.
I'm not that type of writer, soit's not going to be a classic
that you have to read 17 timesover the course of your life.
But here's the thing.
So originally, when I built theClear Path to Cash, it was eight
techniques to maximizing cashin a business, with a
(02:30):
combination of things that Iteach bankers at the Graduate
School of Banking at Coloradoand things that I learned over
25 years or so running 14businesses little things that
made it easier for me.
So I combined that and I usedto do seminars for banks, right?
They would bring in 30 to 100business owners and I would do a
one or two day seminar abouthow to actually understand and
(02:52):
use your financial statements.
And there was a bunch ofaccountants, and one of them in
Arizona, and they came up to meafterwards and said, hey, how
come you don't teach this to us?
Oh my God, I didn't think aboutit.
I just hadn't thought about.
Oh my God, that's the thirdpart of the triangle the
business owner, the banker andthe accountant.
Why am I not spending more timetrying to get accountants on
(03:14):
the same page.
I'm spending all the time theother way.
I built a clear path to cash andstarted selling that course to
accountants.
I thought, oh, with accountants, all I got to do is teach them
math.
If I teach them the math, andthat should be good enough.
(03:34):
Well, what they wanted was roleplays how do I use the math
with a client?
And when we started doing roleplays, I noticed a common theme
where an accountant had troublehaving a conversation right, a
conversation that got people totake action.
That was one of the things thatthey would tell me.
They said nobody listens towhat I do, nobody listens to
what I tell them to do.
They just go do their own thing.
They ignore me or they ghost meand those types of things.
I'm like oh, you don't know howto talk to people.
(03:55):
So that's where the idea camefrom.
Originally, it was givingaccountants the words to say Now
you're like well, how do youknow the words to say.
Well, back in the day, my firstjob, james, I was a state
trooper.
Speaker 1 (04:12):
Yes, I remember you saying that, yeah it's so cool,
yeah, right.
Speaker 2 (04:15):
So not only did accountants want to learn math
from a state trooper, nowthey're asking me to teach them
how to talk to people.
So to me that's always weird,but it's one of those things
where, as a state trooper, youlearn to talk to people on their
worst day, right?
And one of the things that youwant to do is be able to get
them to be committed to whateveris going to happen next, right,
(04:37):
if we're going to jail, ifwe're getting a ticket, you just
want to be committed to thataction, not compliant, and
there's a big difference betweencommitment and compliance,
right?
So?
And compliance is tellingpeople what to do.
So I started to look at whathappened in my business career
when I hired consultants oradvisors and all of them would
come in with these one or twoinch binders, or they come in
(05:00):
with this slide deck or thesereports and they just want to go
through it page by page by page.
You ever done that, right?
Been through somebody'spresentation like that?
yeah, well, I mean that's,that's kind of feels like what
high school is like or any anycourse you're taking, right,
it's painful it's like okay,next page, next page, good,
because they're never on your,your speed, they're never on
(05:21):
your cadence, they're never onyour rhythm, they're never
talking about the thing that'smost interested to you.
Why?
Because they did all this.
I call it free work, somepeople call it pre-work.
To come to my meeting, right,you want to talk to me and give
me advice, but you're nottalking to me, you're presenting
to me.
So the name of the book is Don'tTell Me what To Do.
It's a kind of a doubleentendre there.
(05:42):
Tell meaning you actually can'ttell people what to do, because
people's natural resistance isto say no, to go away.
I don't want you to tell meanything.
The other thing tell is anacronym.
It's an acronym T-E-L-L, whichis terminate every long lecture,
which means you actually haveto start talking to people and
(06:02):
kind of, the ratio I use is 70%of the time the customer or
client talks and 30% of the timeyou talk.
The only way to get to thatpercentage is to ask the right
questions.
Speaker 1 (06:13):
Yeah, it's so good.
I think too many people missthat in a sales conversation
I'll say sales conversationbecause we're talking about the
accountant speaking to theprospect or the client, but it's
really it is just aboutlistening.
You're just there to listen,you ask the right question and
then you stop and you justlisten, and that's what I mean.
(06:33):
I really got a lot out of yourpresentation and out of the book
so far and that's what it allessentially speaks about is kind
of just sit back and listen,ask the right questions and then
listen.
Speaker 2 (06:43):
Yeah.
So that's the big mind shift.
Right, when accountants areused to, I have to do so many
things in an hour.
Right, it's pop, pop, pop, pop,right, and they're just used to
cruising through an hour anddoing things as fast as possible
.
The mind shift is this is not afast art, it is.
We're spending an hour togetherhowever you want to spend it.
(07:06):
Where can I give you most valueas the advisor?
So to do that, you have to slowdown and it's okay not to get
everything done on your agenda.
You'll get to it next time.
So I've got this idea calledthe burning issue and everything
that I do is to get somebody totell me what their burning
issue is, because I believe thatif you say it as the client,
(07:28):
it's absolutely true.
Nobody can argue with it.
If I say it as the advisor, youcan argue with it.
Right, If I say, hey, here'syour problem, you can say no,
it's not.
But if you say it, who am I tosay that it's not the problem?
So the first thing that I teachpeople to do is how to get your
client to actually articulatewhat is the pain that they feel.
(07:49):
Right, and that's the skillthat I teach in that book Don't
Tell Me what to Do, is how to gothrough this elevation sequence
.
Speaker 1 (08:00):
It's a series of questions that get you to a
problem.
So good, I love it.
I got to know Mike.
So good, I love it.
Um, I gotta know mike.
I don't think I asked you atgrocon.
But where, where did cash flow,mike, the identity, start?
Did you give the name toyourself, did like, how did?
Did someone give it to youwhere?
Where did it come from?
Because I love it?
I think it just works so well.
Speaker 2 (08:18):
But I'm so curious to know I I think some bankers
were making fun of me, right,because when I was teaching at
the banking school, I'm walkingdown the hallway and they go hey
, there goes, cash flow Mike.
And I'm like I wonder why theycalled me that.
So I turned around and say hey,what does that mean?
They said you, you only talkabout cash flow.
You never talk about profit orany of the other stuff.
(08:39):
It's just cash flow to you.
So we're we're started callingyou cashflow Mike and I thought
it was like uh, a dig.
I thought they were making funof me again.
But I started hearing it, youknow, once or twice in my head
and I'm like, damn, that'spretty good.
Speaker 1 (08:54):
Yeah.
Speaker 2 (08:56):
It's better than any name I could have come up with,
right?
So, uh, as, as long as you getpast the embarrassment of
calling yourself cashflow Mikecause it's embarrassing at first
, right, hey, I'm cashflow Mikewhen you get past that and lean
into it as an identity, morepeople know me by that name than
my real name.
I mean even you and I'm not.
I'm not calling you out on this, but my last name is pronounced
(09:17):
Milan, right?
Yeah, and I have to teachpeople a song all the time.
I'm like this land is your land, this land is yeah.
Speaker 1 (09:28):
I remember you doing that from stage.
Yeah, that's so good.
Speaker 2 (09:32):
Yeah, it's one of those things where more people
know Cash From Mike.
It's easier, the website'seasier, the social handle,
everything's easier with thatname.
Speaker 1 (09:43):
I just from like the, the marketing side of things as
well, like that's immediatelywhere my brain goes to and I
think it, it works so good.
Like it's the proprietarysystem you've built, it's the
identity, it's the whole brand.
It's not just mike oh yeah,speak with mike, he's a good
connection and blah blah.
No, it's cashflow, mike.
You know, like everything'scashflow.
(10:03):
Right, I think it, it works sogood.
So I'm glad those bankers saidthat to you walking down the
hall one day.
Speaker 2 (10:10):
Yeah, you know that's high praise coming from you,
right?
You run a marketing gurucompany, so that's high praise.
I appreciate that.
Speaker 1 (10:17):
Oh, I appreciate the compliment.
Let me ask you a lot ofbusiness owners know their
numbers, but they don't know howto use them.
Speaker 2 (10:31):
What's the most common gap that you see when
going into a new business?
Normally it's the differencebetween profit and cash flow.
Right, I'm making money.
How come I don't have any?
Right, that's the most commonthing.
Where they're paying taxes,they're seeing these income
statements, they're makinghundreds of thousands of dollars
a year, but yet there's $2,000in the bank.
So it's the difference between.
When you look at a company,there's a vertical analysis and
(10:53):
that's really your profit lossstatement.
You start with sales and youend with profit vertically,
right, you just keep subtractingthings until you get to profit.
Then there's kind of thehorizontal analysis, which is
how long does this take?
So when?
The reason I call it horizontalis it's about time, right?
So think about a scale, a timescale of how long does it take
me to collect, how long doesinventory sit on the shelf, how
(11:15):
long does it take me to pay mybills?
So those two have to work inconcert and most people get
focused on the income statement,because it's like a report card
, and forget about theconversion side.
Speaker 1 (11:28):
Interesting.
It's probably tough becauseevery business is different and
every industry is different, butdo you have a certain metric or
a benchmark of how long abusiness should have available
for cash flow or how muchreserves they should have?
It might be a little vague,depending on the industry, have
(11:50):
yeah, it might be a little vague, depending on the industry.
Speaker 2 (11:55):
No, actually it's agnostic that's the word I was
looking for.
Agnostic meaning that the firstthreshold I try to get people
to is three to six months worthof operating expense, and that
works for everybody right.
So if you spend $10,000 a monthjust in operating expense your
fixed cost, your rent, yoursalaries, those type of things
then you should have thirty tosixty thousand dollars.
This is critical because peopletake money out of their company
(12:17):
and I won't let my clients doit until they get to that
threshold threshold.
If you're not between 30 and 60, then you can't take any money
out.
And the reason for that is itgives you three to six months of
time.
That's really all we're tryingto look at, because, who knows,
a hurricane or tornado COVID,you need at least three to six
months to be able to come upwith a new plan.
(12:39):
If you've got to pivot, ifyou've got to change, if you've
got to close down and rebuild,you know, if something happens,
it gives you an opportunity toadjust right.
You're not just dead in a day.
Speaker 1 (12:49):
Interesting to adjust right.
You're not just dead in a day.
Interesting how many businessesthat you go into working with
are have that in place.
Is it common for most like doesthe majority have three to six
months of runway, or did youfind a lot of people they they
don't have that and they'rechasing their tail every month?
Speaker 2 (13:06):
yeah, they don't have it uh, I'm going to say 90 plus
90 plus percent.
If I had to guess I don't havestats on it, but if I had to
guess, 90 plus percent, becausemost people are just trying to
survive, right?
We get so wrapped up in the dayto day like, oh, I got this
customer, I got this product, Igot this service, I got this
meeting that we're not lookingat what we're building by doing
all these things.
(13:27):
Right, all of these actionscreate something.
And so people always say, well,what's you know working on your
business versus in yourbusiness?
Right, you probably heard thatNobody was ever really able to
explain that to me.
So I built the chart, right?
So, and and you know, I'llprobably pass it over to you and
you can kind of put in the shownotes but it's a cause and
effect chart that visualizeswhat's working in your business
(13:49):
and what's working on yourbusiness, what are the
activities that kind of happen.
And, more importantly, when Isay it's a cause and effect
chart, is I built it because Iwanted to predict the future?
If this happens, what should Iexpect to happen next?
Right, so it kind of walkssomebody through what to expect
to happen next if something badis happening in the business.
Speaker 1 (14:08):
Interesting.
That's cool.
Yeah, I've always that one'salways eluded me for the longest
time, I think the first coupleof years in business I never
really understood what is thedifference and I'm probably
still learning it more as I go.
But in the last couple of yearsit started to hit a lot more
and I try to chalk it up asessentially anything that's sold
the fulfillment, the deliveryof the widget to me that's
(14:32):
working on the business and if Ican get out of the fulfill or
sorry in the business and if Ican get out of the delivery
aspect, okay, now I can go workon the business stuff.
But if you're, whatever you'redoing, stuck doing the thing
that was sold me, that feelslike you're inside the business.
Speaker 2 (14:51):
All right.
So, first of all, I agree withit.
What you just described withyou know, the delivery of the
widget is working in yourbusiness.
It's the thing that I do.
It's my promise to the customer.
What do I do to give it to them?
What happens on the outside iswhere everybody gets vague and
cloudy, Like I don't know whatthat is, because they don't do
it.
It's vague and cloudy Like Idon't know what that is because
(15:12):
they don't do it.
Well, think about it.
If you have low net profit,that is a result of what you did
in the business.
Well, if you have low netprofit, chances are you're going
to have what's called negativeoperating capital.
That's not only the incomestatement, so you don't see it.
But negative operating capital,you know, has some contributing
factors like collecting tooslow, paying too fast, having
too much inventory.
(15:32):
All those things are kind of onthe business.
So if I see negative operatingcapital, chances are I'm going
to be struggling and go stealmoney from other places.
Right, You've heard of RobinPeter, PayPal and those types of
things.
Well, everybody goes to go tothe bank.
Just go get a loan.
Well, when you go get a loan,that's working on your business.
When you go get a loan, there'sa higher need for lending and
(15:53):
chances are you're going to paytoo much interest, right?
That's another thing that'skind of on the business.
And there's a thing where 60%of small business owners do when
they go get loans.
It's called mismatch financing.
It's using the wrong loanproduct to buy something.
Think about buying a house witha credit card.
Would you do that?
No, Come on, Great miles, Greatmiles, James.
(16:14):
No, you don't do that.
Right, but we do that asbusiness owners all the time.
Maybe not that exaggerated, butyou'll use a credit card to buy
something you can depreciatewhere you should have used a
term loan.
Why?
Because credit cards are around30% right now and term loans
are around 10, you know, 7, 8, 9, 10.
(16:35):
It sucks money out of yourbusiness in the form of cash.
So the rule that I teach peopleon lending is the length of the
loan should match the life ofthe asset, right?
So and this is kind of how Iteach James is just simple
things like that the length ofthe loan should match the life
of the asset.
So if I can depreciatesomething for five years, I buy
it with a five-year term loan,that way, when depreciation's
over, so are the payments, and Ican upgrade.
You know it keeps everything ina real clean, matching
(16:56):
situation.
Speaker 1 (17:01):
Yeah, well, I mean, you say it's simple.
It's simple to you becauseyou're the expert in it, but
even some of these things you'resaying yes, some of it makes
obvious sense, but even justother things you're mentioning,
it's like, okay, that's, that'sreally insightful, that's
interesting and and there may bea lot of listeners who are like
James, you're crazy, thatsounds super basic as well, but
from not sitting in the seatthat you're in every day, it's,
trust me, it's not super basicstuff.
(17:22):
So what you're providing your,your audience, your clients, is
super valuable.
Speaker 2 (17:31):
Yeah, that's, that's really kind of you to say,
because my whole thing is tobring financial concepts to the
regular person right To me,because I wasn't an accountant,
I wasn't a banker, but I teachthem both.
Why?
It's not about teaching themthe math.
They can pick up on the mathand all that.
It's about the connection tothe regular person.
Here's how you describe this tosomebody that's not
sophisticated, doesn't have anMBA, doesn't have a CPA, you
(17:54):
know, never, never, dealt withthis.
They're just good at what theydo.
Speaker 1 (17:57):
Yeah, I think that's so good, Just simplifying it,
taking you know, dumbing it downso that you can explain it
essentially to a fifth grader.
I think is the is what I'mhearing from you and that's what
I, that's what I got from yourpresentation again on stage.
I keep going back to that, butthat I thought it was just
really impactful and it soundedso simple and it's like, yeah,
(18:20):
you should know this, becauseyou were able to verbalize it
and communicate it in a way thatwas simple.
So I think that's really good.
Mike, if someone's listeningand they're running lean or
feeling stuck, what's onedecision they can make today
that would help them move theneedle?
Speaker 2 (18:31):
Yeah, probably the one thing is start to look at
how long it takes cash to comein right, and the basic thing is
try to match your AR and AP atfirst, because you'll notice
that some people just don't havethat.
If they're collecting in 60days but paying in 15, well,
that means all your money's goneand you're still waiting for
money to come in.
That makes your business feelclunky, Like, oh, I'm always
(18:52):
waiting for money to come inbefore I can make a decision or
buy something.
Try to get those closertogether.
Right, it's called an ARAPmatch, and when the bankers look
at you, they'll look for themismatch, and the mismatch is
that big gap that I justdescribed or it could be the
other way, which is money'scoming in fast but it's taking
(19:12):
you too long to pay.
The bank's going to ask thatquestion too is hey, you're
getting paid, how come you'renot paying people?
So the closer you can get themto match, the more balanced I
think you'll be.
Speaker 1 (19:23):
That's good.
If you could erase one commonpiece of bad financial advice
forever, what would it be?
Speaker 2 (19:30):
Ooh me, if I could erase that something I do,
taking on debt too early.
Right, you say, oh, you needdebt, it's good debt, you need
it to grow.
No, it's like a ball and chainup front, right, that's one of
the things that I made a mistakein early, early on, that I
don't do now.
That's one of the things that Imade a mistake in early, early
(19:51):
on, that I don't do now.
You know, I run a debt-freecompany because I try to match
my cash flow with my scalability, right, yeah, but we could take
on money, we could take on debt, we could take on investors,
but I'm just trying to match itand stay debt-free because it
really limits what you can do.
Now, some people have to I haveto buy a truck, I have to get a
(20:12):
building, I have to do somethings, what I have to do.
But if you're just taking itfor cash flow, just to have
money to stay alive, well,that's the wrong way to do it.
Speaker 1 (20:24):
Interesting.
Do you think there's a lotagain?
You may not have the stat orthe stat's not readily available
for us, but how many businessesout there do you think run
debt-free?
Speaker 2 (20:36):
Oh man, well, debt-free, I would say less than
20%, I would think.
I would think that everybodytakes a loan for something or
tries to get a loan forsomething, even if it's SBA, to
get up and running, to buy thebusiness right.
A lot of people are buyingbusinesses and they'll take a
loan out to do that.
Some of them will buy cars andtrucks because their accountant
(20:57):
says to do that.
So for the depreciation aspectsit's, I think, probably less
than 20%.
But if you think and dude,that's a total guess, I have no
idea.
Speaker 1 (21:09):
Yeah, I know, I know I'm throwing up random questions
for you.
Speaker 2 (21:13):
So, yeah, so and these are new, right, there's
two new questions in a row.
But you know you go back toMichael Dell's quote, right,
about where he ran into acashflow problem and and part of
his thing and I don't part ofhis thing was when they had to
move from building after theorder.
Right, that's how you used tobuy a Dell.
Was you created the order, theywould build your product and
(21:34):
ship it out to you?
Speaker 1 (21:35):
Yes, that's right.
I remember getting a Dell yearsago.
Speaker 2 (21:37):
Yeah, right, that's exactly what it was, and it
would take like four to sixweeks.
But you paid up front.
So cashflow wasn't a problemfor Dell.
They had money come in up frontand they'd take your money, buy
the parts, put come in up frontand they take your money, buy
the parts, put it together andship it back to you.
Well, when CompuServe orCompUSA and all these folks came
in we'll say, in Best Buy nowthey came in HP, all these other
(22:04):
companies went on the shelf.
Well, that means Dell had tomake the shift from using your
money to buy the parts to usingtheir own money to buy the parts
and put it on the shelf andwait for the money from the sale
.
Right, that's what caused a lotof the cashflow problem.
And what Michael Dell said waswe were too busy watching the
speedometer.
We forgot to look at the gasgauge and what he meant by that.
The speedometer was sales.
Right, they were trying to justincrease sales by putting it in
(22:26):
big box stores because theycould just get sales every day,
instead of watching their cashflow.
Right, they were just puttingproduct on the shelf, product on
the shelf, getting paid 90 dayslater instead of upfront.
So that's one of the thingsthat I think people need to pay
attention to is the matching ofsales.
More sales is only ameasurement of work.
It's not a measurement of cash.
(22:46):
Right?
Gross profit is the only placeyou can get cash, so if you're
going to look for cash on theincome statement, it's gross
profit.
That's such a great visual.
Speaker 1 (22:56):
You kind of touched on it in this next question, but
I'm going to ask it anyways,because maybe there's something
different that comes up Firstbig money lesson that you
learned either the hard way orthe fun way.
Speaker 2 (23:09):
Yeah, I'm going to do the hard way.
Right, it was growing too fast.
I call it growing broke, whichmeans I'm so successful that I
outrun my own operation.
And here's the thing you know Iopened 27 offices, I had a
hotel staffing company, 27offices in nine states in three
years had a few hundred peopleworking every day.
Well, what happens there is I'mmaking payroll every two weeks
(23:33):
and Marriott decides they'regoing to pay me in 70, 80, 90
days, right.
So I got to make six payrollsbefore I get paid for the first
invoice.
I sent them three months before, right.
That was me like going.
I'm so successful, I can sellanybody, I can go out there and
just grow this business.
And then, all of a sudden, I'mwaking up with cold sweats
(23:54):
because, oh my God, I don't knowif I'm gonna make payroll this
next week.
I went four months myselfwithout taking a paycheck, right
.
And you want to test yourrelationship?
try to go without any money youknow, and take a mortgage on the
house and max out your creditcards to stay alive.
Speaker 1 (24:10):
Yeah, I've that's a hard lesson, I would say.
Speaker 2 (24:16):
So if you want to learn how not to do that, you
should take my course.
Speaker 1 (24:20):
Yeah, I mean it's so interesting what you're saying
there, though, because it's justbecause you can sell doesn't
mean you can run a business Justbecause you have one aspect of
something, just because you'rereally good at the thing.
I think a lot of people also.
They're like, oh I'm reallygood at this, I'm just going to
go start a business.
Okay, you're going to learn thehard way.
There's a lot of hats to wearto run a business successfully,
(24:42):
and it sounds like you learnedthat one.
I mean you're crushing it, andthen it was just waiting for
payments.
It will come in, but there'snothing right.
Just think, if I just sell more, I can work myself out of this
right.
Speaker 2 (24:58):
Everybody thinks that being successful is that and
it's really not Meaning that youhave to evaluate can I afford
to take on this next contract,this next project, this next
customer?
Can I afford it?
And that was a whole piece ofthe business pie that I missed
early on, right Until I startedto learn about lines of credit
and being able to control thebusiness pie that I missed early
on until I started to learnabout lines of credit and being
(25:19):
able to control the size of thatgap money coming in versus
money going out.
Where I talked to ARAP, my ARwas the invoice from Marriott,
my AP was the payroll going out,and they were too far apart.
I was paying in two weeks butgetting paid in 90 days.
That means I had to have, well,we'll say, 60, 70 days worth of
money available just to stayopen.
Speaker 1 (25:42):
This particular piece that we're speaking about
really hits home because I'vecertainly been in positions and
a lot more recent than not whereit just feels like the solution
is just sell more and it willfix the problem.
So it is really helpful to hearthat from you, that I'm sure
there's times where if you justgo and sell more it'll fix some
(26:02):
problems.
But it's not always the answerof just go and sell, because
you'd sell yourself into otherproblems.
Speaker 2 (26:09):
Yeah, exactly right, and believe it or not, there's a
technique I teach calledexpense control, where you can
make the same money at differentsales levels.
I had a client that was doing$9 million a year.
Over a five-year period theirsales whittled down to $8
million a year and we got themto where they were making the
same profit at $8 million thatthey were at $9 million.
(26:32):
So you can do it.
So remember, sales is only ameasurement of how much work you
did.
The money comes in at grossprofit and operating expense.
Those are the two things thathave to work together.
Speaker 1 (26:42):
Yeah, that's so good.
How are you doing on time?
Like I got two more questionsfor you, I just want to.
I know we're.
Speaker 2 (26:49):
I'm I committed to the CFO Chronicles.
Speaker 1 (26:53):
Perfect, awesome.
So two more questions for you,then.
How do you want people toremember cash flow mike when
they think back on your work?
Speaker 2 (27:02):
authentic, right I?
I think that's the onedifference and shift I made in
my whole professional career,right?
I mean, when early on I wastrying to be the guy in the suit
, I was trying to be the guy youknow, uh, going to the
conferences that way with thetie and the cufflink, and it
just I tried to be the guy youknow, going to the conferences
that way with the tie and thecuff link, and it just I tried
to be something that I wasn't, Ithink when I shifted to what I
(27:23):
really am right, which is a farmkid.
But when I shifted to that, mylife got easier, I felt more
natural.
I think the authenticity comesacross in everything I do.
So I think that that's you know, it's just the straight BS.
I'm not, it's just straight toyou.
It's not going to be anythingthat's inauthentic or wrong.
Speaker 1 (27:45):
So good, okay.
Last question for you, mikewhat's the best piece of advice
you've ever received, personallyor professionally?
Speaker 2 (27:54):
Oh, that one's easy right.
I even wrote a blog article onthis, probably eight years ago.
You know it's from mygrandfather, right From my
grandfather, and it was kind ofrepeated by a member of my
mentor of mine as well, in adifferent version of it, but my
grandfather said it best I wasstressed out Right First,
starting to run the businesspretty stressed out.
(28:14):
I had the ARAP problem with thehotels.
To run the business prettystressed out.
I had the ARAP problem with thehotels and I was worried about
other things like what was theimmigration laws going to happen
?
Because at that point in timethey were trying to bring in
E-Verify.
What was that going to cost meto get involved with that and
start?
Am I going to have to beef upHR and those types of things?
What was I going to have to dodifferent?
(28:35):
Well, that came with a whole lotof other stress monetarily,
legally, all these type ofthings of what things were
happening in the world in theearly 2000s.
And he just sat me down andsays hey, control what you can
control, that's it.
Don't worry about the otherstuff, you know, because don't
fight a battle that hasn'tstarted.
So they haven't made thatdecision, they haven't done
(28:58):
those things yet.
Control what you can controland don't fight a battle that
hasn't started yet, and that'skind of what's led me to here.
Speaker 1 (29:06):
I love it.
That's so good.
Thank you so much for sharingthat.
Yeah, control what you cancontrol.
That's right.
I've certainly been in the boatwhere I stress about things
that haven't even happened yet,and what is I?
I do think there is a stat onthis, one that I feel confident
in, but I thought I've seen astat where 97% of the stuff
(29:26):
people stress about never evencomes to fruition.
Speaker 2 (29:29):
Yeah, that's probably I'm going to lean with that.
Speaker 1 (29:31):
I'm going to say that that's an accurate number.
But I I, so you know controlwhat you can control, don't
fight the battle that neverexists or doesn't is not even
you know there yet.
Speaker 2 (29:42):
That's awesome, yeah, but you know, what's funny is
that.
Here's what I learned in thisepisode that 85 of stats are all
made up.
Speaker 1 (29:48):
Yes, there's that one as well.
Yeah well, I'm glad you got tothat first instead of someone in
the comments after.
So that's good.
Mike, thank you so much forcoming on.
This was awesome.
I'm so pumped.
I got to meet you a couple ofweeks ago at at a girl con.
I hope to see you again verysoon in another event or
(30:09):
somewhere.
In passing, um, I love whatyou're doing.
What's the best way for peopleto get in touch with you?
How can they get access to more, mike, more of your knowledge?
Speaker 2 (30:20):
Yeah, really cool.
So I mean, first of all, it'seasy, right?
Just go to cashflowmikecom andhere's what I would say.
I have a book called the7-Minute Conversation.
It's how to analyze financialstatements in seven minutes or
less by just six easycalculations.
What I'm doing on the websiteright now is I'm giving you not
only a free copy of that book,but you're getting the video
(30:41):
lesson that goes with it, right?
So you get the book, the videolesson, you get a spreadsheet to
help you do the calculationsall of that in one package for
the low, low cost of your emailaddress.
Speaker 1 (30:51):
Not a bad price.
Speaker 2 (30:53):
That's it, yeah.
Speaker 1 (30:54):
Best price going around right now with inflation.
So that's awesome, mike.
Again, thank you so much forcoming on.
This is incredible For everyonelistening.
Please leave a comment, leave areview.
It helps us grow the show, getmore viewership and Mike love
what you're doing.
Keep it up.
Speaker 2 (31:11):
Thanks, james, appreciate you.
Speaker 1 (31:12):
Thanks for tuning into this episode of CFO
Chronicles the secrets behindsuccess.
I hope you found value intoday's conversation.
As we wrap up, I'd love for youto do two things.
First, make sure to subscribeto this podcast so you don't
miss any future episodes.
If you enjoyed today'sdiscussion, please rate and
review the show.
It helps others discover theinsights we share here.
Second, if you're ready to takeyour business to the next level
(31:35):
and attract the high-endclients you deserve, head over
to accountingleadsnowcom orclick the link in the show notes
to book your strategy.
Call it's time to positionyourself as the advisor your
clients need.
And don't forget you canconnect with me on LinkedIn to
stay up to date on what'shappening in the world of
accounting and financial growth.
We've got exciting topicscoming up, so stay tuned for the
(31:56):
next episode of CFO Chronicles.
Until then, keep pushingforward.
Your growth is just onestrategic move away.
Speaker 3 (32:03):
Thanks for listening to CFO Chronicles the secrets
behind success.
We hope today's episodeprovided valuable strategies to
help you attract morehigh-paying clients.
Be sure to subscribe, followand share with fellow
professionals.
Connect with us on LinkedIn andleave a review or comment to
join the conversation.
Your feedback helps us bringyou the best insights in finance
(32:26):
and marketing.
Until next time, keep strivingfor success and unlocking your
business's potential.
Welcome back to another episode of CFO
Chronicles the secrets behindsuccess, where we explore what's
really working in the world offinance, business strategy and
bold decision making.
I'm your host, james Donovan,and today's guest is someone who
brings the perfect combo ofenergy, expertise and blunt
truth.
We first met just a few weeksago, grocon in Utah.
(00:20):
He was a sponsor and speaker atthe event and we hit it off
immediately.
Between Between great convosand high-level insights, one
thing became clear this guylives and breathes helping
business owners actuallyunderstand and use their numbers
.
I'm talking about Mike Milan,better known as Cashflow Mike.
He's a serial entrepreneur,author, speaker and the creator
(00:40):
of financial tools and trainingthat actually makes sense to
everyday business owners, andright now I'm holding up his
book Don't Tell Me what To Do,which I've been reading this
week and absolutely loving.
But before we dive into Mike'sstory and strategies, a quick
shout out to our sponsor,billcom.
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(01:01):
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Now let's get into the realreason why we're here Cash flow.
Mike, so great seeing you again.
Speaker 2 (01:25):
Hey, live from San Antonio.
Is Cashflow Mike, right?
So I got to tell you.
Rarely do I say I miss somebody, but you I missed you, right?
I mean, it's been like a monthsince I saw you and I'm like you
know what that's somebody Imissed and I was looking forward
to today, so I'm glad you hadme on.
Speaker 1 (01:40):
Awesome.
Hey, you took the words out ofmy mouth.
I'm pumped to have you on theshow and it's great to see you
again.
We had the pleasure of justbeing across the room from one
another with our booth, so gotto chat a lot, which was really
cool.
Let's dive right into it, mike.
First things first.
I do have your book here, as Iwas just showing.
Don't Tell Me what To Do.
It's bold, it's direct.
(02:02):
I love the tone.
What made you write this andwhere did the title come from?
Speaker 2 (02:08):
Yeah, so super interesting, right?
First of all, don't expect thegreat Gatsby, right?
Because I'm not that.
I'm not that type of writer, soit's not going to be a classic
that you have to read 17 timesover the course of your life.
But here's the thing.
So originally, when I built theClear Path to Cash, it was eight
techniques to maximizing cashin a business, with a
(02:30):
combination of things that Iteach bankers at the Graduate
School of Banking at Coloradoand things that I learned over
25 years or so running 14businesses little things that
made it easier for me.
So I combined that and I usedto do seminars for banks, right?
They would bring in 30 to 100business owners and I would do a
one or two day seminar abouthow to actually understand and
(02:52):
use your financial statements.
And there was a bunch ofaccountants, and one of them in
Arizona, and they came up to meafterwards and said, hey, how
come you don't teach this to us?
Oh my God, I didn't think aboutit.
I just hadn't thought about.
Oh my God, that's the thirdpart of the triangle the
business owner, the banker andthe accountant.
Why am I not spending more timetrying to get accountants on
(03:14):
the same page.
I'm spending all the time theother way.
I built a clear path to cash andstarted selling that course to
accountants.
I thought, oh, with accountants, all I got to do is teach them
math.
If I teach them the math, andthat should be good enough.
(03:34):
Well, what they wanted was roleplays how do I use the math
with a client?
And when we started doing roleplays, I noticed a common theme
where an accountant had troublehaving a conversation right, a
conversation that got people totake action.
That was one of the things thatthey would tell me.
They said nobody listens towhat I do, nobody listens to
what I tell them to do.
They just go do their own thing.
They ignore me or they ghost meand those types of things.
I'm like oh, you don't know howto talk to people.
(03:55):
So that's where the idea camefrom.
Originally, it was givingaccountants the words to say Now
you're like well, how do youknow the words to say.
Well, back in the day, my firstjob, james, I was a state
trooper.
Speaker 1 (04:12):
Yes, I remember you saying that, yeah it's so cool,
yeah, right.
Speaker 2 (04:15):
So not only did accountants want to learn math
from a state trooper, nowthey're asking me to teach them
how to talk to people.
So to me that's always weird,but it's one of those things
where, as a state trooper, youlearn to talk to people on their
worst day, right?
And one of the things that youwant to do is be able to get
them to be committed to whateveris going to happen next, right,
(04:37):
if we're going to jail, ifwe're getting a ticket, you just
want to be committed to thataction, not compliant, and
there's a big difference betweencommitment and compliance,
right?
So?
And compliance is tellingpeople what to do.
So I started to look at whathappened in my business career
when I hired consultants oradvisors and all of them would
come in with these one or twoinch binders, or they come in
(05:00):
with this slide deck or thesereports and they just want to go
through it page by page by page.
You ever done that, right?
Been through somebody'spresentation like that?
yeah, well, I mean that's,that's kind of feels like what
high school is like or any anycourse you're taking, right,
it's painful it's like okay,next page, next page, good,
because they're never on your,your speed, they're never on
(05:21):
your cadence, they're never onyour rhythm, they're never
talking about the thing that'smost interested to you.
Why?
Because they did all this.
I call it free work, somepeople call it pre-work.
To come to my meeting, right,you want to talk to me and give
me advice, but you're nottalking to me, you're presenting
to me.
So the name of the book is Don'tTell Me what To Do.
It's a kind of a doubleentendre there.
(05:42):
Tell meaning you actually can'ttell people what to do, because
people's natural resistance isto say no, to go away.
I don't want you to tell meanything.
The other thing tell is anacronym.
It's an acronym T-E-L-L, whichis terminate every long lecture,
which means you actually haveto start talking to people and
(06:02):
kind of, the ratio I use is 70%of the time the customer or
client talks and 30% of the timeyou talk.
The only way to get to thatpercentage is to ask the right
questions.
Speaker 1 (06:13):
Yeah, it's so good.
I think too many people missthat in a sales conversation
I'll say sales conversationbecause we're talking about the
accountant speaking to theprospect or the client, but it's
really it is just aboutlistening.
You're just there to listen,you ask the right question and
then you stop and you justlisten, and that's what I mean.
(06:33):
I really got a lot out of yourpresentation and out of the book
so far and that's what it allessentially speaks about is kind
of just sit back and listen,ask the right questions and then
listen.
Speaker 2 (06:43):
Yeah.
So that's the big mind shift.
Right, when accountants areused to, I have to do so many
things in an hour.
Right, it's pop, pop, pop, pop,right, and they're just used to
cruising through an hour anddoing things as fast as possible
.
The mind shift is this is not afast art, it is.
We're spending an hour togetherhowever you want to spend it.
(07:06):
Where can I give you most valueas the advisor?
So to do that, you have to slowdown and it's okay not to get
everything done on your agenda.
You'll get to it next time.
So I've got this idea calledthe burning issue and everything
that I do is to get somebody totell me what their burning
issue is, because I believe thatif you say it as the client,
(07:28):
it's absolutely true.
Nobody can argue with it.
If I say it as the advisor, youcan argue with it.
Right, If I say, hey, here'syour problem, you can say no,
it's not.
But if you say it, who am I tosay that it's not the problem?
So the first thing that I teachpeople to do is how to get your
client to actually articulatewhat is the pain that they feel.
(07:49):
Right, and that's the skillthat I teach in that book Don't
Tell Me what to Do, is how to gothrough this elevation sequence
.
Speaker 1 (08:00):
It's a series of questions that get you to a
problem.
So good, I love it.
I got to know Mike.
So good, I love it.
Um, I gotta know mike.
I don't think I asked you atgrocon.
But where, where did cash flow,mike, the identity, start?
Did you give the name toyourself, did like, how did?
Did someone give it to youwhere?
Where did it come from?
Because I love it?
I think it just works so well.
Speaker 2 (08:18):
But I'm so curious to know I I think some bankers
were making fun of me, right,because when I was teaching at
the banking school, I'm walkingdown the hallway and they go hey
, there goes, cash flow Mike.
And I'm like I wonder why theycalled me that.
So I turned around and say hey,what does that mean?
They said you, you only talkabout cash flow.
You never talk about profit orany of the other stuff.
(08:39):
It's just cash flow to you.
So we're we're started callingyou cashflow Mike and I thought
it was like uh, a dig.
I thought they were making funof me again.
But I started hearing it, youknow, once or twice in my head
and I'm like, damn, that'spretty good.
Speaker 1 (08:54):
Yeah.
Speaker 2 (08:56):
It's better than any name I could have come up with,
right?
So, uh, as, as long as you getpast the embarrassment of
calling yourself cashflow Mikecause it's embarrassing at first
, right, hey, I'm cashflow Mikewhen you get past that and lean
into it as an identity, morepeople know me by that name than
my real name.
I mean even you and I'm not.
I'm not calling you out on this, but my last name is pronounced
(09:17):
Milan, right?
Yeah, and I have to teachpeople a song all the time.
I'm like this land is your land, this land is yeah.
Speaker 1 (09:28):
I remember you doing that from stage.
Yeah, that's so good.
Speaker 2 (09:32):
Yeah, it's one of those things where more people
know Cash From Mike.
It's easier, the website'seasier, the social handle,
everything's easier with thatname.
Speaker 1 (09:43):
I just from like the, the marketing side of things as
well, like that's immediatelywhere my brain goes to and I
think it, it works so good.
Like it's the proprietarysystem you've built, it's the
identity, it's the whole brand.
It's not just mike oh yeah,speak with mike, he's a good
connection and blah blah.
No, it's cashflow, mike.
You know, like everything'scashflow.
(10:03):
Right, I think it, it works sogood.
So I'm glad those bankers saidthat to you walking down the
hall one day.
Speaker 2 (10:10):
Yeah, you know that's high praise coming from you,
right?
You run a marketing gurucompany, so that's high praise.
I appreciate that.
Speaker 1 (10:17):
Oh, I appreciate the compliment.
Let me ask you a lot ofbusiness owners know their
numbers, but they don't know howto use them.
Speaker 2 (10:31):
What's the most common gap that you see when
going into a new business?
Normally it's the differencebetween profit and cash flow.
Right, I'm making money.
How come I don't have any?
Right, that's the most commonthing.
Where they're paying taxes,they're seeing these income
statements, they're makinghundreds of thousands of dollars
a year, but yet there's $2,000in the bank.
So it's the difference between.
When you look at a company,there's a vertical analysis and
(10:53):
that's really your profit lossstatement.
You start with sales and youend with profit vertically,
right, you just keep subtractingthings until you get to profit.
Then there's kind of thehorizontal analysis, which is
how long does this take?
So when?
The reason I call it horizontalis it's about time, right?
So think about a scale, a timescale of how long does it take
me to collect, how long doesinventory sit on the shelf, how
(11:15):
long does it take me to pay mybills?
So those two have to work inconcert and most people get
focused on the income statement,because it's like a report card
, and forget about theconversion side.
Speaker 1 (11:28):
Interesting.
It's probably tough becauseevery business is different and
every industry is different, butdo you have a certain metric or
a benchmark of how long abusiness should have available
for cash flow or how muchreserves they should have?
It might be a little vague,depending on the industry, have
(11:50):
yeah, it might be a little vague, depending on the industry.
Speaker 2 (11:55):
No, actually it's agnostic that's the word I was
looking for.
Agnostic meaning that the firstthreshold I try to get people
to is three to six months worthof operating expense, and that
works for everybody right.
So if you spend $10,000 a monthjust in operating expense your
fixed cost, your rent, yoursalaries, those type of things
then you should have thirty tosixty thousand dollars.
This is critical because peopletake money out of their company
(12:17):
and I won't let my clients doit until they get to that
threshold threshold.
If you're not between 30 and 60, then you can't take any money
out.
And the reason for that is itgives you three to six months of
time.
That's really all we're tryingto look at, because, who knows,
a hurricane or tornado COVID,you need at least three to six
months to be able to come upwith a new plan.
(12:39):
If you've got to pivot, ifyou've got to change, if you've
got to close down and rebuild,you know, if something happens,
it gives you an opportunity toadjust right.
You're not just dead in a day.
Speaker 1 (12:49):
Interesting to adjust right.
You're not just dead in a day.
Interesting how many businessesthat you go into working with
are have that in place.
Is it common for most like doesthe majority have three to six
months of runway, or did youfind a lot of people they they
don't have that and they'rechasing their tail every month?
Speaker 2 (13:06):
yeah, they don't have it uh, I'm going to say 90 plus
90 plus percent.
If I had to guess I don't havestats on it, but if I had to
guess, 90 plus percent, becausemost people are just trying to
survive, right?
We get so wrapped up in the dayto day like, oh, I got this
customer, I got this product, Igot this service, I got this
meeting that we're not lookingat what we're building by doing
all these things.
(13:27):
Right, all of these actionscreate something.
And so people always say, well,what's you know working on your
business versus in yourbusiness?
Right, you probably heard thatNobody was ever really able to
explain that to me.
So I built the chart, right?
So, and and you know, I'llprobably pass it over to you and
you can kind of put in the shownotes but it's a cause and
effect chart that visualizeswhat's working in your business
(13:49):
and what's working on yourbusiness, what are the
activities that kind of happen.
And, more importantly, when Isay it's a cause and effect
chart, is I built it because Iwanted to predict the future?
If this happens, what should Iexpect to happen next?
Right, so it kind of walkssomebody through what to expect
to happen next if something badis happening in the business.
Speaker 1 (14:08):
Interesting.
That's cool.
Yeah, I've always that one'salways eluded me for the longest
time, I think the first coupleof years in business I never
really understood what is thedifference and I'm probably
still learning it more as I go.
But in the last couple of yearsit started to hit a lot more
and I try to chalk it up asessentially anything that's sold
the fulfillment, the deliveryof the widget to me that's
(14:32):
working on the business and if Ican get out of the fulfill or
sorry in the business and if Ican get out of the delivery
aspect, okay, now I can go workon the business stuff.
But if you're, whatever you'redoing, stuck doing the thing
that was sold me, that feelslike you're inside the business.
Speaker 2 (14:51):
All right.
So, first of all, I agree withit.
What you just described withyou know, the delivery of the
widget is working in yourbusiness.
It's the thing that I do.
It's my promise to the customer.
What do I do to give it to them?
What happens on the outside iswhere everybody gets vague and
cloudy, Like I don't know whatthat is, because they don't do
it.
It's vague and cloudy Like Idon't know what that is because
(15:12):
they don't do it.
Well, think about it.
If you have low net profit,that is a result of what you did
in the business.
Well, if you have low netprofit, chances are you're going
to have what's called negativeoperating capital.
That's not only the incomestatement, so you don't see it.
But negative operating capital,you know, has some contributing
factors like collecting tooslow, paying too fast, having
too much inventory.
(15:32):
All those things are kind of onthe business.
So if I see negative operatingcapital, chances are I'm going
to be struggling and go stealmoney from other places.
Right, You've heard of RobinPeter, PayPal and those types of
things.
Well, everybody goes to go tothe bank.
Just go get a loan.
Well, when you go get a loan,that's working on your business.
When you go get a loan, there'sa higher need for lending and
(15:53):
chances are you're going to paytoo much interest, right?
That's another thing that'skind of on the business.
And there's a thing where 60%of small business owners do when
they go get loans.
It's called mismatch financing.
It's using the wrong loanproduct to buy something.
Think about buying a house witha credit card.
Would you do that?
No, Come on, Great miles, Greatmiles, James.
(16:14):
No, you don't do that.
Right, but we do that asbusiness owners all the time.
Maybe not that exaggerated, butyou'll use a credit card to buy
something you can depreciatewhere you should have used a
term loan.
Why?
Because credit cards are around30% right now and term loans
are around 10, you know, 7, 8, 9, 10.
(16:35):
It sucks money out of yourbusiness in the form of cash.
So the rule that I teach peopleon lending is the length of the
loan should match the life ofthe asset, right?
So and this is kind of how Iteach James is just simple
things like that the length ofthe loan should match the life
of the asset.
So if I can depreciatesomething for five years, I buy
it with a five-year term loan,that way, when depreciation's
over, so are the payments, and Ican upgrade.
You know it keeps everything ina real clean, matching
(16:56):
situation.
Speaker 1 (17:01):
Yeah, well, I mean, you say it's simple.
It's simple to you becauseyou're the expert in it, but
even some of these things you'resaying yes, some of it makes
obvious sense, but even justother things you're mentioning,
it's like, okay, that's, that'sreally insightful, that's
interesting and and there may bea lot of listeners who are like
James, you're crazy, thatsounds super basic as well, but
from not sitting in the seatthat you're in every day, it's,
trust me, it's not super basicstuff.
(17:22):
So what you're providing your,your audience, your clients, is
super valuable.
Speaker 2 (17:31):
Yeah, that's, that's really kind of you to say,
because my whole thing is tobring financial concepts to the
regular person right To me,because I wasn't an accountant,
I wasn't a banker, but I teachthem both.
Why?
It's not about teaching themthe math.
They can pick up on the mathand all that.
It's about the connection tothe regular person.
Here's how you describe this tosomebody that's not
sophisticated, doesn't have anMBA, doesn't have a CPA, you
(17:54):
know, never, never, dealt withthis.
They're just good at what theydo.
Speaker 1 (17:57):
Yeah, I think that's so good, Just simplifying it,
taking you know, dumbing it downso that you can explain it
essentially to a fifth grader.
I think is the is what I'mhearing from you and that's what
I, that's what I got from yourpresentation again on stage.
I keep going back to that, butthat I thought it was just
really impactful and it soundedso simple and it's like, yeah,
(18:20):
you should know this, becauseyou were able to verbalize it
and communicate it in a way thatwas simple.
So I think that's really good.
Mike, if someone's listeningand they're running lean or
feeling stuck, what's onedecision they can make today
that would help them move theneedle?
Speaker 2 (18:31):
Yeah, probably the one thing is start to look at
how long it takes cash to comein right, and the basic thing is
try to match your AR and AP atfirst, because you'll notice
that some people just don't havethat.
If they're collecting in 60days but paying in 15, well,
that means all your money's goneand you're still waiting for
money to come in.
That makes your business feelclunky, Like, oh, I'm always
(18:52):
waiting for money to come inbefore I can make a decision or
buy something.
Try to get those closertogether.
Right, it's called an ARAPmatch, and when the bankers look
at you, they'll look for themismatch, and the mismatch is
that big gap that I justdescribed or it could be the
other way, which is money'scoming in fast but it's taking
(19:12):
you too long to pay.
The bank's going to ask thatquestion too is hey, you're
getting paid, how come you'renot paying people?
So the closer you can get themto match, the more balanced I
think you'll be.
Speaker 1 (19:23):
That's good.
If you could erase one commonpiece of bad financial advice
forever, what would it be?
Speaker 2 (19:30):
Ooh me, if I could erase that something I do,
taking on debt too early.
Right, you say, oh, you needdebt, it's good debt, you need
it to grow.
No, it's like a ball and chainup front, right, that's one of
the things that I made a mistakein early, early on, that I
don't do now.
That's one of the things that Imade a mistake in early, early
(19:51):
on, that I don't do now.
You know, I run a debt-freecompany because I try to match
my cash flow with my scalability, right, yeah, but we could take
on money, we could take on debt, we could take on investors,
but I'm just trying to match itand stay debt-free because it
really limits what you can do.
Now, some people have to I haveto buy a truck, I have to get a
(20:12):
building, I have to do somethings, what I have to do.
But if you're just taking itfor cash flow, just to have
money to stay alive, well,that's the wrong way to do it.
Speaker 1 (20:24):
Interesting.
Do you think there's a lotagain?
You may not have the stat orthe stat's not readily available
for us, but how many businessesout there do you think run
debt-free?
Speaker 2 (20:36):
Oh man, well, debt-free, I would say less than
20%, I would think.
I would think that everybodytakes a loan for something or
tries to get a loan forsomething, even if it's SBA, to
get up and running, to buy thebusiness right.
A lot of people are buyingbusinesses and they'll take a
loan out to do that.
Some of them will buy cars andtrucks because their accountant
(20:57):
says to do that.
So for the depreciation aspectsit's, I think, probably less
than 20%.
But if you think and dude,that's a total guess, I have no
idea.
Speaker 1 (21:09):
Yeah, I know, I know I'm throwing up random questions
for you.
Speaker 2 (21:13):
So, yeah, so and these are new, right, there's
two new questions in a row.
But you know you go back toMichael Dell's quote, right,
about where he ran into acashflow problem and and part of
his thing and I don't part ofhis thing was when they had to
move from building after theorder.
Right, that's how you used tobuy a Dell.
Was you created the order, theywould build your product and
(21:34):
ship it out to you?
Speaker 1 (21:35):
Yes, that's right.
I remember getting a Dell yearsago.
Speaker 2 (21:37):
Yeah, right, that's exactly what it was, and it
would take like four to sixweeks.
But you paid up front.
So cashflow wasn't a problemfor Dell.
They had money come in up frontand they'd take your money, buy
the parts, put come in up frontand they take your money, buy
the parts, put it together andship it back to you.
Well, when CompuServe orCompUSA and all these folks came
in we'll say, in Best Buy nowthey came in HP, all these other
(22:04):
companies went on the shelf.
Well, that means Dell had tomake the shift from using your
money to buy the parts to usingtheir own money to buy the parts
and put it on the shelf andwait for the money from the sale
.
Right, that's what caused a lotof the cashflow problem.
And what Michael Dell said waswe were too busy watching the
speedometer.
We forgot to look at the gasgauge and what he meant by that.
The speedometer was sales.
Right, they were trying to justincrease sales by putting it in
(22:26):
big box stores because theycould just get sales every day,
instead of watching their cashflow.
Right, they were just puttingproduct on the shelf, product on
the shelf, getting paid 90 dayslater instead of upfront.
So that's one of the thingsthat I think people need to pay
attention to is the matching ofsales.
More sales is only ameasurement of work.
It's not a measurement of cash.
(22:46):
Right?
Gross profit is the only placeyou can get cash, so if you're
going to look for cash on theincome statement, it's gross
profit.
That's such a great visual.
Speaker 1 (22:56):
You kind of touched on it in this next question, but
I'm going to ask it anyways,because maybe there's something
different that comes up Firstbig money lesson that you
learned either the hard way orthe fun way.
Speaker 2 (23:09):
Yeah, I'm going to do the hard way.
Right, it was growing too fast.
I call it growing broke, whichmeans I'm so successful that I
outrun my own operation.
And here's the thing you know Iopened 27 offices, I had a
hotel staffing company, 27offices in nine states in three
years had a few hundred peopleworking every day.
Well, what happens there is I'mmaking payroll every two weeks
(23:33):
and Marriott decides they'regoing to pay me in 70, 80, 90
days, right.
So I got to make six payrollsbefore I get paid for the first
invoice.
I sent them three months before, right.
That was me like going.
I'm so successful, I can sellanybody, I can go out there and
just grow this business.
And then, all of a sudden, I'mwaking up with cold sweats
(23:54):
because, oh my God, I don't knowif I'm gonna make payroll this
next week.
I went four months myselfwithout taking a paycheck, right
.
And you want to test yourrelationship?
try to go without any money youknow, and take a mortgage on the
house and max out your creditcards to stay alive.
Speaker 1 (24:10):
Yeah, I've that's a hard lesson, I would say.
Speaker 2 (24:16):
So if you want to learn how not to do that, you
should take my course.
Speaker 1 (24:20):
Yeah, I mean it's so interesting what you're saying
there, though, because it's justbecause you can sell doesn't
mean you can run a business Justbecause you have one aspect of
something, just because you'rereally good at the thing.
I think a lot of people also.
They're like, oh I'm reallygood at this, I'm just going to
go start a business.
Okay, you're going to learn thehard way.
There's a lot of hats to wearto run a business successfully,
(24:42):
and it sounds like you learnedthat one.
I mean you're crushing it, andthen it was just waiting for
payments.
It will come in, but there'snothing right.
Just think, if I just sell more, I can work myself out of this
right.
Speaker 2 (24:58):
Everybody thinks that being successful is that and
it's really not Meaning that youhave to evaluate can I afford
to take on this next contract,this next project, this next
customer?
Can I afford it?
And that was a whole piece ofthe business pie that I missed
early on, right Until I startedto learn about lines of credit
and being able to control thebusiness pie that I missed early
on until I started to learnabout lines of credit and being
(25:19):
able to control the size of thatgap money coming in versus
money going out.
Where I talked to ARAP, my ARwas the invoice from Marriott,
my AP was the payroll going out,and they were too far apart.
I was paying in two weeks butgetting paid in 90 days.
That means I had to have, well,we'll say, 60, 70 days worth of
money available just to stayopen.
Speaker 1 (25:42):
This particular piece that we're speaking about
really hits home because I'vecertainly been in positions and
a lot more recent than not whereit just feels like the solution
is just sell more and it willfix the problem.
So it is really helpful to hearthat from you, that I'm sure
there's times where if you justgo and sell more it'll fix some
(26:02):
problems.
But it's not always the answerof just go and sell, because
you'd sell yourself into otherproblems.
Speaker 2 (26:09):
Yeah, exactly right, and believe it or not, there's a
technique I teach calledexpense control, where you can
make the same money at differentsales levels.
I had a client that was doing$9 million a year.
Over a five-year period theirsales whittled down to $8
million a year and we got themto where they were making the
same profit at $8 million thatthey were at $9 million.
(26:32):
So you can do it.
So remember, sales is only ameasurement of how much work you
did.
The money comes in at grossprofit and operating expense.
Those are the two things thathave to work together.
Speaker 1 (26:42):
Yeah, that's so good.
How are you doing on time?
Like I got two more questionsfor you, I just want to.
I know we're.
Speaker 2 (26:49):
I'm I committed to the CFO Chronicles.
Speaker 1 (26:53):
Perfect, awesome.
So two more questions for you,then.
How do you want people toremember cash flow mike when
they think back on your work?
Speaker 2 (27:02):
authentic, right I?
I think that's the onedifference and shift I made in
my whole professional career,right?
I mean, when early on I wastrying to be the guy in the suit
, I was trying to be the guy youknow, uh, going to the
conferences that way with thetie and the cufflink, and it
just I tried to be the guy youknow, going to the conferences
that way with the tie and thecuff link, and it just I tried
to be something that I wasn't, Ithink when I shifted to what I
(27:23):
really am right, which is a farmkid.
But when I shifted to that, mylife got easier, I felt more
natural.
I think the authenticity comesacross in everything I do.
So I think that that's you know, it's just the straight BS.
I'm not, it's just straight toyou.
It's not going to be anythingthat's inauthentic or wrong.
Speaker 1 (27:45):
So good, okay.
Last question for you, mikewhat's the best piece of advice
you've ever received, personallyor professionally?
Speaker 2 (27:54):
Oh, that one's easy right.
I even wrote a blog article onthis, probably eight years ago.
You know it's from mygrandfather, right From my
grandfather, and it was kind ofrepeated by a member of my
mentor of mine as well, in adifferent version of it, but my
grandfather said it best I wasstressed out Right First,
starting to run the businesspretty stressed out.
(28:14):
I had the ARAP problem with thehotels.
To run the business prettystressed out.
I had the ARAP problem with thehotels and I was worried about
other things like what was theimmigration laws going to happen
?
Because at that point in timethey were trying to bring in
E-Verify.
What was that going to cost meto get involved with that and
start?
Am I going to have to beef upHR and those types of things?
What was I going to have to dodifferent?
(28:35):
Well, that came with a whole lotof other stress monetarily,
legally, all these type ofthings of what things were
happening in the world in theearly 2000s.
And he just sat me down andsays hey, control what you can
control, that's it.
Don't worry about the otherstuff, you know, because don't
fight a battle that hasn'tstarted.
So they haven't made thatdecision, they haven't done
(28:58):
those things yet.
Control what you can controland don't fight a battle that
hasn't started yet, and that'skind of what's led me to here.
Speaker 1 (29:06):
I love it.
That's so good.
Thank you so much for sharingthat.
Yeah, control what you cancontrol.
That's right.
I've certainly been in the boatwhere I stress about things
that haven't even happened yet,and what is I?
I do think there is a stat onthis, one that I feel confident
in, but I thought I've seen astat where 97% of the stuff
(29:26):
people stress about never evencomes to fruition.
Speaker 2 (29:29):
Yeah, that's probably I'm going to lean with that.
Speaker 1 (29:31):
I'm going to say that that's an accurate number.
But I I, so you know controlwhat you can control, don't
fight the battle that neverexists or doesn't is not even
you know there yet.
Speaker 2 (29:42):
That's awesome, yeah, but you know, what's funny is
that.
Here's what I learned in thisepisode that 85 of stats are all
made up.
Speaker 1 (29:48):
Yes, there's that one as well.
Yeah well, I'm glad you got tothat first instead of someone in
the comments after.
So that's good.
Mike, thank you so much forcoming on.
This was awesome.
I'm so pumped.
I got to meet you a couple ofweeks ago at at a girl con.
I hope to see you again verysoon in another event or
(30:09):
somewhere.
In passing, um, I love whatyou're doing.
What's the best way for peopleto get in touch with you?
How can they get access to more, mike, more of your knowledge?
Speaker 2 (30:20):
Yeah, really cool.
So I mean, first of all, it'seasy, right?
Just go to cashflowmikecom andhere's what I would say.
I have a book called the7-Minute Conversation.
It's how to analyze financialstatements in seven minutes or
less by just six easycalculations.
What I'm doing on the websiteright now is I'm giving you not
only a free copy of that book,but you're getting the video
(30:41):
lesson that goes with it, right?
So you get the book, the videolesson, you get a spreadsheet to
help you do the calculationsall of that in one package for
the low, low cost of your emailaddress.
Speaker 1 (30:51):
Not a bad price.
Speaker 2 (30:53):
That's it, yeah.
Speaker 1 (30:54):
Best price going around right now with inflation.
So that's awesome, mike.
Again, thank you so much forcoming on.
This is incredible For everyonelistening.
Please leave a comment, leave areview.
It helps us grow the show, getmore viewership and Mike love
what you're doing.
Keep it up.
Speaker 2 (31:11):
Thanks, james, appreciate you.
Speaker 1 (31:12):
Thanks for tuning into this episode of CFO
Chronicles the secrets behindsuccess.
I hope you found value intoday's conversation.
As we wrap up, I'd love for youto do two things.
First, make sure to subscribeto this podcast so you don't
miss any future episodes.
If you enjoyed today'sdiscussion, please rate and
review the show.
It helps others discover theinsights we share here.
Second, if you're ready to takeyour business to the next level
(31:35):
and attract the high-endclients you deserve, head over
to accountingleadsnowcom orclick the link in the show notes
to book your strategy.
Call it's time to positionyourself as the advisor your
clients need.
And don't forget you canconnect with me on LinkedIn to
stay up to date on what'shappening in the world of
accounting and financial growth.
We've got exciting topicscoming up, so stay tuned for the
(31:56):
next episode of CFO Chronicles.
Until then, keep pushingforward.
Your growth is just onestrategic move away.
Speaker 3 (32:03):
Thanks for listening to CFO Chronicles the secrets
behind success.
We hope today's episodeprovided valuable strategies to
help you attract morehigh-paying clients.
Be sure to subscribe, followand share with fellow
professionals.
Connect with us on LinkedIn andleave a review or comment to
join the conversation.
Your feedback helps us bringyou the best insights in finance
(32:26):
and marketing.
Until next time, keep strivingfor success and unlocking your
business's potential.
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