Ep 119- Running A Profitable Business First With David Richter

Transcript

today we're here with

david

he's our guest today and i have my

co-host matt rogers here from the hive

mind david richter is

interesting person so we went to high

school back together uh went to high

school together years ago

it's been 12 years now yeah a lifetime

ago a lifetime ago about a third of our

life ago

right

a third of our life ago we went to the

same school and it's just been uh

interesting coming circling back into

the same kind of people so it's

interesting it's very interesting so

have you always been an entrepreneur

i guess not no because i started out

working in college at just a normal you

know normal job i was

at a warehouse you know doing

doing things there as a machinist and as

an operator as a you know operating

forklifts and stuff so no i wasn't

always an entrepreneur but read the book

rich dad poor dad in college too so a

friend of mine gave me that book so it's

kind of what unlocked like oh wow

there's a whole nother world out there

and another a whole nother way of

thinking than what i've thought of to

this point so that's kind of what kicked

me off on the entrepreneurial journey

gotcha gotcha so i always i always like

asking that question because some people

there's just different varying

backgrounds yeah kind of go any

direction and so i'm like and i i didn't

know like i said a lot of people work at

the at different places and call centers

and such back in the day that's where i

came from the call center right here

i mentioned that one i was like i'm a

truck driver

right

one thing

i'm curious about so how long you've

been in real estate so you got into real

estate right after college yeah during

college it was 2012 so

about 10 years now

when that was when i bought my first

deal so i read the rich dad poor dad and

said i got to do something with this

knowledge so i actually used a realtor

in the local area when there was deals

everywhere and so cherry picked one off

the mls it was a hud foreclosure

property

fixed it up and

uh actually rented it for a while so

cash flowed it had pretty good cash flow

back in the day and then also lived in

it once i first got married so that was

the first house i lived in then

eventually we moved out of that house

and i lease option that property and put

a lease option tenant inside there and

then that tenant cashed me out six

months later so that was a fun first

deal for me so that's kind of how i got

started into it and did a couple

different things with that property and

from there did a lot of deals with a lot

of investors up there in northwest

indiana where we were

was part of a company there where we

took it from five deals to 25 deals a

month doing wholesale fix and flip

turnkey lease options rentals like any

everything in between so seen a lot in

the last 10 years in the real estate

world and done a lot of different types

of deals and sat in a lot of different

seats as a real estate investor

man that is awesome so i i think it's

funny because you actually lease option

your first property i did the same thing

too at least

i'm still waiting for him to

buy me out but if i would have sold it

with a realtor i would have only made

like 20k and i got 30k down i make 500 a

month for two years and then whenever he

cashes me out i should make like 60k on

it right nice there you go that's the

way to do it so i'm like i'm like yes

please option for the win i'm gonna

leverage my own mortgage there it is

it's good stuff

no that's awesome so one thing i'm

really curious about so i didn't know

you're in there for 10 years because i

think um you said you've done over like

700 transactions

over 850 so between

between being with that company and the

deals i've done because i've done fix

and flips or wholesale and then also i

had a little rental portfolio too but

yeah i've been a part of over 850 deals

up to this point

wow

that's crazy i mean 10 years is a long

time too

it is it looking back on it yeah it

feels like it's been like i can't

believe it's only been 10 years since

you know like i bought that first house

um but it's also like wow a lot has

happened in the last 10 years you know

got married have a daughter now you know

lots of lots of life changes moved from

that area now in florida so

yeah it's a lot can happen in 10 years

so if you're listening to this now and

you're like i'm just starting out

five ten years can change a whole lot if

you start listening to good people like

daniel and matt here and taking their

advice and getting on hive mind

so david you know for the newer

investors who maybe haven't done their

first deal or have done a couple and are

looking to

get more of a foothold in the industry

can you talk about your first year or

two in the business you know it sounds

like you're able to find a great deal on

the mls back when those were very kind

of easy to find and prevalent what steps

did you take after that to start

ensuring that you're able to to source

great deals and be able to to do the

things that you're able to do now

so i found a local investor in the area

and basically instead i'll work for free

you know like uh i've got a day job but

i'll work nights weekends whatever so i

did that with that investor for about

eight months learned a lot during that

time and then after eight months he

offered me a you know position there so

i was like heck yeah because i like want

to work in the business and i want to do

more of these deals so that's where i

got into it and started learning i not

only was now learning how to acquire a

property the bigger thing now was i was

learning how to run a business what to

do what not to do how to grow it you

know like there was just so much more

because they had when we like when i

said when we started they were doing

about five deals a month and they had

about five people but then we started

growing and started doing other

transaction types so that whole it was

basically pay to play because i was

getting paid to

you know to pay to play the game and

also to help provide value to them you

know and to and then i eventually bought

a couple deals from them as well too and

as well as sourcing my own but

that to me was the quicker path to

success than me just saying okay let me

dump some money into marketing and like

let me get it set up so i kind of wanted

to learn the business at that time

before i you know jumped in with both

feet and it was a it was an awesome

working and learning experience during

that time was there for five years and

you know built a little side portfolio

as well too sourcing deals from you know

the company and from other places as

well so it was a good ride and i learned

a lot of good lessons but

i would say if someone's starting out

first it's getting around people like

you guys you know like listening to the

content you put out listen you know like

what value can you bring to them like do

you have a certain set of skills because

like me daniel probably knows you know

like in school i was pretty studious you

know i was like more operational you

know so that into the business world

that translated into more like i could

help you with your systems your

processes you know that type of stuff

and that was what i went in there to

help them with and so so started helping

them like let's get the acquisition set

up so i did acquisitions you know and

like direct to seller moved to

dispositions and selling the property

got that set up and started then i moved

to the

um transaction coordination did that did

project management in the flips got that

star property management when we started

getting more deals and then eventually

the finance seat and accounting seat as

well too so i was kind of like though go

you know get the process down and then

do that so that's kind of the skill set

i had so if you're listening and you're

just starting out what skill set do you

have are you good on the phone if you're

good on the phone you're going to eat

well anywhere in any real estate company

because that's the people that they're

always looking for it's like if you're

good on the phone and can close deals

but yeah that's how i got started and

you know i would just say if you can

provide value to someone you'll you're

going to get that value back

now daniel this is this is the second

time that we've heard this from from our

last two guests

you know suggesting that hey you know

instead of going out alone

get a job with a company and learn their

ropes from inside and like david was

talking about paying to play you know

you get paid to play and i think that is

that's a huge point to learn on the job

and and not have to you can make the

mistakes

i don't want to say on someone else's

dime but you have a little layer of

cushion and protection to make to learn

and grow and not feel like the way the

world's on your shoulders to you know

have to uh you know go out and hunt and

do everything on your own yeah and

that's where uh that book that's come

out in the last few years who not how it

was like that's kind of the who that i

was searching for at that time with

before the book was coming i was like

this was what my path what i wanted it

to look like and how i thought i could

get there faster and it was a great

warrant like i said great learning

experience now starting a couple

different businesses over my lifetime

now and like what to do what not to do

and just you know getting those that

real hands-on experience of seeing a

small company grow into a little you

know doing 25 30 deals a month and 300

deals a year so it was a it was a lot of

fun and like you said getting to be

around those people and really learn

from them

so i have a question

you're integrators so integra i feel

like integrators sometimes struggle to

find their right

yang to their yin

and um i found mine and it works out

very well there's a i know a lot of

integrators that struggle to find their

place in business just because they

don't really they don't they might not

be good on the phones they might not be

good at negotiations they might be good

in person like

and i'm even even alluding to now like

now you've kind of

maybe hired that position

right

now i've gotta talk now that i have my

own business and all that i

i have a lot of visionary inside of me

too but that's where i have to make sure

i have the right integrator got a great

guy on our team that is an absolute and

absolute he's the epitome of an

integrator type operator and is really

good at our cfo direction and making

sure we have everything for our

operations team so yes it is finding

those right people and i'm no i'm not

the best sales person so that's where

it's like i have to have the right sales

person i have to write to have the right

finance person i my specific skill set

is business development i like that a

lot i like finding the key players the

culture the people the numbers like the

job of a ceo so that was where once i

started my own business it was like i

can't just be the hunter gatherer and

like killing the deals and taking them

down i now have to learn how to be that

leader and that developer of other

people because i need other people to do

that so i'm not always doing that so i

can focus on how do i grow this business

how do i expand it how do i have how do

i triple you know the team member base

and how do i triple the client base

instead of just like going out there

hunting one at a time so yeah it's been

definitely been a journey a growing

journey and yeah finding those right

people it is it is hard it's for that

yen to your gang you know type thing the

integrator visionary and really making

sure that it's someone that fits your

core values it fits the you know all the

things that you need to make sure that's

going to make you successful over a long

period of time so it's definitely

something that

as you start your own business something

to start working on right away becoming

more of that leader attracting the right

people and really always always

you know it's like always be closing

it's like always have your eyes open for

that person because they're out there

they are out there right now that yen to

your yang is out there and it's like you

have no idea where they're going to come

from so that's just like always have

your eye open for the good people you

can bring on your team

man that was good and i read i i think i

think we knew resonate in the same part

because like i think i think we're on

we're on the same level probably yeah

but it's kind of interesting though

because i can i can play both sides too

because i'm running my own businesses

out to be the visionary in those cases

but

in hive minds case i'm the integrator

i play bo i play i play my hats right

yeah well we do we wear a lot of

different hats especially if you have

different businesses like that it's like

sometimes you have to be sitting in that

seat in one you know the integrator

operator but then in the other ones

you've got a good team around you so you

can be more the visionary and like

here's the direction here's where we're

going

here's the accountability you know that

i'm going to hold you to and then

run you know run as fast as you can

so let's kind of dive into what you're

doing now so you said you worked for

five five years for that company kind of

split off did your own thing

that's been seven years now so what do

you what what kind of businesses are you

running now sure so once i left there i

had sold a lot of my holdings to at that

time which allowed me to travel do

whatever so i moved across the country

to work with another investor because i

like partnering up you know it's like i

like that type of deal because honestly

too i don't want to just build anything

from the ground up so that's where i

started working with another investor

and the first thing was i started with

the finances because i'm like the

numbers don't lie after sitting in that

seat and knowing how the numbers

influenced everything you know from

marketing and knowing my returns on

investment to selling the properties and

making sure that this is what we had

into the property and this is what we're

selling it for to make the true profit

here on this property you know like

getting that education and sitting in

that seat when i went to somewhere else

it was like the first thing i don't care

what you tell me about your business

show me your numbers like i need to see

your numbers and see if this is a

legitimate operation so i did a dove in

and there weren't numbers you know like

there wasn't a lot there was stuff set

up but it like wasn't in the right place

or whatnot so i went in and said hey we

gotta fix this we got to have clear

metrics here so we can hold ourselves

accountable and hold our team members

accountable so we went in cleaned up

their financials over three months and

then from there was able to see that

this investor i was working with he had

a portfolio and he was very under

leveraged like he had like 30 percent

loan to value on his property so only

had a 30

mortgage you know on the total

investment on his property or what the

property was worth so he said yeah i'd

love to be at like 50 or 60 i'm

comfortable at you know 50 or 60 percent

loan to value so then he was able to

pull out a bunch of cash and then he

said something to me which started this

next business he said

knowing the numbers has given me more

clarity more confidence and this has

changed my life like going through this

process so to me that was a huge light

bulb of like i bet you a lot of

investors are good at making the money

but like don't necessarily spend a lot

of time on the financial side to see

what the levers are that can really

turbo charge their cash holdings their

business their you know their leverage

their you know their profitability so

that's where i started calling mentors

and was like hey what do you think about

me starting a business of you know like

helping investors with their financials

from someone who's been in real estate

investing and can actually speak both

languages real estate and the numbers

and they were all like yeah i think that

would be great i'd have a bunch of

people to you know that could help you

know you could help with that service

and one of my mentors gary harper he

told me like hey have you read profit

first and so i was like no i've never

read profit first so i i downloaded that

book by mike mccowitz read it in one

evening took 10 pages of notes and said

this is a great framework for the cash

flow management piece of businesses so

that's where i kind of got the profit

first bug and you know of saying like

okay we gotta at least manage the cash

you know that's one of the big pieces

that's missing and one of the biggest

pieces in real estate like come on i

mean up and down all the time if you're

wholesaling flipping you know you'll

have a two hundred thousand dollar a

month and then you'll have like a fifty

thousand dollar or a ten thousand dollar

month it's like the roller coaster is

real so that's where i was like okay i

wanna start this put this framework in

place so that's where i started a

fractional cfo company to help investors

with their finances to have kind of a

different person than a bookkeeper who's

more transactional cpa who more works

for the irs and making sure your ducks

are in a row for them the cfo is that

business strategist they're the

financial business strategists on the

team coordinating all that and making

sure you actually have profitability so

that's where i started that company to

be able to do that and implement profit

first and give people clarity and

confidence in their numbers

that's a valuable resource too for for

investors and those who like you said

before know how to make the money but

maybe struggle to know how to hang on to

it or where to allocate it are there a

couple of things you see over and over

again when you work with investors that

make um

maybe some of the same common moves that

you see that you can go in and clean up

is there anything that kind of sticks

out that happens over and over again you

see sure so the biggest thing that i see

as a mistake is a lot of investors work

and just business owners in general

have one big bank account where

everything goes in and everything goes

out of including personal but that's a

whole nother story co-mingling let's not

go down that rabbit hole but where you

have one big bank account everything

goes in and out one day you feel like a

cane especially in real estate king or

queen because you've got a you know

hundreds of thousands of dollars in

there from your private lenders and all

those people supplying your money from

you know for your deals then the next

day it all goes out for all the rehab

projects you got payroll run and

marketing running and all those things

running out and then the next day you

feel like a proper because you've got

like a thousand dollars in there so

that's where you know that's where we

see a lot of people they have that one

bank account it gives them no clarity

it's like i where'd all my money go you

know that's the the most common question

that i get when people are describing

their finances is i don't know where my

money is going you know i feel like i'm

making a lot but i have no idea where it

goes and that one of the biggest reasons

and mistakes that people can make is

that having that one big bank account so

that's where the premise of profit first

comes into play because it's all about

separating it out getting clarity

getting around that but that's one of

the biggest ones the second one is just

sticking their head in the sand like

once they go down this road and start

making some money on some deals they're

like i'll get to bookkeeping later or

i'll get to the finances later and then

it's like three years later they're

coming to me and they're like i have

nothing set up help me and it's like

well now you're growing so fast that

it's like we got to put some foundations

in place first of just getting the

numbers in there and like helping you

get to just square one of knowing that

we can't even do like the fun stuff yet

of like analyzing those numbers and like

forecasting out where you're going to be

and like what do you want to invest in

or what do you want to take home for

your pay or whatnot so that's where

don't put your head in the sand like get

a simple system and make sure that you

implement it like a profit first or

something like that to at least get a

hold of your cash then the first one of

the first hires for a real estate

investor should be admin slash

bookkeeper so that way they don't have

to do that because like we all know most

of us are not that person we're not the

numbers person so we need to get that

off our plate so we don't have to you

know worry about that and

kick the can down the road until it

becomes just a gigantic mess because now

you're doing 10 deals a month and like i

have nothing in place so those are

coming some of the big mistakes i see

right out of the gate with a lot of

people so

is your book more of a

diy type of deal where you instruct them

how to

come up with the right the right plan to

make sure they manage it themselves

right so profit first the original book

gives a great framework for

for managing the cash this book is more

for the real estate investor that the

original book by mike mccow it's profit

first was more for any type of business

service anything you know like brick and

mortar where my book profit first for

real estate investing takes that same

framework but applies it to real estate

and all i know is real estate language

so it's full of stories people that i

you know we've worked with before in the

past and just

very directly towards real estate and it

gives them yes not only the mindset and

all that but like here's practical steps

because the two big things a prophet

first that i feel like separates it even

from a rich dad poor dad or from uh you

know richest man in babylon is it not

just tells you like pay yourself first

and like take your profit first and like

teaches you that mindset it also says

here's some practical steps here's a

system for you to be able to implement

and be able to know where your cash is

going so yes i detail it out in there so

that's why i wanted to say

even if you're new and can't work with

us you know or like are at that level of

where you're just starting out at least

get the book and at least read the book

and implement it because you can start

it from the very beginning i was on a

podcast well my i've got the profit

first rei podcast and i had a guest on

there and he said if i would have just

started this system just from the bare

bones at the very beginning i'd have

five million dollars more in my account

right now today and i was like picking

myself off before and that's like where

i said you got it that's why i need to

get this message out no matter where you

are in your journey because this book

and this mindset is about being

profitable from your first deal or your

next deal if you're already doing deals

so that's really what the core message

is is you don't have to do more deals or

buy more rentals to be more profitable

you just need to take your profit first

wow that's awesome i think i i that's

why that's why i like i like i like your

store and like the product because it

really

my my goal is to help people make more

money your goal is to help people keep

more money right exactly and not from

just the aspect of like you hear a lot

of financial people say that usually

they're talking about okay how do we

pare down your expenses or how do we you

know like save money on your taxes or

whatnot which is all great that is all

great but you also want to actually keep

more money for you like you want an

account that is just specifically for

you so you could take more home and make

bring home the bacon for you and your

family so that's what the book is about

this isn't a bunch of tax tips or

whatnot it's about how to keep more cash

inside your pockets instead of always

paying everyone else first and feeling

like why the heck did i even start this

business

that's really interesting and one of the

things you touched on earlier which i

think most investors can relate to uh

especially in the beginning is kind of

the boom and bust nature of

month-to-month uh deal flow where you

said you know one month you might make

100 grand and the next month you might

make 10 grand or you know you might go

from 20 grand to 3 grand whatever the

swings may be what are some things you

can kind of do to put in place on those

months where deal flow is light maybe

things just aren't lining up or closing

the way they should and maybe you string

together a couple of rough months uh you

know is there anything you could do kind

within the book or or things you you

work on with your clients to kind of

help shelter those times when things

aren't going great

so yeah i definitely talk about that in

the book in the book i call it the real

estate rat race i mean you were

literally a living deal to deal and just

spending your you know spinning in

circles so i also write an entire

chapter on this it's chapter six where

reserves help grow your company where

you need to set up a specific account

for reserves not touch it because you

are as a real estate investor you're

going to have the months where you're

just killing it absolutely six seven

figures i mean just crazy months then

you're gonna have the zero dollar months

you know where it's like okay we're

doing 20 deals a month what happened

like how did we just close two you know

so that's where if you say what do we

want for our business and is that three

months is that six months because

obviously the the general wisdom is

three months you know at least to be

able to have a quarter so that way you

could say how do no deals in a quarter

and still be okay and that's where i

devote a whole chapter of like reserves

help grow the business because i know i

know as a real estate investor myself

lazy money to us is just like a cardinal

sin you know like i can't have money in

an account or it's just burning a hole

in my pocket so but that would be one

big way to get off that roller coaster

that up and down knowing that it gets

there's just so many benefits for that

peace of mind that helps you get private

lenders or lenders to make sure that

they can fund you because they like

seeing cash and accounts like there's a

lot of different ways that it helps you

versus just having money sit there it's

for a lot of different reasons but that

would be one big way to to get off that

roller coaster

that's awesome so um

that's your like main business are you

still doing real estate real estate

investing all that good stuff on the

side or this is like your main focus now

i was gonna say i sold everything to

start this and now that i'm here and

settling down in florida i'm gonna start

ramping it back up again but yeah i've

still got the real estate bug for sure

but no i've still at this time i've sold

everything that that i had

no i think it's interesting because i

think it's smart of you to kind of like

let's stop i know i can start it up

again i already have the information and

knowledge to do it again yeah that's not

the problem let me let me stop and

refocus and get this up and running that

we can focus on your power exactly

that's been a big point for me is focus

and that's it that and so many things

i've learned over the years from

watching other people of just like what

to do what not to do and like focus is

the one thing that everyone always talks

about and it is once you have your own

business it is hard because it's not

only focused for

your business and like all the shiny

objects that come there but it's like if

i've done something else too i still

like that stuff still want to do it but

i have to it has to be intentional and

it has to fit in line with the overall

vision so if i found the perfect partner

and they were doing it and i could just

apply the money okay like sign me up

i'll partner with you let's get it done

but like besides that it's like at this

point i have to be very selective of how

use my time as well too

because that's something too you know

and you probably

i don't know if you struggle with this

too daniel but coming from a background

of like working

your truck driving i come from like the

railroad industry slash working in a

business you know like working helping

with the investors sometimes it's like i

like doing the urgent and like doing

that type of stuff and it's like i need

to focus on what's good for the overall

business what really is that highest and

best use of my time so that's another

thing that has been really

really key for you know staying on track

of like and growing as a business owner

like okay no there's sometimes i'm not

going to get to that thing even though

it's urgent it's just not important

right now i need to do these other

things that are very important in the

overarching goals so yeah it's like

right now for me real estate would come

up if found the perfect partner and if i

could just apply the you know the the

the money or what not to because that's

about what i'd be good for at this point

because i'm not gonna i'm not gonna be

on the phone i'm not gonna be talking to

sellers i'm not gonna be doing that type

of stuff anytime soon much rather

partner with someone you're retired

right i'm like yeah i'll supply the deal

i'll supply the dm for the money for the

deals here but like i don't want to be

out there running deals at this point

that's awesome um so how how once you

start this when do you kind of stop and

pivot into this into this thing

so it's been about two and a half years

now and we've seen

we've been working with a lot of

investors right now we're at about 50 on

a monthly basis that we're working with

um you know on a fractional cfo basis

and you know that's been a passion of

mine just seeing people go from broke or

spinning in their rat race to now having

money in these different accounts having

true cash profit and being able to do

what they want so yeah it's been about

two and a half years now of helping

those people get out of the rat race

so i have a question

bring it up what what's the difference

between

real estate wholesale versus um

recurring income

other than like real estate wholesale i

feel like is just an atm machine

you know like that you go out there and

it's a one-hit wonder you have to have

amazing people and processes for that to

even be

recurring but it's never going to truly

be recurring uh the recurring is amazing

you know like that

whether that's rentals multi-family

software

services whatever that might be

subscriptions you know like that's where

you you're building that base because we

have clients like that we have clients

who have wholesale deals and we have

clients who have wholesale deals and

rentals and we have clients with rentals

and the people that have rentals they're

trying to build it to a base of like

just to take care of my needs we have

one client who achieved that like their

rentals could take care of their needs

so any flips or wholesale deals icing on

the cake you know because they now had

their recurring like in rich dad board

had you know they and the cash flow 101

they got out of the rat race you know

like with their recurring you know

subscription or whatever now it's just

rentals that are replacing that

but then that other stuff is icing on

the cake but a lot of people use a

wholesale or whatnot to then get into

the rentals and buy the long-term or buy

the multi-family or the commercial

buildings or whatnot so that's where

yeah i'm definitely a huge fan of the

recurring and the rentals and the cash

flow subscriptions and that type of

stuff because there's a lot of security

in that

way more especially if you like you guys

like if you're providing a service that

is literally helping people make money

and literally getting them out of their

rat race there is no feeling like that

of being able to have a successful

business that's helping others and also

is recurring as well too because now

month after month we're going to keep

helping these people so

yeah i could go on and on about that all

day long but yeah there's definitely a

big difference to me between the

wholesale business and the recurring

is there any sweet spots with uh kind of

cool or niche businesses you've seen

clients uh own that

is part of the recurring revenue or

subscription model maybe something you

haven't thought of

prior

hmm i'd have to think about that we're

working with a lot of people in the real

estate investing space one person has a

speedboat rentals but i guess that you

know that could be recurring if they

have enough you know income coming in or

enough

recurring people coming back but no i

guess i haven't seen that except for

people are in software or have coaching

packages or whatnot or have these

different types of things where you know

like programs and whatnot so we work

with a lot of real estate investors and

a lot of real estate influencers as well

too so the ones that are out there doing

the work but also teaching a lot of

people so that's a lot of the recurring

that we type we typically see is there a

good success story i'm sure you have

many with the clients that you work with

but

maybe somebody you worked with early

that was struggling uh whether it be

with cash flow and some of the systems

you implemented with them and maybe

where they've taken off to kind of

things to your guidance so

talk about him a little in the book but

there's a guy that came to us at right

when i started so like 2019

and he said like i just lost seventy

thousand dollars i have a flipping

business and i lost seventy thousand

dollars in my flipping business my

rental business is okay but not that big

so that was a big hit for us and you

know i started we started talking to him

and then you know i told him yeah i'd

love to help you here's the here's the

pricing and he went home to his wife and

said i don't know if you know we really

need this don't know if we can afford it

and she even said i don't know if we

can't afford you know can't afford not

to do this so

came on board with us and right away he

just took it like a duck to water what

we were saying like there's a lot of

people that still struggle even though

they pay for the service and they come

on board they still struggle in terms of

like should i really do this with my

cash and like do i really want to focus

on this but he took it and ran with it

so he started implementing what we were

saying we started teaching him you know

like as a business owner what the

different financial statements meant and

how he could actually utilize those to

make decisions then we started

implementing profit first getting cash

in good order and so that after a year

of doing that

great story here he called me

because he had just got off the phone

with his cpa the year before when he

lost 70 000 when his cpa told him she

that cpa said you know like in your foot

you're with your flicks and flip

business if i ever thought about doing

that i never do that in a million years

you know kind of like saying yeah no

thanks so then the next year she calls

him and says whoa what turned around

like this is amazing so and

because she called and said yeah you did

really well you had you know multiple

six figures on your bottom line so

here's what your tax liability is and

first the client said like this is

amazing you know and it told me like

this is the first time i paid taxes in

like years because i'm actually

profitable you know so profitable on my

flipping side like more profitable than

even the offsetting rentals you know

like to get me down on my tax liability

so she said you know here's what you owe

and he tells her okay that's how much i

owe let me look at my bank account so he

like literally pulls up his bank

accounts and says oh i've got this tax

account here uh profit and you know uh

income tax account and he said how much

was it told him again and he's like you

know what i have it down to the penny

almost like i'm a hundred dollars off

i'll send it to you right now she said

what like put like right now because

this was like january of the of the

following year and she said he said yeah

let me just send it to you now and take

this off my plate i don't want to worry

about it again so she did that you know

he sent it off she took the money and

then there you go like he was done for

the year he said that was the best thing

ever well then he calls me this last

year so he calls me again at the end of

2021 and said i just had the same call

with my my cpa because we're still

working with them and she told me again

like great job this year had a great

bottom line here's how much you owe this

year and so he said okay let me pull up

my accounts again and pulls up his

accounts he's got like 20 000 extra in

his account he's like i'm giving myself

a tax refund this year so like he did he

was able to take all that money out

didn't affect his operations didn't

affect his liability didn't affect

anything and he was able to take that

money out and pay himself a refund so

that's one of my favorite stories this

guy's like a poster child though because

he set up a profit account too and like

able to buy an rv from that and like

take a two-week vacation with his family

he's got young kids

puts pours a lot of time and effort into

them as well too and like really wants

to invest in them so he's used a lot of

that money for family and vacations set

up on a giving account too like to give

to start a a charity and like a camp for

children of his organization and like

his um church or whatnot and like

gave a

significant five-figure sum to them at

the end of 2021 so it was just that was

one of the best success stories that we

have working with someone um that really

took it and ran with it that's fantastic

was there any other specific kind of

business advice you gave it sounds like

you got the books in order kind of gave

them the framework about how to

um you know structure their their

different accounts so you know you have

a tax account you have your other

accounts um it sounds like this guy also

made a ton of money too in the car right

there's also was there any kind of

specific business advice you might have

given to kind of get him over the

threshold there so he works with the cfo

on a weekly basis with us and one of the

big things in that first year was he was

trying to do a lot of deals and with his

staff and with him just running ragged

and he hated flipping at that time and

so we sat down with him and said what do

you really need and what do you really

want because that's one of our first

steps is like what do you need to

survive and where do you want to end up

where do you want to be and then they

figured it out he only had to flip like

one property a quarter and he had you

know like 20 or 30 rentals and like with

that income he was able to sustain

himself anything above that was icing on

the cake so that's what he did he slowed

down and actually did less deals but

made way more profit than he had ever

done in the history of his life before

for the last two years because he said

this is the amount of deals i need to do

for what i need and then being able to

say this is how many deals i need to do

to not only sustain me to sustain the

business and to have the profit that i

want so being able to

utilize the numbers to say you don't

have to do more deals you just have to

do you know you could do less deals but

be more profitable and so other people

too we go in there and look at their

books they're like you want to do more

deals so then here's what we need to do

and here's where we need to get your

profitability so you can invest in the

business and grow and hire more people

or whatnot but for him it was slowing

down because that was that's i think

that's a question that everyone asked

themselves at one point in business is

like do i want to keep scaling and

growing and grinding and going and you

know like sell this off one day or in

some of us have to search internally do

we want to

slow down do west deals and just be very

very profitable and so for him he had

that choice now now that he saw his

numbers had a handle on his cash flow he

was even able to make that decision now

and like have that conversation of like

which way do i want to go so for him

he's like my kids are young i'd rather

go slower right now i'd rather not build

it as fast and as much as i thought i

wanted to and what every mastermind was

telling me so i was like let me do west

deals but be more profitable so that was

kind of like a big decision he had to

make that we kind of guided him through

that's interesting and you know daniel

think about that like

you get kind of in the rat race a go go

go deal deal deal

and you know to step back a little bit

and think about hey you know what if i

did a few less deals trying to do bigger

deals

more money involved

but not have to feel like you're on the

hamster wheel of all time at all times

that uh you know to be able to put that

in place and see the the profits and the

revenue kind of soar by doing a little

bit less i think is appealing to any

investor so

uh that's an incredible story

yeah and that's what i that's the point

of the book like even if you want to

grow a team you should be doing less

than like the less you do the more money

you make

you're

you are going to get to the point i had

someone else on the podcast and they

said something that has stuck with me

very much they said at this point

they're hiring thinkers not doers i'm

hiring people for their brains now not

their hands you know so like when you

first start out you need an admin you

need someone to take these tasks off

your plate but as you start growing

you're going to need to hire people for

their brain if you want to grow big that

people that are smarter than you people

that might intimidate you but people

that will actually get you where you

want to go because what got you here

won't get you there wherever you are but

that same thing if you want to stay

small as an operator then you also need

to see that the less you do the more

you're able to just think or connect the

dots or like have your few team members

work the more money you can actually

make from staying small because now

you're just focused on squeezing the

profitability from everything without

having this huge overhead or without you

know the scaling and growth that

everyone thinks that they want when they

really want is the financial freedom

they got into business for and the time

freedom they got into business for why

sacrifice that now when you think i'm

going to have this big payoff in the

future if you could do some of that

today so yeah it's a it's a big thing

for sure with us

that's amazing man i i i'm i'm i'm

definitely the finance guy but i'm never

yay finances right i know that's why

that's why

i love the profit first aspect because

it makes something that's very unsexy a

little bit sexier than you know than it

is because accounting no one like if i

say the word accounting cpa finances

quickbooks like all that just everyone

tunes out but this is where that's why i

got lit on fire with profit first

because it's more this is your cash

you're going to have to deal with your

cash whether you touch your books or not

like you're going to have to deal with

the money that comes in and out of your

business and you're going to really have

to dig into that to make sure you know

where you are so yes finances i get it

are not going to excite a lot of

entrepreneurs but what they return

is the biggest thing that we're all

looking for because the first part is

sales you have to have sales but if you

have sales you have to have that finance

piece so that way you're not just

spinning your wheels because if you just

keep dumping in and dumping in and

dumping in without a net to catch the

money then why are you doing this you

know like why are you on this rat race

if you don't have something to actually

catch it and like someone there on your

team saying this is what profitability

looks like like stop stop doing this

stop doing that like why is this still

what you wanted to do you know then we

have to stay on focus for you know

making sure you're getting to where you

actually want to be as a business owner

that's amazing

what what what's the time frame does it

take is it like three months six months

like what is it what does it really take

to get a handle on your numbers like you

do by the quarter well i would say it

depends on where you are in your

business because if you are that person

who's like started the business and

you're three years down the road and

have nothing in place it's going to take

a little bit longer

what we do for people is we do a 60-day

upfront process called laying the

financial foundation it's a 60-day

program of implementing profit first

getting your numbers in order too as

long as they're not just a total raving

mess of years and years and years so

that's usually where we try and say 60

days let's get you to at least square

one i know my numbers i could have a

dashboard built you know of my financial

kpis and my projections i could have a

profit first dashboard as well too

where's my money going where's it's been

and where is it right now and how do i

need to transfer it so that's kind of

the time frame that we try and with a

lot of people that come to us that

needing the help in the implementation

wow

so what is what is and i'm gonna jump

back to business yeah i think i think uh

you've said some some really key

insights i really want to focus on so i

like that you're at the point where like

i don't want to redo business from

scratch

i want to partner with people

so how how important is people

and finding the right people in your

business

there's a great book ceo only does three

things by trey taylor and those three

things are culture people and numbers if

you're in that ceo box you are

responsible for the culture of the

people that are already there and

creating that intentionally you are

responsible for getting the right people

in the right seat because that is

paramount as the ceo and then the

numbers making sure your numbers are on

track and everyone's being held

accountable across the board so i would

say it's pretty dang important to have

the right people there on your team

because that is you you think about it

to enable for you the business owner to

be elevated out of all these seats that

everyone sits in and just scrambling you

have to hire the amazing people that's

why you can't always just have a virtual

assistant i'm a huge proponent of

virtual assistants i love virtual

assistants i still work with one from

like day one of the real estate world so

like for the last eight to ten years

i've been working with the same guy so

no knock on virtual assistants but you

have to elevate yourself to say i need

people who are smarter than me and be

very humble to say

i've got this vision because what draws

them to you even though they're smarter

than you is that you took the risk you

have the vision and you have a culture

of winning and letting them win and

getting them to where they want to be as

long as you're focused on i want to make

sure they're making so much money why

would they ever go anywhere else you

know like and i'm providing this culture

of why would they go anywhere else

because i'm taking care of them and they

know that i care about them too so i

would say having the right people and

then taking care of them are those

one-two punch of like that is how you

really elevate yourself as an

entrepreneur and business owner and

leader

so you said you love va's but

you're saying you need a more

a step up from that when you hit a

certain level right i was going to say

yeah if you want someone who's on your

team that's a that integrator that's

going to be your partner then that's

where kind of that guy was saying i hire

people for their brains not their hands

i feel like with virtual assistants most

of them are going to be the hardest

worker on your team they're going to be

the ones that are there show up do those

things if they're the right person then

they're going to be just working what

can i do i'm going to get it done for

you because that's how my guy is and

that's how a lot of people are that have

virtual assistants but i don't need a

bunch of those people i who what do i

really need i need a bunch of people as

well too that can think and say here's

the problem here's the solution and i

didn't even have to go to david you know

because i know how he thinks and i know

that what's best for the business to be

able to get across this goal line and

i'm going to make those decisions and

help my department do its best so yes i

think at some point you have to think

about that's why i preach profit first

too you have to have money for this

stuff like if you want the best people

you're going to have to have money you

know like you're going to have to pay

them so that's where i'm just saying

that's where i've seen a lot of the most

successful real estate investors flip

the switch from how can i get the

cheapest of everything to how can i get

the most expensive of everything how can

i get the person who is worth two

hundred fifty thousand dollars to be my

ceo and right hand person and pay them

that money because they're going to be

bringing in five six ten times that in

the year because of the systems the

people the processes that they put in

place

[Music]

wow

never heard that one before there you go

that basically comes down that you get

what you pay for right you know exactly

exactly you get what you pay for for the

most part yeah

david can you touch on uh for people who

maybe don't want to take on a 50 50

partner and maybe they're more

interested in hiring employees va's yeah

and uh you know being the the

at the top of the company themselves you

know what does that process look like in

your eyes in terms of you know some

people want to partner and be 50 50.

that's fantastic some people don't um

what what is the line where's that kind

of line in the sand for you in terms of

what you would need to do kind of

working with a partner to build the

culture versus like just being

being the ceo yourself and hiring

everyone below you

so that's what this business is for me i

know i like partnerships but i built the

the simple cfo from the ground up and

i'm 100 owner so i could speak to that

of they have to be very intentional of

at each stage hiring the right people

for the stage when i first started it

was one the one virtual assistant with

me as my admin that i had worked with

for forever because i needed someone

there to help me with the tasks but then

you start hiring other people

if you really know where you're going to

because that's another moving target

when you're first getting started is

what do i want to do what value do i

provide the market once you figure that

out and you can clarify that that's when

you can get very intentional of like

these are the people the key people i

will need on my team this is how i'm

going to take care of them but then it

is it's just being intentional with them

setting the culture having i do weekly

meetings with the whole entire team like

on wednesday tomorrow morning i'm going

to wake up and i'm going to run a

culture meeting of like here's what

here's the wins for the week celebrate

them with the team here's some training

or some things yeah i want to hear from

them too story good stories from them

you know it's like building those into

the culture of the company as you grow

and you know like running on an

operating system that encourages that

building of the culture along the way

too you just have to be very intentional

and you have to build a certain set of

skills so if you're going to do it all

alone and you aren't going to have a

partnership which is totally fine like a

lot of people do they have 100 ownership

then you are going to have to learn how

to be that leader as you grow as you

scale and say okay this time this month

i need to learn on how to how to build a

better culture this month i need to

learn on how to hire the right people

and where am i going to find them so

that's where you as the individual are

going to have to have your personal

growth that's why i love business too i

feel like if i would have started this

there's no way i'd be reading and

reading all these books and like doing

all these things like you know it feels

like if you put yourself in that

position you're going to you're going to

rise to where you want to be so like for

me it was very self-motivating like

especially as you bring more team

members on i have to be i have to grow

in order to

provide them what they need in order for

us to get to the next level so i would

say it's just a lot of personal growth

mentorship masterminds good people like

this podcast it's like getting that

foundation then finding more of your

your culture your your fit your values

and then finding those mentors and

people around you that can help you get

to the next levels

one of the things you mentioned earlier

was um for people's first hire you'd

recommend a admin slash bookkeeper

past that is there kind of a

set of hires you see

and uh people you work with and

you know okay so admin bookkeeper first

what comes after that in the real estate

world let's say you're wholesaling

you're trying to build rental portfolios

you're in lead generation you're

bringing in leads to try to convert uh

what do you what would be the next

couple of logical hires in your mind so

if the owner really loves sales it might

be a transaction coordinator to stop

him from doing the actual getting it

across the goal line if he's like i

don't like if he or she doesn't like the

sales then it's usually an acquisitions

person like how can i stop running

appointments you know like how do i stop

going to this a lot of people keep

dispositions with the owner for a while

you know and selling the properties you

know that's usually a higher that

doesn't get hired out till later on

because usually if you're doing

wholesale deals a lot of them can sell

themselves um because they're so you

know like because there's meat on the

bone if you're a good wholesaler so

that's where i see probably those two

positions either sales in the

acquisitions or transaction coordinator

if the owner really loves going on the

appointments until they want to get out

of that seat

i got a question

okay so are you 100 virtual or you have

an office that you people show up to

my company is 100 virtual as fractional

cfos we don't provide full-time people

on people's staff so one cfo could be

working with three or four companies

because we're not you know a typical cfo

easily 150 250 000 you're looking in

that range and most small businesses

small entrepreneurs and even medium size

don't need a full-time cfo on their

staff so we have fractional cfos to help

with the business strategy the

implementations like everything we've

talked about but we're all virtual so

that way we can handle several of those

types of clients across wherever we are

so we've got people on the west coast

east coast everywhere in between your

office is virtual too like all your

people work

okay so i have a reason why i went down

this way because how do you build

culture because i feel it's a lot harder

building culture when you're virtual 100

virtual than versus an office because in

office you can always put the core

values on the wall you know there's

something you can physically look at

like how how do you build culture

virtually with your people the same way

as you do in office intentionally

because even if you have the core values

on the wall who cares well are you

talking about them are you living them

are you are you recognizing people for

that same thing virtually do you talk

about it do you hold people accountable

to those do you talk do you have

meetings where you call out people

specifically of how they embody the core

you know a core value of yours so it's

like that's where i'm very intentional

on our meetings of

being honestly the ceo is the

cheerleader let the operations and let

the other people be the accountability

and the bad guy

let the owner be the cheerleader to say

we're here here's the vision here's the

culture i believe in you guys let's go

you know and like that's what

that's even on virtual teams it's

letting them know that also we've got

slack a lot of virtual teams use slack

or some communication channel like that

so it's like sending messages out to the

entire team you know like here you know

like here's a win we have culture we

have a good news and win channel where

if cfos have a win with their clients

they're putting it in there and all of

everyone gets to celebrate the win for

that person so it's like being

intentional with those types of things

we send people books we send people

gifts you know it's like just

like i said you could do this in office

or you could do this virtually it's just

being intentional and thinking what can

i do with the people that are virtual

and how can i make them feel special

i'm going to do that i need a wind

channel that's good that was a good one

right there

i like that

man i think

the word i've been hearing a lot lately

is intentional it's been like the key

i've been hearing it come up so many

times in different conversations on like

being intentional having a purpose to

what you're doing to make sure you get

the outcome you want yeah

it is key it is the key i think you'd be

for anything i mean you're not going to

just wake up and become rich you're not

going to wake up and your culture is

going to be good either

but you are building a culture whether

you do it or not if you're not building

a culture you are building a culture

you're building a culture where people

know you don't care you know so it's

like that's where you're building one or

the other so that's where you have to be

intentional with these things especially

as the owner the owner it does rise and

fall on you it does i mean and that's a

lot of responsibility but that's where

we put ourselves you know so if it's

like if we're going to do that we have

to be intentional and then think about

like we have like dan you and i have

young kids you know so it's like you got

to be intentional all around like

where's the time for that family where's

the time for the business how do i build

a culture here how do i make sure that

my daughter loves me you know like how

do i make sure that i have time with my

wife on the weekends and at night you

know it's like making sure that we're

building that in as well too so

it's it goes a lot farther than just

business it's like how are you being

intentional with all the different

relationships in your life because like

like a lot of people say when you get i

think of this a lot i know it's cliche

but when you get to the end of your life

what are you really gonna say that i'm

glad i worked those extra hours you know

i'm glad i did those things i'm glad i

you know what not or like that my kid

actually likes me you know so it's like

being intentional with the right things

too and i think that is conveyed in my

messages as well too because like

some a lot of people they can't reach me

after a certain time or you know like

they can't in the mornings like i don't

schedule things in the early morning

because that's when i play with my

daughter you know so my team knows i'm

there for them i will go to bat for them

i have fired clients for them you know

because they've been belligerent so they

know i'm there to for their back but

they also know too that i've got a set

of core values where

i'm not going to sacrifice my morning

time with my girl you know and playing

with her in the morning so it's like

also being intentional in those other

areas too that help the business as well

too of showing like hey

this person is actually like trying to

be you know doing good things in other

areas of his life too so just to go back

to your building culture virtually

setting some of those parameters in

place help the overall culture as well

too because it shows who you really are

and what you're trying to do so

yeah tensionality is a big part of it

okay so i know you're i know you're a

bookworm

what else can you tell i'm not so i know

you are

so what's your top favorite five books

because i'm not i'm not gonna ask one

cause i'm sure you have like five i know

you can you can name a good five you're

so i can name a really good five so

right now because i'm going to say right

now because it always changes and i'm

sure i could think of 10 other ones that

i didn't mention to you one of them

would be obviously be profit first

especially for real estate investing one

of them this ultimate blueprint for a

highly six for an insanely successful

business by keith cunningham

incredible so i would put that on the

top of my list another one up here

expert secrets by russell brunson i'm a

big russell brunson fan um so his expert

secrets book is incredible if you want

to become an expert in your area and

really provide value and drive raving

fans to you

um also let's see because i've got a ton

that i'm going through

let me give you another one that's a

little different um think again by adam

grant i've read that a couple times

that's just that probably unlocked my

mind to a lot of the stuff where i grew

up thinking i had to think a certain way

it's like questioning everything so

that's one where if you want a good one

to stretch your mind of how you think um

that book think again is another good

one i'm reading a bunch of parenting

books too so you know like i i'm reading

all over the place but

emotional intelligence by daniel goldman

that's a really good one as well too

because emotional intelligence goes a

lot with what you were talking about

culture intentionality like being able

to emotionally handle other people's

problems as well as your own is a very

specific set of skills as well too so

that would probably be another one that

i would throw out there as a really

people don't look good the ceo has to be

the counselor the underpaid counselor

right yeah exactly they're the therapist

uh for sure okay bonus here's a bonus

two other books for raising children one

is raising lions by joe newman so if you

have a little

five-year-old girl like me or boy that

just loves to

display their omnipotence at every turn

that's a really good one for the

non-traditional way of like getting

disciplined inside the home and

even working with the school and whatnot

it's a really good book raising lions

then another one is the family board

meeting by jim shields and tells you

about how to spend quality time at least

once a quarter with your kids and with

your significant other and like gives a

framework for that which is super short

book that one's only like 50 or 60 pages

so like even if you're not a bookworm

you could flip through that in an hour

or less maybe and like that's a really

really short book of like giving a

framework for how to spend intentional

time with with the people in your life

that really matter so those are two

bonus books that i've read recently that

are really good

gotcha oh what is a quote that is yours

or somebody else's that you resonate

with

ah profit is a habit not an event

so make profit a habit inside of your

business inside your personal life don't

think it's something that's way out

there at the end of your life or the end

of your year

wow

okay that was good there's been so many

good gems here this has just been uh

this has been really really cool and

i've really enjoyed this conversation

awesome well i try to provide value

that's why i wrote this book like

people need to stop living in the rat

race like there's a way out and there's

a simple way out but like you said

daniel a lot of people don't like that

side of the business but usually the

biggest gold nuggets are those places

you don't want to touch

a lot of people don't want to touch the

finances but that's usually how to get

yourself out of the rat race so yeah i

appreciate you guys having me on i love

i love spreading this message so really

appreciate being here today david is

there anywhere specifically uh people

should go to find your book or is it

just kind of where wherever else you

would normally buy your books so

simplecfosolutions.com

leads you down the rabbit hole of david

richter of like the book the podcast

working with us my facebook linkedin

like it's a one-stop shop if you want to

start following more about here in

profit first for real estate investing

or what we do so

simplecfosolutions.com also my book's

available on amazon so that's where

several thousand real estate investors

have purchased the book already and want

to just get that message out more so

would love to be a part of your real

estate investing journey

awesome awesome so um any final thoughts

final word final drop of

knowledge

if anything if you could take one

message away because i didn't go into

like the specifics of profit first so

pick up the book but besides that open

one new bank account remember how i said

one of the biggest mistakes is everyone

has their you know like the big one big

bank account where everything goes in

and out at least open one other bank

account call it profit and transfer one

percent of all your future income to get

into the habit of being profitable so

just do that if you can do that one step

get into that habit start seeing that

profit build i promise you come back a

year from now as you start growing that

percentage too as you can see that okay

i can do more than this that you will

have way more money than you've ever had

inside your business because you listen

to that one piece of advice

there you go we appreciate your time

thanks for coming on the show thank you

uh david thank you matt for coming on

Ep 119- Running A Profitable Business First With David Richter

Matt Rogers