28. The Number You're Afraid to Look At | Business Strategy

It is Friday, the schedule was full, your customers were happy, and there is still not enough in the account to cover payroll. If that gap makes your stomach drop, this one is for you. Ginny has a real, honest conversation about the money most service business owners were never taught to look at.

Here is the idea that catches hardworking owners off guard: profit is not cash. You can look profitable on paper and still miss payroll, because cash is the oxygen of your business, and it runs out in the gap between the money going out and the money coming in. Ginny walks through three simple habits that keep you breathing: a fifteen minute weekly cash check, separating the money that was never yours to spend, like sales tax and payroll taxes, and job costing so you know each job actually made money after materials and labor.

This episode is for owners in the early camps, the HVAC tech, the plumber, the appliance repair owner who is busy but not sure the work is paying. You will walk away able to answer one honest question: can I cover the next two payrolls, no matter what.

Turn on the lights, my friend. You are not the problem. Your altitude is. 

And speaking of altitude, you can find out exactly where you are on the mountain by taking a quick quiz at outcomeacademy.com/findmycamp .

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Transcript

Alright, I have a hard conversation today. I want you to picture the Friday you're sitting down to get ready to do payroll, and there's not enough money in the account to cover it.

Not because you haven't been busy, but because you haven't been monitoring the one important number that you needed to be monitoring. And that number has a name, and we're gonna get all up in that information today.

Well, hello my friends, and welcome back to the Outcome Academy podcast. Today, we are gonna get a little uncomfortable, and we're gonna have a conversation about money. Not the kind about revenue and targets and someday kind of things. We're gonna talk about the version of money that sits on your chest at two o'clock in the morning.

The version that we were never really taught to talk about out loud. So I want you to get comfortable, because today we're gonna get really uncomfortable. We're gonna get real. So let me start by painting you a little picture, and I want you to tell me if any of this feels familiar. It's the end of the week, the schedule was really full, your team worked hard, your customers were happy, five-star reviews trickling in.

The outside of the business looks like it's doing awesome. And then you sit down to move money to pay your people, and the number in the account isn't quite big enough. So you start doing that thing that every owner in that moment does. You start moving pieces around in your head. Maybe that one customer pays today. Maybe you can cover part of it now, and the rest on Monday.

Maybe you can float it on the card just this one time, and then your stomach drops, and that quiet panic sets in. And the worst part is you're not even sure how you got here. Because the work was there. The work was always there. Now I'm not gonna tell you one person's story today, because the truth is I've seen this several times in several different versions, and they all play out not good.

I've watched what happens when an owner who built something real, who genuinely cares about people that work for them, and they got caught in a gap and they couldn't make payroll. And here's what happens next, almost every single time. The team starts to feel it. Because when good people don't get paid the way they were, they get scared.

And scared turns into frustrated. And frustrated turns into a really hard conversation. One that no owner ever wants to have. Trust starts to crack. In too many of those stories, it ends with the owner having to let people go. And that is really, that's just awful. So the part I want you to really sit with today, the heart of what I really want to say.

When you talk to an owner who's been through it, the first thing that usually comes out is anger. They're frustrated. But that's not the real thing. Underneath that anger, almost every single time, is something a lot quieter and a lot more human. It's embarrassment. They carried this thing on their back. They cared about these people, about their families.

About their groceries, their rent, and it felt like they failed them in the most public and humiliating way a leader can fail. That embarrassment is exactly what I want to talk to you about today, because I've come to believe it's one of the biggest things keeping owners stuck.

So let me name the real problem clearly, because, like always, I think when you hear it named out loud and we have a really real conversation, you're gonna feel a lot less alone in it. So here's the problem: most business owners will track absolutely everything except their own numbers. You can tell me your schedule cold.

You know who you are seeing Tuesday, which tech is going where, which parts are on the truck. You have got the operations of your business memorized. But if I asked you right now, off the top of your head, what your profit margin was last month, or exactly how much cash you have available after the bills that are already on their way out, a lot of you would get really quiet.

And I want to be so clear about this. That is not because you're not smart. You're running circles around most people just by keeping all the plates spinning in the air. It's because nobody ever handed you these habits. You were handed a trade, a skill, a license, a craft, something you're really good at. Nobody ever sat down and taught you how to read the money behind it.

And here's the thing that makes it so much harder. Money feels personal. It does not feel like a business metric. It feels like a report card on you as a human being. So when the numbers feel uncertain, we do the most natural thing in the world. We look away. We tell ourselves we'll deal with it when things slow down a little.

And I want you to really hear this next part, because it is the whole trap in one sentence. What you refuse to look at, you cannot manage. The not knowing feels safer than the knowing, right up until the Friday when it's not safe at all. So even in our UASA peer group, I'm just gonna call it right out.

There was a time when we didn't actually talk about finances. So when we very first started our peer group, we kind of kept that private, and we talked about percentages. And I'm here to tell you a little contrarian point of view about that one little piece. Now, you know I've talked about my peer group for UASA and our mastermind group and our other mastermind group and our book club and all the accountability that we have built in.

I feel like if you can't talk in your private circles where you've signed an NDA and you are cheering for each other. You want each other to succeed. If you can't lay it all out on the table with those people, what are you doing there? These are people that you trust. Tell them what's going on financially.

Compare apples to apples. So in our peer group, we have various sizes of businesses. So ours, we have three trucks on the road, and there is somebody in our peer group that has many more trucks on the road. So the way that we compare apples to apples is we take our revenue and we divide it by the number of trucks we have on the road. And so that way we're comparing an average of revenue per technician.

That's just one little tiny number in all of the numbers that we're gonna talk about. But I really, really wanna destigmatize talking about money. So think about that.

I'm not saying you're gonna publish your financials publicly or something like that. Absolutely not. You do not need to publish it. And it's up to you whether you want to share it with your team. We're reading a book in our book club right now called The Great Game of Business. They believe very much in this book that you should publish all your financials with your team. You should share everything. I'm not telling you you have to do that. We all have our own comfort levels. But in your circles, in the people that you surround yourself with that are helping you with your business, please, please be honest with them about where you are financially. The more you hide, the more secrets you keep, the less transparent you're being, and the less chance you have for somebody who really cares about you to tell you like it is.

If some part of you has been avoiding the money because looking feels scary, I want to say this as gently and as clearly as I know how. You are not the problem. Your altitude is the problem.

At this stage of your climb, watching your money the right way is simply a skill you haven't built yet. And not having built it is not a character flaw. It's just a stretch of the trail that nobody has ever shown you how to walk. So today I'm gonna show you. Let me bring in the framework for a second, because it's going to make all of this feel a lot less overwhelming. If you've been with me for a while, you know that inside the Business Mountain Framework, I look at your business as 16 different categories that every single owner has to tend.

We organize those 16 into three pillars: team, trajectory, and tracking. Your money lives in the tracking pillar. It's one of those 16 pieces of your trek up the mountain, and we call it your financial KPIs. It's just a fancy way of saying the small handful of numbers that tell you the truth about whether your climb is actually working. And here's what I love about looking at your business this way.

When you see it as 16 specific categories of your business instead of one giant mountain of stress, your overwhelm becomes diagnostic. Instead of standing at the bottom going, I have too much to do and I don't even know where to start, you get to say something completely different. You get to say, my financial area is underdeveloped right now, and it's creating a bottleneck, and that is specific. And that, my friend, is fixable. Do you feel how much kinder that is to yourself? That's the difference between drowning and climbing. One is a feeling and the other is a map.

Let me give you the single most important money idea I have. And then I'm gonna give you three simple habits to act on it. And I promise you, these are not complicated. You do not need an accounting degree. You do not need to have an MBA. You just need to be willing to turn on the lights. Here's the big idea. Profit. Profit isn't cash. I'm gonna say that again, because almost nobody really takes it in until the day it bites them.

Profit is not cash. You can be profitable on paper and still not be able to make payroll. They are two completely different things. Profit is a story your books tell you about a whole month after that month is already over. Cash is what is actually sitting in the account on the Friday when you gotta make your people their paychecks.

And the gap between those two things is exactly where businesses get into trouble. Let me give you the picture that I always come back to, because it's the one that makes this click. Alright, think about climbing at a high altitude.

The thing that takes climbers down on the world's tallest mountains is usually not a lack of skill. And it's not a lack of heart. It's running out of oxygen. You can be the strongest, most determined, most experienced climber on that slope. If the oxygen runs out, guess what? None of it matters.

Cash is the oxygen of your business. Your schedule can be packed. Your customers, they can absolutely love you. Your work can be top-notch. And if you run out of cash in the gap between the money going out and the money coming in, your climb, it's over. The gap is what catches up with people. They're paying for parts, they're paying their team before their customers have paid them.

And because nobody is watching the oxygen week to week, the first time they see the problem is the Friday that they cannot breathe.

Add another whole level of complexity if you do warranty work, because there's that time period, or if you work for businesses and you have accounts receivable and you have a net 30. You're gonna do the work, and then you have to wait for that time period for your money to come in. So I really want you to think about these little nuances when you're thinking about your money and how you're running your business.

So, that's a lot of bad news, I know. But here's some good news, and here's what I really want you to hear: watching your oxygen at your altitude, it's simple.

At Camp One and Camp Two, where most of you are climbing right now, the money work, it is not super complicated at all. It comes down to three habits, and doing them is what keeps you alive long enough to get up your mountain. So let's walk through all three, one at a time. Here is the first habit: habit number one, a weekly cash check. And it takes about 15 minutes.

Once a week I want you to sit down, and I want you to look at three things. Just three. First, what is actually in your account right now, today? Second, what's going out before money comes in? And payroll is the big one here. But it's also rent. It's your loan payment, it's the parts order you already placed. And third, what's coming in? And this part matters just as much, when it's coming. Not, I invoiced $40,000, but what is actually coming in and what's gonna land in your account this week when you need the money? So once you're looking at those three things, and you're answering one simple, honest question: can I cover the next two payrolls, no matter what? That's the whole exercise. If the answer is yes, you get to climb with peace this week. If the answer is no, then congratulations, because you just gave yourself weeks of warning instead of a Friday afternoon ambush. And I cannot overstate how much warning that is worth. Weeks of warning, a problem you can solve. A Friday with no warning is a crisis that takes your whole team down with it.

So that habit, that's habit number one. 15 minutes, once a week, three numbers, one question. That alone will change how you sleep. Seriously. Now let me give you the second habit. This one quietly saves more businesses than any clever strategy I could ever hand you. Here it is: stop treating money that is not yours like it's yours.

Let me explain what I mean. The sales tax you collect, that is not your money. You're holding it for the state. The taxes you're gonna owe at the end of the year, not your money either. The payroll taxes, not your money. But here's what happens: all of that money comes in and it sits in one main account, mixed in with everything else. And your brain, which is just trying to help, looks at that balance and counts all of it as available. So you make decisions against it. You see a bigger number than you really have, and you spend like that number is real. And then the tax bill comes and the money's gone. Because in your mind, it was never separate. So you separate it.

The moment that money comes in, I want you to move it somewhere else. A second account, a savings account, somewhere out of sight. So that number you're seeing in your operating account is actually true. It's honest. It's the amount you have to work with. That's it. It sounds almost too simple to matter. It matters more than almost anything on this list.

So many of you, I know, have read Profit First, and I'm gonna be really honest with you. I love the overall idea of Profit First, but I do think that there's way too many accounts in that book. So the way that we do it at Cavalry Appliance and our other two businesses, too, just to be really honest here, we have three accounts. We have one account that is coming in, all of the money gets dumped in there. We have one account that is the money goes out, and then we have one account that's our savings account, and it's always my goal to have, at the very, very least, two full payroll cycles in our savings account. So if you don't have that saved up, if you don't have that money pushed over there for your taxes, please, please make that a habit. Please make that habit number two. You don't have to have seven accounts like it is in Profit First. If you want to, that's great. It works. It's not a bad idea. I just think it's a little complicated for us small business owners. So you do want to make sure that you have that money available to you when it's time to pay your taxes.

So any money that's coming in and going back out, it doesn't belong to you. If you see it in your account and you have all these amazing plans for it, and then the next exciting thing that you hear on a podcast, not this one, of course, I wouldn't lead you astray, but some podcasts get you really excited about things you don't need to be excited about right now at your stage of the climb on the mountain.

You don't want to be spending money that you don't have to spend. Alright? So that is habit number two. What is not yours does not get to sit where you can spend it. Here's the third habit. Know whether you are actually making money on the work itself.

We call this the cost of doing business. And I don't want you to let that term scare you, because it's just honesty applied to a single job. Here's how it works.

After a job is done, you look at it and you ask a simple question. After I paid for the materials and after I paid for the labor, did this job make me money? Or did it cost me money? Let me make it real. Say you quoted a job at $400. It feels good, $400. But then the parts ran you $180. Your tech was on it for three hours plus the drive, plus the trip back because the first part was wrong. By the time you actually add up what that job cost you to deliver, the $400 job might have made you like $20. Or it might have lost money and you never even knew that.

And so here's the hard truth I need you to hear, because it's the one that catches busy, hardworking owners completely off guard. A business that loses a little money on every single job does not go broke slowly. It goes broke faster, because every new job you book digs the hole a little deeper.

Busy is not the same thing as healthy. A full calendar can hide a completely empty tank. So you have got to know your numbers on the actual work you're doing. That is habit number three. I want you to look at the job after it's done, and I want you to tell yourself the truth about whether it actually paid you. So I want you to think about that.

We do a quick, rudimentary cost of doing business. And at the ASTI conference, there's usually a class called cost of doing business. And it goes into a very, sometimes complicated, way of figuring out your cost of doing business. And again, I'm not saying it's wrong. It's awesome. You absolutely must, if you never sat in that class, you must sit in that class. However, there's a really simple way that you can do this. You're gonna look at your financial report that you pull out of your software. And if you're just using a spreadsheet, that's fine. If you're just starting out and you don't have so many customers that you need to do QuickBooks or Wave, you can do a spreadsheet. But what I want you to do is take all of the expenses, literally look at your bank account, add up everything that you spent for that month. Then I want you to count the number of jobs you have. And then I just want you to divide, and that's your cost of doing business. So for us, if we have ten thousand dollars that came out of our account, we spent ten thousand dollars and we had a thousand jobs, that means it costs us ten dollars a job. Obviously, that's not true. Lately, we did our cost of doing business, kind of shocked us. We were kind of bummed at how high it was, and I attribute that to the expensive parts; parts have gone up. Also, gas was almost five dollars a gallon there for a little while. So you really need to keep an eye on this on a regular basis to see how much money it is costing you to do the calls or the service that you're providing for each person, because you really, really want to make sure that you're pricing yourself appropriately. There is somebody close to us that used to be a general contractor. And he would get so frustrated and so upset at his customers because he would be doing a job and he wouldn't be making any money, and he would get frustrated because they would be asking him to deliver. Well, it turns out he kept underquoting, and that's not the customer's fault, is it? So you really need to have a pulse on where you are as far as your job costing to make sure that you're not doing what we just talked about and digging your hole deeper and deeper and deeper as you go.

So that's it. That's your three habits: a weekly cash check, so you always know if you can cover payroll. Separating the money that was never yours to spend, and job costing, number three, so that you know the work itself is actually paying you. Three simple habits, none of them are complicated, all of them are within your reach starting this week. And that's what watching your oxygen looks like at your altitude. Now, I want to come back to the embarrassment, because that is really the heart of this whole entire episode.

This is where I want to lift your thinking up before we close. When a team gets angry over money, that anger is almost never, ever really about the money. Underneath it, it's something more like grief. Those people trusted their owner with their livelihoods, with their families. And when the ground shifted under them, they felt that trust crack, and it really hurt.

I've had a conversation with one of our team members, our newest technician, and he has shared with me that one of the things that he felt frustrated about in past working environments that he was in is that he was worried about the financial health of the business that he was working for.

People come to work because they want to get paid. Of course they like you. Of course you want them to love your customers and you want them to love the business. But if we're really being honest, people have jobs because they have bills to pay. They have mouths to feed, they have roofs that they need to pay for, for their children and their families. They have medical bills to pay, they have car payments to pay, electric bills to pay. So people are all living in their own version of making ends meet, of hardship. And so when we hire them as employers, we have an obligation to make sure that they get paid for the time that they're giving us. And it's really, really fair for them to expect to be paid on time.

And so it's something that we need to really take serious as business owners. If you're not going to do this work and make sure that you're being responsible about the finances in your business, then you should expect people to start to have the trust wither a bit when they're looking at you as the owner and leader in their business. So the owner, when this is going on, also feels it deeply. And so I want to save you that embarrassment, because it's not usually a careless person who ends up in that spot. It's a person who cared so much about their business that the failure felt like a failure of love.

And so here's the reframe I want to give you. And if you carry one thing out of this episode, I hope it's this. Looking at your numbers is not an accounting chore. It's an act of leadership. It's an act of love. The reason to walk into that scary room and turn on the lights and look at your spreadsheet, it's because there are people whose lives are tied to whether you're paying attention. Your family, your team, the customers who depend on you showing up.

A leader's whole entire job is to protect the people who depend on the business. And you simply cannot protect what you refuse to look at. I believe we are each given things to steward in our lives. The work in front of us, the resources we've been entrusted with, the people who climb alongside us. And stewardship does not start with hustle. It starts with honest eyes. It starts with being willing to look clearly, without flinching, at what you've actually been given, so that you can take good care of it.

So I want you to take that shame off the table for you. I want you to just let it go. There is no shame in a number. A number is just information. It's neither good nor bad until you decide what to do with it. So that shame story, the one that whispers that looking will only confirm what you're not good at. That story is the exact lie that keeps the lights off in the one room that you most need to walk into. So I want you to walk into your room, turn on the lights, because I promise you are so much stronger when you can actually see.

Alright, so let me bring this whole conversation in for a landing. Here's what I want you to remember: your money is just one little category out of the 16 categories on the mountain. And what good looks like on that trail changes completely depending on your altitude. The three habits I gave you today are exactly right for Camp One and Camp Two, where most of you are. They would be the wrong focus entirely for someone standing near the summit. That is the whole idea behind the framework. The right work at the wrong altitude is still the wrong work. And figuring out exactly where you're standing and what to climb next is the thing I most want to help you with. So if you are somebody in Camp Three and you're scaling your business you're gonna have different things to look at when you're looking at your financial KPIs. If you're at Camp Four and you're preparing to sell your business, you're going to want to have really clean books for a lot of months, because you're going to be turning those over to a potential buyer. So this whole conversation today is really to help our friends at Camp One and Camp Two. But I want you to think like you're a Camp Three or a Camp Four person, because I want you to think about where you're headed when you get further and further up the mountain.

You're not the problem, my friend. Your altitude is the problem.

And the moment that you turn on the lights in that scary room, overwhelm stops being a feeling and it starts becoming a map. I will see you on the mountain. Thanks for being here. I can't wait to see you next week. I appreciate so much the time that you give me by joining me here on the Outcome Academy podcast.

Thank you so much. If you're listening to this on Spotify or on Apple, go ahead and follow, please. And if you're on YouTube, give me a subscribe. It helps other people find the Outcome Academy podcast. It helps them grow their business. It helps them get unstuck and learn where they are in the mountain. I'm so excited about the Business Mountain Framework and what it can do to unlock people's journey up the mountain to the summit of their dreams. Till next time, thanks, and have a great week.