196: Greg Crabtree — Keeping Your Business Financials Healthy
Cash is a king and you can’t survive without cash. You also cannot take advantage of opportunities without cash. If you’ve prepared well, you have a big cash reserve right now and you will be able to maximize your return on luck during this period. However, what happens if you don’t currently have enough in reserves?
Greg Crabtree is a speaker, author, entrepreneur, and financial expert. He is the CEO of Crabtree, Rowe & Berger, PC, a CPA firm that focuses on helping businesses create sustainable profits, manage tax implications, and more. Greg is also the author of the book, Simple Numbers, Straight Talk, Big Profits, in which he shares his core principles on how to turn your business into a wealth-building engine.
When Greg wrote his first book, it was during a time where the market had just recovered from the recession. During his research, he found that a fully capitalized business, which means businesses that had two-months of core capital targets achieved, were the ones that took advantage of their situation the most and not only survived the recession but thrived from it.
Greg realizes that not every business has two months of cash on hand, which just means that businesses currently facing a crisis need to think creatively on how to navigate through situations like this. Whatever is happening in the world today, take a look at your profit engines and ask yourself, “Am I going to be losing money or am I just not going to make as much?”
If you’re going to be losing money, look at the balance sheet right away and see how much runway you might have. Then, start cutting things that don’t make sense for your business right now. One of Greg’s travel clients realized that it made the most sense to turn off their paid search as fewer people will be willing to travel right now.
There are big ripple effects happening all across industries. Investors are hesitant to invest, restaurant and service industries are down, people are staying home more. However, that doesn’t mean all businesses are affected equally. Greg’s real estate clients are OK in this uncertain time. Take a look at your particular industry and see if this is a disaster for you.
Greg believes most industries have 90 days of runway to wait and see what this pandemic might turn into before it puts businesses in a tight situation. He is hopeful that by June things will be a little more clear and the pandemic situation will be positive. Most of Greg’s clients right now are growing between 10-30% a year. Greg’s advice is to reduce unnecessary spending, be cautious about staff adjustments, and ride it out. And remember, the stock market is not an accurate indicator of the economy.
Interview Links:
Simple Numbers, Straight Talk, Big Profits, by Greg Crabtree
Resources:
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