Turn Your Business Into a Cash Flow Machine with Adam Lean
Apr 23, 2024When it comes to running a successful business, most entrepreneurs are masters at leveraging their skills to launch their dreams into the marketplace. But as Shannon points out in the latest episode of "Keep What You Earn," there's a critical difference between owning your job and owning a money-making machine. Our special guest, Adam Lean, a wizard in the art of cash flow, hits the nail on the head, revealing the secret sauce that can turn any business into a veritable cash flow machine.
In EP544, Adam, the brain behind the CFO Project, shares his insight on the common pitfalls that ensnare business owners. Crafting a service or product is only the start of the entrepreneurial journey. The real challenge – and opportunity – lies in creating a venture that doesn't just survive, but thrives financially. The cornerstone of this success? Understanding and manipulating cash flow.
But what exactly is cash flow? Adam breaks it down for us. It's the lifeblood of your business, the ebb and flow of funds in and out of your accounts. Positive cash flow is the beating heart of a healthy business, signaling that your company is managing its liquid assets well. Shannon and Adam discuss that while profit shows the success of your business on paper, cash flow dictates its day-to-day viability.
An example familiar to many, Uber, comes to the table. Despite a lack of consistent profitability, Uber captivates with its positive cash flow, underscored by robust investments. It's a practical demonstration that businesses can indeed operate without immediate profits if they play their cash flow cards right.
Therein lies the complexity and the beauty – not all businesses are the same, and thus, not all cash flow drivers apply equally across the board. Adam highlights six pivotal drivers for cash flow: time spent in inventory, asset purchases or sales, credit policies, debt management, owner investments or withdrawals, and consistent net annual growth. It's a mixed bag where wise usage can spell triumphant success or lack thereof, the beginning of the end.
One enlightening moment from the conversation comes when Adam illustrates the power of wise debt management. A pizza oven scenario demonstrates that investing in assets with borrowed funds can amplify a business's cash flow if managed wisely. And that's where expertise like his comes into play.
Shannon reminds us that's exactly why entrepreneurs need a guiding light – someone who not only understands these drivers but can apply them to each unique business fabric effectively. It's about harnessing the potential within these drivers to fuel business growth.
Delving into the professional world, Adam lamented the gap in service that many accountants leave. While charging an average of $904 a year for tax returns, professionals often fail to offer the strategic insight entrepreneurs crave. Most accountants are not equipped to dive deep into the entrepreneur's world, which is why the CFO Project is teaching accountants to evolve beyond recorders of the past into interpreters of financial narratives, providing business owners with the actionable advice they need.
For both entrepreneurs and accountants looking for enlightenment, Adam extends an open invitation. Business owners can discover a wealth of knowledge at businessownersonly.com, while accountants keen on offering CFO-level guidance can turn to thecfoproject.com for transformative training.
In closing, this episode is more than just a dialogue about financial terms. It's an epiphany for ambitious entrepreneurs. The takeaway? With a fundamental understanding of cash flow and the right guidance, any business – regardless of size or industry – can be engineered to be a cash flow powerhouse, and in turn, a beacon of profitability.
Be sure to tune into "Keep What You Earn" for more eye-opening conversations aimed at empowering entrepreneurs with the knowledge to not just keep what they earn but to multiply it manifold.
Adam Lean is a former accountant turned 2-time entrepreneur who built, scaled, and sold two businesses. While helping other business owners, he realized his passion was teaching and providing tools to business owners to help them make more money and have a peace-of-mind. He currently runs The CFO Project - a training company that trains financial professionals on how to offer CFO and advisory services
Facebook: https://www.facebook.com/thecfoproject
LinkedIn: https://www.linkedin.com/company/thecfoproject/
Website: https://thecfoproject.com/
What you'll hear in this episode:
06:20 CFO services, business transformation program.
08:42 Positive cash flow essential for business survival.
10:54 Profit ≠ Cash Flow: Making revenue ≠ having money.
17:09 Accelerate customer collections, extend credit wisely, manage debt.
19:59 Debt can be good if used wisely.
22:10 Accountants and bookkeepers guide clients with financial strategy.
26:22 Focus on fewer things for faster results.
29:35 Focus on right things, turning data into decisions.
32:46 Train accountants to communicate effectively with businesses.
If you like this episode, check out:
Best Practices to Collect Cash from Customers Faster
How to Generate Cash Without Increasing Price
Want to learn more so you can earn more?
5-Day Financial Mindset Refresh: https://www.keepwhatyouearn.com/refresh
Visit keepwhatyouearn.com to dive deeper on our episodes
Visit keepwhatyouearncfo.com to work with Shannon and her team
Watch this episode and more here: https://www.youtube.com/channel/UCMlIuZsrllp1Uc_MlhriLvQ
Connect with Shannon on IG: https://www.instagram.com/shannonkweinstein/
The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.
