Build A Cash Reserve for your Repair Shop

[Joe Marconi]

Premium Member Content 

This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

[weighit]

When I had my little business, for the first three years all we did was pay off loans, but at the end of those three years we were debt free. Then we started putting anywhere from 3 to 5% of the gross sales each month into that side account savings for what if expenses. It would grow and grow and if we needed some surprise un accounted for purchase, we had the money. No sweat, no more loans for us. When we decided to sell the business, that extra money was moved in to the bonus for the owners account!  Worked out well and have suggested that approach to a relative that has a small business and so far they are doing it too. They want to buy a bigger building and are planning on using that money for expansion. Also they do not want loans.

[Joe Marconi]

Premium Member Content 

This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.

[Charlie]

3 to 6 months of operating expenses, set aside in a stagnant account is hard to fathom to a small business owner who is trying to grow.

I speak from experience, for the first 24 years, I leveraged everything to grow. I work well in stressful situations, and can find my way through the tough times. It seemed for years, the numbers in my checkbook balance were red. I accepted every risk in order to grow to three locations, purchasing the Real Estate along the way. The trick was always having good revenue, strong revenue can conceal a multitude of sins. For the first 24 years I operated with no cash in the bank (to speak of) while making payments on the prior years taxes. I was bold and lucky, some would say stupid.... I was very fortunate.

Then, in 2019 I read Profit First, and it changed my world. The economic stresses of running this company have nearly vanished. We just purchased our fifth location, taxes are all paid with next years in the bank. The numbers in our Operating Account are now all black. When my bankers ask for the performance report, they almost can't believe it. Shifting how that revenue is handled, and changing my mindset has given our company strength and predictability. 

For anyone looking to sell their business, or to transfer operations to the next generation (that's all of us), having strong, predictable financials will change the multiplier, in many cases it doubles it. I suppose you could say, having strong, predictable financials is the best investment you will make. 

Was it necessary to operate the way I did for the first 24 years, in order to get where I am? I can't say for sure, but what I will say, is if I was to do it all over again, I would begin with the Profit First philosophy. Many of us start from nothing, with nothing, and we only know what we know. The lucky ones survive, and along the way, become enlightened, stimulating positive change. I only hope that for the next operator, it doesn't take 24 years to figure it out. 

[Joe Marconi]

Premium Member Content 

This content is hidden to guests, one of the benefits of a paid membership. Please login or register to view this content.