Jun 1, 2022
Are your finances stressing you out?
Doug Peterson founded Get Priorities Straight (GPS) to help people create cash flow clarity, and develop innovative personal spending and savings habits to gain financial peace of mind. In this episode, he offers his wealth of knowledge when it comes to managing and protecting our wealth. Tune in if you want to take control of your finances now!
[00:01 - 04:39] The Problem With How Our Society Manages Money
- We don’t talk about money and money management
- Helping people account for their expenses and set up reserves
[04:40 - 13:19] Mastering Business Cash Flow
- Knowing where you stand and how long you will last
- You need a cash infusion
- Growing too fast is not always a good thing
- Let the business normalize
- Don’t overextend and don’t be impatient
- Figuring out where all the money is going and what it is that you want to keep track of
- Learning from mistakes and establishing predictability
[13:20 - 21:38] Money Skills Are Survival Skills
- Doug shares his thoughts on success
- Building a solid foundation for his clients
- Working with people who want to be successful
- Businesses lose revenue just for the lack of awareness of their finances
[21:39 - 22:24] Closing Segment
- Reach out to Doug!
- Links Below
- Final Words
Tweetable Quotes
“You can really build something great, but there's an impatience. I got to do it now, now is the perfect window. If you have cash, there's always a great window, right?” - Doug Peterson
“Cash flow is a symptom. Cash flow is the pain point. That opens the door to figure out what we need to do to improve and get better results. And I think the biggest benefit is sleeping at night.”
“Success is only the feeling you get when you accomplish something you set out to do. It's only a feeling, it's not a destination. It's not a thing.” - Doug Peterson
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Connect with Doug! Visit the Get Your Priorities Straight website or schedulewithdoug.com to learn more cashflow fundamentals!
Resource Mentioned
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Want to read the full show notes of the episode? Check it out below:
[00:00:00] Doug Peterson: Success is only the feeling you get when you accomplish something you set out to do. It's only a feeling. It's not a destination. It's not a thing. Failure is the feeling you get when you don't accomplish something you set out to do.
[00:00:26] Sam Wilson: Doug Peterson founded Get Priorities Straight in 2018 to help business owners and high-income earners master their personal and business cash flows so they could reduce stress, eliminate waste, and focus on what they do best. Doug, welcome to the show.
[00:00:40] Doug Peterson: Thank you very much. It's great to be here. And I'm excited to talk to you because you talk about so many different things on your show that it's really interesting.
[00:00:48] Sam Wilson: Well, thanks. I appreciate that. There's three questions I ask every guest who comes on the show: in 90 seconds or less, where did you start? Where are you now? And how did you get there?
[00:00:56] Doug Peterson: Well, you mentioned, I had a lot of years in businesses, I had six companies, two of them failed. I've done the last 20 years of coaching and mentoring. And I started GPS because I saw a really big problem in my career, and it has affected people in their business, personal, and health, and that's personal and business finances. People don't pay a lot of attention. I'm sure you've had a few guests here that they build a house of cards and things went up and they overleveraged and lost it all.
[00:01:27] Doug Peterson: And I'm one of those guys. I used my house as collateral. I lost my house, went bankrupt, and had to voluntary repo my car. And then when I was 40, I had a downturn in the recruiting market and had to start over again with kids coming up to college age. So I've experienced financial pain.
[00:01:45] Doug Peterson: That's wow. Let's hear a little bit more about what you're doing now, I guess, and how those experiences have shaped, what it is that you do now. So I thought, what's a huge problem? And a huge problem, I believe is how our society manages money. Let's start at the foundation, how my wife and I manage money.
[00:02:09] Doug Peterson: Now, my dad was a stoic Norwegian. The joke was, I told your mother, I married her when I loved her. When I married her, I told her I loved her. If it changes, I'll let her know. And so they didn't talk about money and stuff. In fact, I got it right here since we're all on the cuff, my mother-in-law and father-in-law got married and he complained about how much, how many shoes she would buy.
[00:02:34] Doug Peterson: So she said, after 10 years of marriage, he said, I've still got my same shoe. He said you will have them forever. I'm having them bronzed. So she bronzed his shoes and said, you'll never have to buy another pair. And that's how they learn money management. It goes into the same thing in business with your business partners.
[00:02:52] Doug Peterson: You got to know where you stand. And I thought this is a huge problem that I have a solution to.
[00:02:58] Sam Wilson: Well, talk to us about that. What is the solution? What is the, can you actually, before you get the solution, clearly define the huge problem that you're seeing. I mean, I think one of the things you say was that cash flow management is a major problem, but can you break that down more specifically into, into kind of the nuts and bolts of that?
[00:03:14] Doug Peterson: Absolutely. So you get a profit and loss statement and the profit and loss statement on your business shows your income and your expenses, right? And it doesn't show your owner disbursements. It doesn't show your debt service doesn't necessarily show your accounts receivable. Like you build into a good cash flow projection.
[00:03:33] Doug Peterson: People also don't really know and plan for all the infrequent expenses that will come up for sure. So, what I help people do is really understand how much of their cash has already been committed so that they have the money when they need it and have reserves. And you need three to six months worth of reserves in your business, three to six months in personal. And that I would say as a minimum. The average small business has about 27 days worth of cash before they're going to run out. And leverage isn't necessarily capital, right? It's debt. So when you're in a spot where we've been for so long, and I've heard it with a couple of guests on your show, they say, you know, we're probably due for a little downtick.
[00:04:17] Doug Peterson: Things have been going up and up and up and up, and it's not being a pessimist. It's just, that's the way things go. So I want people to be able to have money when they need it, have reserves to be able to sleep at night, not bet the farm, know their personal finances, as well as their business finances and be on the same page with their spouse. I think all of those is a pretty tall order.
[00:04:38] Sam Wilson: It's a very tall order. Let's talk here. Let's specifically, maybe on the business side of things. I know a lot of, for a lot of us who are solopreneurs entrepreneurs or even running companies, a lot of times there's this like ebb and flow between the two where it's like, okay, so we need a cash infusion, especially if it's without outside investors. It's okay when you have cap, which I've got a business like that, which we don't have to do that anymore, but early on it was, Hey, we need 50 grand. We need 80 grand. We'll just pull it out of savings and put it over here into the business. I mean, there's a lot of overlap, especially early on in businesses. I mean, do you help people kind of navigate that side of things? I mean, what what's, what do you, what do you say to that? And then what are you doing for people on that front?
[00:05:17] Doug Peterson: Well, as far as needing a cash infusion, it also has to do with, you know, what kind of debt are you carrying now? What kind of interest rates are you carrying? Is it secured? Is it unsecured? Are you bringing in partners? You know, there's a lot of moving parts. Again, the foundation that I find is missing is they really don't know exactly what it costs and how long they can last. I think they do. And they're hopeful, but especially starting out, you don't have a lot of data and track record.
[00:05:45] Doug Peterson: So it's difficult to figure out. So I start with the facts. Let's figure out exactly where you are, what your cash needs are, how long you can last. And then obviously you have to build a good case and be bankable, right? So many people when they get stretched and have unsecured credit, start out very bankable, and it's again, like betting the farm.
[00:06:05] Doug Peterson: We want to be careful. Banks love to loan you money. And investors love the loan you money when you don't need it. But when you really need it. It's tough. When I really had some problems in my business, I had nobody to talk to because I didn't qualify. Nothing they had could, they can sell me.
[00:06:26] Doug Peterson: So who's going to talk to you? Who's going to help you out? It's finding somebody that seasoned in the business has been through the war to help you realize, you know, that's not one you want to go down. So to be more specific, you need a cash infusion. You got to really make sure your business credit, your personal credit, your assets are solid and that you don't grow too fast. I think that's the biggest problem with really smart, ambitious people is they grow too fast.
[00:06:53] Sam Wilson: Can you define that for me?
[00:06:55] Doug Peterson: Growing too fast? It's been going well, it'll continue like this. Let's not let it settle out and make sure these are turning cash and making profits. One of your guests on the show, I'm trying to remember his name, talked about turning them in five years where he built them out, let them normalize. And I thought ,I'm going to borrow that term. Before you buy more properties, let's normalize a little bit. I've got a client in Utah. That's got six properties, 27 units. They're doing some flips.
[00:07:27] Doug Peterson: They own a real estate company. My advice to them is I don't want to rain on your parade, but let this normalize a little bit. Let's see how these are performing, which ones you want to keep, which ones you don't, because they're just going
[00:07:38] Sam Wilson: Right. They're growing, they're growing like gangbusters and you're, you're saying, Hey, this is great love to grow, but let's actually let the dust settle a little bit and see where we really are.
[00:07:47] Sam Wilson: What does that gain you? I mean, for those of us who are go, go, go motivated. What does that do? Tell me what that, what the goal of letting things kind of normalize. What is that?
[00:07:58] Doug Peterson: Well, especially for people that are starting out and I've done this, most of us have done this. We're shooting from the hip, right. We're doing our best guess. We're trying. What we need to do is the skills that got us there that gave us the courage to go out and buy, and this is just an opinion, and stretch ourselves and learn new things. Those aren't the skills that really people build wealth over the long term. They build wealth by figuring out what the formula is and being safe, making sure their investors get paid so they have more investors and, you know, not try to do it all at once. You can, you can really build something great, but there's an impatience. I got to do it now. I mean, now is the perfect window. If you have cash, there's always a great window, right? And I'm sure you've seen that in both markets, the people that had the cash when they ran into the deal and that deal came from a lot of relationships, right? It wasn't advertised. They were able to execute on it.
[00:09:00] Doug Peterson: That's, that's absolutely right. What are you doing when you're looking at a business? I mean, other than, you know, looking at their balance sheet, looking at their P and L what things are you looking at? And for when you do just an initial deep dive with someone. I want to get an idea, first of all, how much they know of what's going on.
[00:09:19] Doug Peterson: Very simply if people are using QuickBooks, often their books are closed by the 15th of the next month. And I put in a system where, you know, real-time where you stand all the time throughout the month, and it's not a great deal of work. And it gives you so much clarity. The first thing I want to find out is just really, where do you stand?
[00:09:38] Doug Peterson: What do you know? How much are you anticipating expenses? Have you laid out? Most people I run into don't do very much cash flow planning. And I would say this is people under 10 employees anywhere from say two to eight to 10 million in revenue, which is pretty much where I sit. People above that have a controller or a fractional CFO or something they can help with.
[00:10:00] Sam Wilson: Right. So you guys start first off with cash flow planning, figuring out in a real-time basis. Are you doing that with measuring? Just weekly KPIs, saying, okay, this is where we expect certain revenues to look like, certain expenses to look like, and then normalizing that, not normalizing it, but then reconciling that the end of the month or what's that look like?
[00:10:18] Doug Peterson: Well, a lot of times it's developing what those KPIs are. So we really got to look at what business you're in, what you're trying to accomplish. I mean, I hate to give you so many general answers. To give you a very specific answer, we figure out where all your money's going. Well, often bookkeepers come in and keep the books the way you had them.
[00:10:37] Doug Peterson: Happens very often, nothing against them. Do your taxes and you say, I want to spend a lot of my tax. It says, okay, well, I did a whole bunch of adjusting entries at the end of the year, and your books are worthless to manage with throughout the year. So we need to determine on a real fundamental level, what is it that you want to keep track of?
[00:10:54] Doug Peterson: And why? And then how are you going to do that then the efficient way where you can get the information before it's too late. I just had a client recently spend 65,000 on a product, on an upgrade, a renovation, and it came in 110,000 over. And now the product properties underwater, well, you still got to pay for all that stuff.
[00:11:16] Sam Wilson: Right. Right. Yeah. And the day, I mean, surely they knew they'd gone that far over budget.
[00:11:24] Doug Peterson: Not until it was pretty darn late.
[00:11:26] Sam Wilson: Wow.
[00:11:27] Doug Peterson: Yeah. So here's the funny thing. We're all people, we all have holes and blind spots and we've all, you know, one of my favorite quotes is champions are rarely chosen from the ranks to be unscarred. We've all screwed something up big.
[00:11:42] Sam Wilson: I like that.
[00:11:44] Doug Peterson: So, you know, we're not going to run and advertise this is what happened. And so often we don't learn from that. It just depends. It could be that it wasn't that we went over on this product, but we're, our staff is just way too expensive, right? We've put in really terrible systems so that it's not efficient.
[00:12:06] Doug Peterson: So it has way more to do with, with, well, not way more. Cash flow is a symptom. Cash flow is the pain point. That opens the door to figure out what do we need to do to improve. And get better results. And I think the biggest benefit is sleeping at night.
[00:12:25] Sam Wilson: Yeah. Oh man. There's nothing like having a business that consistently produces revenue with very little input from us as the owners. And it's predictable. I think that's, yeah. That's, you're absolutely right. It's it's also, that's the pain point. And also the real blessing where it's like, oh, okay. Yeah. That's continued to produce a revenue. It's in line. That's what works expecting you need to do. Keep going. That's a good feeling.
[00:12:52] Doug Peterson: Yeah. It's not only a good feeling, but you hit some on the head that I learned from a mentor of mine named Bobb Biehl and he said, confidence is a direct result of predictability. And we don't have confidence when we can't predict if this is going to work. Everything from, I just had knee surgery and I can't go on that 10-mile hike.
[00:13:11] Doug Peterson: You know, I'm not confident. To finances, good investments, it fits everywhere. And there's another thing he taught me too. I wanted to bring up, ‘cause I know you asked this on your show sometimes about success and definition of success. And I thought this was the best I've ever heard. Success is only the feeling you get when you accomplish something you set out to do.
[00:13:33] Doug Peterson: It's only a feeling it's not a destination. It's not a thing. Failure is the feeling you get when you don't accomplish something you set out to do. So technically we're successful meeting today. We make it a thing and we make personal. Like I'm a success, I'm a failure. And I bet you bet a lot of people that have hit high levels of success that say, you know, I thought it was going to be something different than it is. I thought it was going to be more, I thought I'd feel better or something. I'm still the same guy.
[00:14:04] Sam Wilson: Yeah, you're absolutely right. I mean, on that note, no, we're turning left. You're a little bit in the conversation, but it was, I was talking to somebody the other day that was having a big cash out from a large portfolio sale.
[00:14:15] Sam Wilson: And it was the check they were receiving was north of $10 million. And I said, what's that? What's that feel like I said, is that, you know, and he just goes, cause you know, he goes, I'll probably, he goes the biggest check I'll ever got, I ever got. And he goes, I'll probably be excited about it for a day or two.
[00:14:31] Sam Wilson: And then just go back, go back to work. And I'm like, man, that's really interesting. Like I look forward to, I look forward to having that opportunity at least to go.
[00:14:42] Doug Peterson: I have not experienced that. So I can't answer what it's like.
[00:14:45] Sam Wilson: I can't either not, not at this stage in my life. I certainly can't either. So walk us through, if you don't mind the, I mean, I'm certain you've seen kind of, people come to you in all, all states of either disarray or needing certain, you know, certain points in their journey. Where do you like to see someone or do you like, but where do you typically see start? And then on the term of success, what does a successful process look like for you with a client when you get them to a point where you say what we've done together has been a success for you as a client? What does that mean?
[00:15:17] Doug Peterson: Well, what that means is that we've gone in and really identified on the fundamental level. I think what I do is a foundation. I help build a really solid foundation. So in a fundamental level, we know where you are, where your expenses are, where all your cash is going, how much cash you have, how long you can last, what your creditworthiness is and what your plans are.
[00:15:39] Doug Peterson: And a system in place to where you can monitor that every. But also on things that are uncertain or that certainty is a direct result. Confidence, the direct result of predictability, what you can't predict, you can be tracking real-time and see where you're going so that you can mitigate mistakes. And that's especially important when you're doing renovation, projects and any kind of capital improvement.
[00:16:05] Doug Peterson: Because as you know, projects take on a life of their own, they tend to grow and scale. And it's, it's like a cancer. You didn't realize we had to do all this other stuff too. If you've done a commercial property or a home remodel, it's not straightforward. And then you get into situations now where we have so much labor shortage and material shortage.
[00:16:25] Doug Peterson: Now it's a lot longer, so what's that going to cost? So when we're finished, they've got a good model where they can really sit down and predict and compare it to previous models. Here's, what's changed that we're going to really have to take into account.
[00:16:40] Sam Wilson: And that's, I like what you're doing there, because there is, there's kind of the, you know, and Dave Ramsey gets, he gets kind of gets beat on in the real estate circles a bit just because, you know, he's Mr. No leverage, Mr. And for the right group for the right crowd, that's fine. But he only really approaches a certain target avatar, you know, in, in a really an American culture, you know, but I think, but not really that it doesn't deal with businesses. At least not, not what I've seen and there's just, no, there's, there's, there's not that crossover between business and personal.
[00:17:13] Sam Wilson: Where do you kind of come in and blend those two? I mean, so are there different models you work with on both fronts or is it, Hey, this is the one big, giant model we're building for you personally. What's what's that? What's that look like?
[00:17:25] Doug Peterson: Well, cash flow is cash flow. Personal or business, money and money out. We want more money in than out, and that's the basic formula.
[00:17:34] Doug Peterson: And then when you look at debt on the personal side, you know, that's your debt, but on the business side, let's make sure you have protection. I'm not an attorney and I'm not a CPA, but I've run into a lot of people co-mingling funds and making their LLCs worthless, right? The cash and the LLC then that has no protection.
[00:17:55] Doug Peterson: And, you know, everything's at risk to kind of hit on the Ramsey note. Nothing is Dave Ramsey. He's got a lot of good foundational information but his target market is broke people. Don't have any credit, pay off all your debt, live within your means, and don't be broke anymore. And I don't mean to be negative or anything, but I want to work with people that want to be successful. Let's say we have to travel with our business. You know, let's leverage our credit cards so that we get miles that we know we're always paying them off. And I've got 1.2 million airline miles just from doing a very simple system over time.
[00:18:34] Doug Peterson: And that's a lot of money, you know, that's net that's got to come out. And so you've got to, and I don't get into taxes and things, but I get you set up so that your tax planners can help you, your accountants can help you better, your bookkeepers work better with you. And I think I answered the question. Did I? I kind of went around and around there.
[00:18:53] Sam Wilson: No, you did. You certainly did not. And I liked that differentiation where, you know, Dave helps broke people get unbroke. And you want to help successful people get even more successful. And again, there's nothing that's a different, different avatar there entirely 'cause there's a lot of people in this country that would do really well to heed Dave Ramsey's advice. So there's certainly a, certainly a need being met on that front as well. It just, you know, I think, I think it's interesting the way, he worked. I love the idea, is that cash flow, we want more money in than out.
[00:19:20] Sam Wilson: You've shared some really cool stuff with us today, you know, where, you know, use the cash flow as the pain point. I loved your quote there. He said confidence is a direct result of predictability. And for a lot of us as business owners, especially as we're learning to scale, that's the thrust of the show is how to scale commercial real estate.
[00:19:34] Sam Wilson: That's one of the things we lack early on. It's that? Oh my gosh. We've got to get a few deals in we're out here hustling, trying to find investors, trying to find deals. We're putting money into marketing and X, Y, and Z. And it's a little bit of a how'd you say it in the early on you said shooting from the hip.
[00:19:50] Sam Wilson: And so establishing that predictability and even maybe just developing that baseline, I think, up front where you go. Okay. Even if, even if we don't know exactly what it's going to be, we're going to build some targets and then adjust those targets as we move along and just see where things are. I think you've given us some really great things to think about.
[00:20:07] Sam Wilson: Is there anything else you'd like to add here before we jump into you telling us how to get a hold of you?
[00:20:11] Doug Peterson: No, I would just say that the, well, yes I do. It's not sexy. It's kind of anti-climatic. When you finally get this under control, it's like another thing you have to do. But when you don't have it under control, it's a nightmare.
[00:20:28] Doug Peterson: Most people waste, I would guess about 15% of their revenue, just from lack of awareness and that's all net profit. So I would say the last piece is proactively manage your money, learn how to handle it, and if you don't have that personality, get someone on your team or hire someone to help you with it, because it will make a lot of difference long term.
[00:20:50] Sam Wilson: That's a key, a key point there. Yeah. I think that's an interesting stat. 15% of revenue is wasted just because of a lack of awareness.
[00:20:59] Doug Peterson: Yep. Have you heard about Pearson's law?
[00:21:02] Sam Wilson: Have not.
[00:21:03] Doug Peterson: So Pearson's law is basically what you manage, improve, what you manage and report on improves more. We want to manage what we've got so that it really makes a difference.
[00:21:17] Doug Peterson: And I really think today's money skills are today's survival skills. You can do really well, but you can also lose a lot, right? You don't hear about those people as much.
[00:21:27] Sam Wilson: No, they're not their stories aren't, aren't nearly as much fun, but certainly things that we learned from. Doug, thanks for taking the time to come on the show today. I do appreciate it. If our listeners want to get in touch with you or learn more about you and what you do, what is the best way to do that?
[00:21:40] Doug Peterson: Well, if you just go to schedulewithdoug.com, it has my website Get Priority Straight, my phone number, my calendar. If you want to have a conversation, that's the best way to do it.
[00:21:49] Sam Wilson: Awesome, schedulewithdoug.com, we will make sure we put that in the show notes. Doug, thank you again for coming on the show today. I do appreciate it.
[00:21:56] Doug Peterson: Thank you very much. Great to be here, Sam.