Podcast Summary: Owned and Operated – "You’re Growing Fast… So Why Are You Still Broke?"

Host: John Wilson
Guest: Patrick Dichter, Apple Tree Business Services
Date: December 4, 2025

Episode Overview

In this episode, John Wilson (owner of a $30 million HVAC, plumbing & electrical company) welcomes Patrick Dichter, CEO of Apple Tree Business Services, for a deep dive into why even fast-growing home service businesses can feel perpetually cash-strapped. They discuss the stages of accounting maturity for service businesses, the critical need for clean bookkeeping, cash flow management, financial forecasting, common pitfalls, and best practices for scaling sustainably. The conversation is lively, candid, and packed with actionable advice and real-world anecdotes.

Key Discussion Points & Insights

1. The Reality of Growing Broke (00:00–04:39)

• Financial Clarity as an Asset: Both highlight how essential good accounting is to making fast, strategic decisions.

  "[With clarity,] you can make real decisions and we can make them much faster." – John (00:10)

• Cash Drain in Service Businesses: Even when growing quickly and pricing is correct, lack of visibility into accrual-based financials can leave owners asking: "Where’s my money?" (00:14)

  "It's amazing how much cash a service business can eat." – Patrick (00:14)

2. The Stages of Accounting Maturity in Home Services (04:39–07:34)

• Beginners (0–$500k): “Checkbook Charlie” runs the business by account balances; no real bookkeeping.

• Emerging ($500k–$2M): Bookkeeping “kind of” happens, usually by an untrained employee or spouse. Directional, but with many blind spots (gross profit, depreciation, etc.).

• Growth ($2M–$10M): Outsourced bookkeeping by professionals becomes the norm. Clean numbers become a gateway to better decisions, tax planning, and business management.

• Scale (>$10M): Brings in-house finance teams, possibly a controller or CFO.

  "From $500k to $2 million...the P&L is directionally accurate, but the balance sheet is not." – Patrick (05:50)

3. Learning the Hard Way: The Importance of Clean Month-End Close (07:34–10:36)

• John shares: He only got his first true month-end close 9 years into running the business, making years of decisions with partial data.
• Discuss how inaccurate books, especially on accruals (payroll, WIP, materials timing), can distort profits or losses and prompt wrong moves.

  "We thought we were operating at break even... turns out we were actually losing 20%." – John (08:25)

4. Cash Flow Cycles & the Silent Killers (10:36–13:04)

• Rapid growth consumes cash—hiring, materials, longer AR cycles.

• Accrual vs. cash differences: Fixed costs, multi-payroll months, and unrecognized revenues can mask trouble or success.

• PMs or owner stepping out can further stretch cash.

• Seasonal swings and “Checkbook Charlie” returning at scale, to obsess over cash over P&L.

• Importance of forward-looking cash planning—the bigger you get, the more critical.

  “The bigger you are, you really have to be able to look further ahead.” – Patrick (12:41)

5. Tools & Tactics for Better Financial Tracking (16:28–20:15)

• Clean books are the foundation for daily/weekly/monthly margin tracking, forecasting, and controlling overhead.
• Simple Forecasting: Start with recurring bills over 13 weeks, then roll forward up to 12 months for strategic oversight.
• If new: Export P&L to Excel, add seasonality, drag out projections, compare budget to actual, refine monthly.

  “If somebody is new to this...here’s how you create a cash flow forecast, quick and dirty in under an hour.” – Patrick (17:14)

• Importance of having a quick-and-dirty cash-out sheet—clarity during crunches saves companies.

6. Common Accounting & Bookkeeping Blunders (20:15–24:33)

• Staying on QuickBooks Desktop: It's becoming obsolete and lacks integration.
• Bad CRM Integrations: Mapping errors can double-book or misbook revenue; often impossible to unwind.

  “Oh, it’s a shit show. Total shit show.” – John (20:58)

• Improper Payroll Mapping: Techs not mapped to COGS, or books not matching tax filings.
• Going too long without professional support delays growth and creates blind spots.

7. Scaling, Acquisitions & Managing Balance Sheet Risk (24:33–30:00)

• When to pursue M&A: Only once the first business is stable—clean margins, cash, systems.
• Cash-planning mistakes: Underestimating CapEx and debt service needs, especially with big purchases or inventory.

  “Next year I want 15 vehicles...I was like, there’s $150,000 of capex…but no, there’s like $1.3 million of CapEx, what are you talking about?” – John (26:16)

• As businesses scale, focus shifts from just P&L to holistic balance sheet management.

8. Liquidity, Risk, and Operating in Tough Markets (2025 Context) (28:57–36:53)

• 2025 is proving tough: longer sales cycles, pricing pressures, higher overhead, and banks less friendly.
• Conservative cash positions: 1–2 months overhead is prudent; 3 months for risk-averse or slow/no-growth companies.
• Problems with NAICS code shared between home services and construction—can affect credit limits when construction goes bust.
• Must also plan for the unexpected—like fuel card limits dropping overnight due to wider industry risk.

9. The Profit First Debate & Cash Management Best Practices (32:06–37:23)

• The Profit First book’s framework (seven bank accounts, split by category) may backfire for fast-growing service businesses—most abandon it.
• Patrick’s take: “Love the book, hate the application…90% fail to keep up, and bounce checks.”
• John’s solution: One capital account, with an auto-transfer every day/week to build a war chest for weathering storms, investment, or distributions.

  “How do we set aside and grow our cash position?” – John (36:53)

10. Golden Rules for Scaling With Positive Cash Flow (37:29–41:12)

• Get gross margin and pricing right (target 40–50%).
• Maintain a rainy-day fund (2–3 months overhead).
• Pay quarterly tax estimates to dodge the double whammy of slow season + tax bill.
• Always have an available line of credit.
• Culture of Collections: Aggressively collect AR—growth eats up cash if you let AR days stretch. Resi (residential) customers pay better than commercial.

  “Accounts receivable is a full contact sport. You got to be on it, you got to be diligent, you got to be aggressive.” – Patrick (40:00)

11. Merchant Fees: Pay Up for Faster Cash (41:12–42:57)

• Take credit cards—don’t get hung up on fees. You’ll get paid faster; it’s cheaper than using a line of credit.
• Negotiate merchant fees with processing providers; even large SaaS vendors will often negotiate.

  “Eat the credit card fee because you’re going to get paid faster...it’s not just apples to apples.” – Patrick (41:24)

12. Prepping for Sale: What Buyers (and Banks) Want (43:34–51:32)

• Clean Financials: Number one deal killer is messy books; have at least 1–2 years clean, file tax returns early.
• Understand working capital and tax implications up front—surprises at the end kill deals.
• Speak the buyer’s language—know your addbacks, P&L vs. balance sheet distinctions.
• Avoid “creative” accounting/tax fraud; kills SBA financing and scares off buyers.
• As scale increases (>$1–2M EBITDA), lenders/buyers focus more on EBITDA than net profit/taxes.
• Be ready for a part-time job during the sales process—maintain data room, keep things current.

  “Messy financials are probably the number one deal killer…” – Patrick (43:34)

Notable Quotes & Memorable Moments

• On Clean Books:
  “We thought we were operating at break even... turns out we were actually losing 20%.” – John (08:25)

• On Bookkeeping Blunders:
  “Oh, it’s a shit show. Total shit show.” – John, on CRM integrations gone wrong (20:58)

• On Collections:
  "Accounts receivable is a full contact sport. You got to be on it, you got to be diligent, you got to be aggressive." – Patrick (40:00)

• On Profit First:
  “Love the book, love the framework, I hate it in application. 90% of people open 7 accounts, stick with it a month, then miss a payroll.” – Patrick (32:31)

• On When to Scale via Acquisition:
  “My stance on when you're ready for acquisitions is when you can really look at a balance sheet holistically.” – John (27:40)

• On Why You Need a Real Bookkeeper:
  "Hire a professional bookkeeper sooner." – Patrick (50:46)

Key Timestamps

• 00:00: The cash conundrum in fast-growing service businesses.
• 04:39: Stages of accounting maturity.
• 08:25: Hidden losses from bad financial data.
• 16:28: Forecasting and the daily numbers grind.
• 20:15: QuickBooks, CRM, and payroll integration blunders.
• 26:16: Mistakes in CapEx and debt planning.
• 32:31: The Profit First debate.
• 37:29: Cash management rules as you scale.
• 40:00: Culture of collections.
• 41:12: Credit card fees vs. cash flow.
• 43:34: Preparing your business for sale: clean books & diligence.
• 50:46: Advice to operators: get a pro bookkeeper.

Final Takeaways

• Clarity in your numbers is a superpower—it enables proactive decision-making and stress-free scaling.
• Professional bookkeeping and accounting are essential well before you hit $2M revenue.
• Always track, forecast, and protect your cash (culture of collections, clean AR, appropriate reserves), especially in turbulent times.
• Prepare early for eventual exits: Clean financials are your ticket to a smooth, lucrative sale.
• Adopt process, but keep it practical: One savings account and auto-transfers beat “Profit First” for fast-growing, high-expense service businesses.

Connect with the Guest:
Patrick Dichter: Apple Tree Business Services, Twitter/LinkedIn @patrickdichter

This summary delivers the essence of the episode, providing a thorough, engaging guide for owners seeking real financial clarity as they grow—or prep to sell—their home service business.