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Hey there. My name is Brian Beers. I do this podcast to help ordinary people make life changing money by owning franchises. I own a portfolio of franchises. I help people buy their first franchise. I partner with people to scale their franchise. It's literally my life. So if you want to learn more about making money by owning franchises, go to brianbeers.com I have a weekly newsletter where I share very tactical advice on everything that I talk about here on the podcast. So let's go. Cash flow is the lifeblood of a business and losing track of just a few key numbers could crush you. And I know what that's like. I've run out of cash. I've had to put money into the business to make payroll. But over the last eight years, I have built a business that today generates over $45 million in revenue a year. And I saved the business by figuring out what are the key numbers that are critical and what numbers can I ignore. And in this video I'm going to break it all down from sales to payroll, to margins to marketing, I operations and more. And you can grab a free checklist that covers everything in this video in the description below. So let's go. I run a data driven business, not one based on feelings, emotions, vanity or anything else. And people can try to spin a story, but the numbers don't lie. And your team will take a higher level of ownership when they know what's expected of them. And we're either hitting our numbers or we're not. It's as simple as that. And so we're going to break down our business into four distinct timeframes. Weekly, monthly, quarterly, and annual. And there's a different objective with each one. So every week we're going to focus on actions that produce direct results. I'm looking to change habits here. Every month we're to look at metrics that seed a larger trend. I want to recognize them here so we can either accelerate it or stop it. Every quarter, I'm going to look at things that take months to develop. It's like an elephant. These are slow but powerful. An annual, we're looking at the big objectives. These are the themes that set the course for the entire year. Now it's easy to get stuck in the weeds because you're in business every day, putting out fire, setting new records, hiring, firing, and just making sure that you don't run out of cash. And you live in this day to day rhythm just trying to survive. And when you do this, you lose sight of the bigger picture and rarely pause to climb that tree so you can see over the entire forest. But when you're at the top, it's much easier to tell if a storm is coming and completely change directions. This process that we're going to follow, we're going to keep it simple, we're going to keep it actionable, and it will put money in your bank account, which is the entire goal. So to get started, you're going to create a simple spreadsheet to track your numbers. This allows you to consolidate from multiple sources into a single spot. And this is more impactful to write the numbers down versus just reading them from an automated report. You can take it up a notch by actually handwriting the numbers like old school here on paper. Because you want to ingrain the numbers into your brain by manually entering, by manually writing, you feel the pain of the bad numbers, and you get excited when you have your wins. There are three metrics that I measure all the time. I look at these every week, every month, every quarter, and every year. The first one is the number of invoices. Now, your terminology might be slightly different. Like, in our painting business, we call it jobs. In the auto repair business, we call it car count. In our senior care business, it's active clients. But if we don't have cars, we have nothing to fix. If we don't have jobs, we have nothing to paint. So we track the total number of invoices, and we compare that number to the same time frame last year. So this helps us adjust for any seasonality the business may have. Now, if invoices are trending down, like week over week, month over month, whatever, we need to figure out the problem. Is it a marketing that's not generating leads? Is it converting those leads into estimates? Do we have a reputation issue that we need to fix? And if the invoices are trending up, we're going to identify what's working so we can double down. Is it new marketing? Is it new training? Is it new people? Like, what is driving our success? We track sales in the same manner. So we're looking at our total sales we did for whatever the time frame is, and we're to compare that to last year, looking at the same time frame. So we'll look week over the same week, the month over the same month, quarter, quarter, and we're looking at the improvement and then the percentage improvement to say, hey, we're 10% up or 20% up or 15% down, whatever it is. And if sales are trending down, we're going to attempt to identify the cause. Do we just have less invoices. Is it that we're estimating less? Are we closing less? We, we're going to get into all that in this video. And if sales are trending up, we're going to double down on what's working. It's an important distinction here that we want to see growth in both our invoices and our sales. And it's a huge red flag. If your sales are growing really fast but invoices are shrinking, you know, more invoices means your customers are coming back and they're referring your friends. It means our team is saying yes to more opportunities. It means we are expanding our customer base and creating a strong foundation. Now, on the flip side, a business could raise your prices by like 30% and try to squeeze every dollar out of every customer. And now customers aren't coming back as often. They aren't referring to friends. And the foundation that we have starts to crack and eventually crumble. Make sure you pay attention and you want to see them both rising. And the third metric I look at all the time is our payroll percentage to sales. Payroll is the biggest controllable expense that most businesses have, and it will make or break your entire business. And the number that we look at is simply dividing our payroll wages by our number of sales. So if you, a given week, if our payroll is $5,000 and you sold $20,000 of stuff, then your payroll metric is 25%. $5,000 divided by $20,000. Now in a month, it may be $20,000 of payroll compared to $100,000 in sales, you would be at 20%. And there's lots of different ways that you can track payroll. I like to keep it simple. And I just tracked what we call earned gross wages. So this is like all the worked hours, the salaries, the Bonus, the commissions, etc. That number excludes. So I don't include any paid time off, any payroll taxes that you know, employer payroll taxes for 1k contributions, health insurance, etc. This earned gross wages is the easiest one for track. And it's very clean because then other factors don't influence it. It's up to you to decide which number you're going to track. Whether that's like the wages like I do, or looking at your total number like here's the total dollars, you know, all my P and L that I had to pay related to payroll. Just be consistent. So if you're going to track it with, with your loaded wages, make sure that's the number that you always track and you're consistent and you don't flip flop between, hey, we track it at loaded wages here and we track unloaded here because they're going to be different. I also recommend to connect with other business owners in your industry to figure out if your number is good or not. So if you're at 25% and everybody else is at 20%, then you're probably leaving 5% on the table of additional profit that you need to be able to capture. And on the other hand, you may be good and be able to, you know, give recommendations to other people. So you want to be looking at invoices, sales and payroll all the time, every week, every month, every quarter, every year. These are the foundational components of your business. Oh yeah, and by the way, if you get value from this video, please smash that subscribe button. You know, I'm working hard to put out new content every week and your support, your subscription means a lot to me. So now let's get into the three other cash flow metrics that we are going to track every week in addition to the three that we just covered. Number one, we're going to look at our cash balance. So cash is the lifeblood of a business and what, running out of cash is the number one reason that a business fails. So you must keep an eye on your cash at all times. A profitable business can have a cash crunch because of timings of payments. What we do to help with this is we try to pay almost all of our bills on the 10th or the 25th of the month. So there's only two times of the month that we're making payments. And this is easier to manage in the back office and it's more predictable rather than having these bills that like go out all throughout the month. And then we also put as much as possible on a cash back credit card. So right now we are using the Spark 2% cash back credit card. For us, that's the best one. And by putting it on our credit card, it allows us to kick the can down the road. Let's say we buy something today on the 15th of September. You know, I am not going to pay for that until maybe the 10th or 25th October. But when I do, I'm going to put it on my credit card and then I'm not going to pay that credit card until November. That delays it and that helps your cash flow. Now obviously you get in this rhythm where now you're just paying off your credit card. And there are times when your sales tax, your credit card payments Your property taxes, your payroll taxes, all this stuff hits at the same time and you can have a cash grunts and so it's a good idea to prepare for that. Have a line of credit for your business, have savings, be prepared to be able to withstand these cash crunches when they happen and then look for strategies to delay payments as much as possible and then also to collect cash, whether that's through deposits, through sales, whatever it is to bring in money and, and then to watch your balances and control it on the back end. Now the second thing we're going to look at every single week are number of new 5 star Google reviews. I have to convince something here. You know, years ago I didn't care about Google. I didn't see a direct correlation between reviews and revenue. But now we place a huge focus on getting new reviews every single week and it's paying off. We get over 200 Google reviews across all my locations every single week. 200 reviews a week. And that helps us search ranking so we search higher when people are looking for the service we provide. And it also, you know, now leads to customers who specifically mention coming to us because of the great reviews that they read online. So it's really encouraging for your people on the front line to get more reviews because it gets more business and it's totally free. And the secret to getting reviews is to simply ask is not to rely on like a QR code or some printed thing. It is for your person in the store on the phone, whatever it is, say hey, it would mean a lot to me if you take two seconds and give me a five star review. Another tip here if you're the owner, is to put a financial penalty in place for your team if they don't get a certain number of reviews. A lot of people do the opposite where they give a bonus to say hey we'll be $5 for every five review. And you know, we have found that a loss of version is way more powerful than a reward in this case. So instead of you know, $5 for review get it's like you are going to lose 20% of your bonus or some amount, some percentage of a bonus. And if you don't hit a very easy threshold, use this carefully. You don't want to have too many negatives but you know, when used carefully they the loss aversion can be very powerful for motivating somebody. The third thing that we're going to look at every week is follow ups. The goal in any service business is to go above and beyond expectations so in our case, this means calling customers from the previous week back to thank them for the business. Now on this call we're going to see, do you have any questions, do you have any concern about the work that was done? And we're also going to talk about the things that they declined, the things that they didn't buy that day to see. Maybe they have any questions, maybe we didn't talk about the payment plans. Right. There's lots of things that we can work once we get them on the phone and we can get them talking and we can start to build trust. We could also ask for the five star reviews right now or maybe a referral. It all depends on the situation. You don't want to bombard them with a ton of these different requests. So keep it simple but customize it to your needs so most businesses never follow up by this simple phone call or text. Whatever it is will set you apart from the competition. To review. You have a weekly, it should look like this. You have columns going across. Those are going to be your weeks and then the rows going down are the categories. It's going to be invoices, sales, payroll, our cash balance or number of new Google reviews and how many follow ups do we do. So if I can do it, you can do it. To learn more about franchising, check out my free coaching program. It's linked below. I host live group calls. I've got a course and if, if you're really serious, you can work with somebody on my team to explore franchises that may fit your goals and your skills and your budget and make sense for you. So next we'll zoom out for a monthly review. Now our goal in the month is to recognize trends because I want to adjust if we're in trouble going in the wrong direction or I want to double down on what's working. Invoices and sales, we're going to compare those to the same month last year and I'm looking for positive growth in both categories. I on payroll, we're going to look at our payroll percentage for the month, the previous month compared to our sales. And if you were in a service based business, payroll, it needs a ton of attention. Like I want to drive this point home that payroll needs to be viewed as an investment, not a cost. A lot of times people say hey, I don't want to hire this like salesperson because it cost me so much. It's like the wrong way to think about it. In my goal is to increase my cash flow, like how much money I'm Making by two times whatever that incremental payroll cost is. So, so for example, if we're going to add a new technician or like salesperson or whatever and they are going to make $5,000 a month, that we expect them to generate an additional $10,000 in profit per month. So I'm going to pay them 5,000. I want 10,000. That's after paying them after all expenses. Like it's an investment hiring people and building your business. You are taking risk as a business owner and if you take risk, you should have reward. And I'm looking for at least two times whatever they're making in, in my pocket after paying everything. Similarly, if I bring on a new operations manager who's going to like run a whole district or run a company for me, and let's say he's going to make $100,000, then I'm going to look for a return of minimum of $200,000 a year if he is going to make $100,000. So this works at every single level. So it takes some time for new employees to ramp up before they start producing. So in a week to week rhythm, you may see that your payroll is rising, right, because you added all these people, but they're not really producing yet. And so you may start freaking out and you may want to pull the plug, which may be a bad decision in the long run. Because what happens is once they start to get trained and as the investment in that person starts to pay off now sales rise right in that payroll percentage goes down, which increases your cash flow. So this is where the longer time frame of looking at a month makes sense. Because the week to week rhythm, you can have a lot of variance. But over the course of a month, of a quarter rate, longer time frames, you, you can see this progression. Next we're going to look at your cost of goods sold as a percentage of sales. This also is referred to as cogs. This is important for any business that resales products. So paint, fencing, roofing, auto repair, salons. Like if you sell a product to a customer, this is an important metric. So what you do is you just take your total materials that were used in the sale and you divide them by the sales. For example, in my auto repair business our goal is to spend $22,000 on parts that we are going to sell for installed for $100,000, which would give us a COGS percentage of 22%. In my painting business, our goal is to spend $12,000 on paint that we are to sell installed on the walls for $100,000, which gives us a COGS percentage of 12%. You need to establish a baseline number and then look for opportunities to drive your cogs percentage down. And, and there's a couple of ways to do that. You can increase your prices so you buy it for $20 and sell it for 100 or 110. Right. You can sell more high margin products or services. So in the auto repair business, so we can sell an alignment where there's no cost of goods that helps drive our cost of good percentage down as a percentage. We could look to find lower cost vendors. We can negotiate rebates with vendors so they've given us money back if we hit a certain buying threshold. We could also look to reduce discounts. So maybe that job is really 120 and we're discounting it to 100. We can try to discount it only to 110 or maybe no discount at all. Most of your cost of goods savings will become straight profit. And so it's very important to find ways to improve this number. The second thing I'm going to look at every month in addition to the other ones, is our close rate. So this measures how much did we estimate versus how much do we sell. For example, if we estimated $200,000 of work and, and we sold $100,000, then we had a 50% close rate. Now if the close rate is very low, let's say it was only 20%, then I would focus in on our sales process. I would look for opportunities to get better at maybe the script like the words that we're saying, our process of actually going about and estimating it to make sure we're estimating the job right. I would look at how are we presenting the options, Is it in person? Are we just doing it over the phone? Are we using pictures and videos? Or are we asking great questions to figure out, like why do you want to get this done? What is your timeline? Are you the decision maker? Do you have a budget? Asking better questions get you better answers and then we can help them find solutions. And then what are the objections they have? Right? If they have a money objection, do we have solutions with payment plans? If it's a time objections, is there a way that we can fit them in within our time and schedules? All of this are little clues that help you increase your closure. So you really want to dig in here. You really want to find the answers you and you need to ask great questions to do that. Now if the close rate is very high, let's say it was 80% then I'd focus on finding more opportunities, estimating more like, you know, we joke in the auto repair business that a six year old could sell an alternator to a car that gets towed in with a bad alternator. We look for opportunities to say hey, we're going to fix the alternator, no problem. But what is the rest of the car? D Are the tires in good shape? Has the maintenance been up to date? Are the brakes good? Is the suspension tight? Are the filters clean? Like there's other things that we can check and if it's all good, right, it doesn't need anything. But you never know. There could be other opportunities. Also could be a sign that your prices are way too low. So if you're selling 80% and everybody else is, you know, in your industry is selling 50% and your margins are lower than they should be, you probably need to raise your prices. For many sales driven businesses, a 40 to 50% close rate is like a pretty good number. But talk to other people in your industry to figure out what number is good for you. Then the third thing we're going to look at is your total Google. So every week we're looking at the number of new reviews that we got and then every month we're looking we are going to look at the total and then compare that to the previous month, not last month. Because I want to look at a month to the month trend. So for example, in June we're at 4.5 and 300. In July we're at 4.5 with 325 reviews. And then in August we're at 4.6 with 375 reviews. So we have 25 reviews and we have 50 reviews. And finally we move that needle and we're going to celebrate that 0.1 movement that we went up. If we go down, then alarm bells are going off. If we go down from 4.5 to 4.4 like we are going to figure out what happened. We are to respond to every review. We object to any negative ones that we deem as span a competitor, an ex employee or just like not true. And then we're going to focus on just getting more five star reviews. That helps drown out the occasional bad ones. And the fourth thing we're doing is look at a marketing review. So the goal of marketing is to drive leads in each month that we review. How many leads and sales do we get from each source versus how much do we spend to generate those leads and sales and then we want to rebalance Our budgets based on what's working in the auto repair business. We are also going to look at offers that may change seasonally. So in the summertime, you know, our promotions should focus on air conditioning. In the fall we should be looking at tires and we should, in the winter we're going to look at batteries and you're going to customize this to your business and what works for you. The fifth thing we're going to look at is past due. Ar. Now AR stands for Accounts Receivable. These are customers that you've done work and you've sent them an invoice but they haven't paid you yet. Now it's always best if you can collect payment at the time of service. But in some businesses, especially in the business to business space, they want to bill all their customers. So you need to develop a solid collections process which means you're sending out invoices immediately and then you have the right contacts on file. Then you follow up religiously. After the payment is one day late, the squeaky wheel gets paid first and, and after five days you're going to reach out to your operational contacts and then you're going to keep escalating from there. So you want to review your past due counts and you need to define past due based on whatever payment terms that you extended to customers and that the bigger the customer, you know, the longer the payment term that they're going to ask for because that helps their cashflow. Remember earlier when I talked about, you know, wanting to delay to the 10th or the 25th, some of them are going to want to like the 10th of the following month. Like they're going to want 45 to 60 day terms because they want, they want to kick the can down the road just like we do. You know, with a big customer, you know, you might take it because it's worth it, but try to stand your ground as much as possible and keep those payment day as short as possible. For small accounts it should be 15 days max. Like ideally it's 5 to 10 days after you do the service, you're sending them the bill, you're getting a check, you're going to ACH whatever it is. Most of them should be 30 days maximum. Just explain to that you're a small business owner and that you rely on cash flow to pay your employees and you need to get paid right like you did a service, you got to get paid. If you do extend terms, you better have a good cash flow buffer to handle those 45 to say to 60 day terms. And don't be afraid to hound people for payments when it's past due. I see this all the time, especially with new business owners. They set an invoice and then they're just quiet, they're gone, just waiting to get paid. But like, you did a service, they agreed to pay you by a certain date. And so you need to get paid and so you need to call them and you need to be nice about it. Don't be a dick. But like, listen, we did a service, we got to get paid by the state, My employees are counting on me. It's your money, so go and get it to review. So now you have a weeklies that we're looking things every week. And now your monthly should look like this. Columns going across are the months of January, February, March, April, et cetera. And the rows going down are going to be your invoices, sales, payroll percentage for the month, your cost of goods percentage, your close rate, your Google review, your and the amount of past due AR that you have. So let's move to the quarterly review. So it's important here to block off time, be intentional here. And I would give at least a day within one to two weeks after the end of the quarter. So quarters end in March, in June, after September and after December. Now, zooming out to a quarter allows us to look at metrics that take some time to develop. And again, I'm going to look at invoices, sales and payroll for the quarter because they are the critical foundational parts of the business. And there's also additional six things that I care about. So number one, turnover. So every business is in the people business that just happens to fix cars, paint houses, flip burgers, like whatever it is. And that turnover is very costly to your business. It costs time and energy and money to get people hired, to get them trained, to get them up to speed. And that it can be very damaging to your cash flow to lose a high producing team member. Turnover is calculated by taking the total number of new hires divided by the total number of positions. So let's say our company has 10 people in it. We have a general manager, we have an admin, we have eight, like sales or technicians, whatever. And if over the last 12 months we hired zero new people, their turnover is zero percent. If we hired five new people, our turnover would be 50%, right? Five divided by 10. We hired 10 new people, our turnover would be 100%. If we hired 20 new people would be 200%. So every quarter we're looking at the last 12 months. Of new hires and then divide that by the number of positions in our company. And your payroll provider should have a report to help make this process easier. The second thing we look at is our sales by category. So from your point of sale, your CRM, look for a report that breaks down your sales into major categories. Then compare those categories to the same quarter last year. So in the auto repair business, I'm going to look at our brake sales or tire sales, ride control, maintenance, general repair. In the paint business, we're going to look at interiors, exteriors and cabinets. In the senior care business, you may look at your private pay, your Medicaid and your VA and look for trends for what categories are growing and what categories are shrinking every quarter. And then what I do is each quarter I set a goal and an action plan around growing one or two of our categories. So we may say, hey, this quarter we're going to focus on air conditioning sales because it's a summertime and we are going to make sure we have new machines, we're going to make sure we have training, we're going to make sure we have everything we need, we're going to going to advertise for it. And then the next quarter we're going to say, hey, now we're going to look at tire sales and we want to grow our tires this season. We're going to look at our inventory, we're going to look at our training, we're going to look at our pricing, we're going to look at all the things around growing that specific category for the next quarter. So you're going to have to dive into your business to figure out what are the key categories to look at. Now less is more. You know, even in the auto repair, there's probably 20 different categories that I can look at, but I'm going to look at just a handful ones and that drive the major results. The third thing I'm looking at is inventory. Now inventory is cash sitting on your shelf. And we invest into inventory because we expect to turn that cash into more cash. But if inventory is not selling, then that cash is now losing value. And it's also has the risk of getting stolen, of broken, of going bad. And so every quarter we assess what inventory do we currently have and make sure it's worth having it. I'd rather buy it on demand when I need it to than have it sit on the shelf, unless there's a big advantage to that. Over the years, we've trimmed down our stocking models, we've consolidated vendors, we've done blowout sales to move inventory and all these things to help improve our cash flow. And when you have inventory, you also have to count it. And if your counts are way off, like it says you should have 10 tires and you've only got eight, then like, you may have a theft problem. And if it does, like, you have to tighten up your controls and you have to count more often, and you have to have a higher level of accountability. Now, the fourth thing I look at is new unit pipeline. There are two categories that you can grow your business. You can grow through acquisition, or you can go through development. So in acquisition, I would look for opportunities to acquire local competitors. In my case, they're neighboring franchisees because I'm in a franchise business. And a local acquisition, though, is much easier and it's much safer than a remote one. Like, I'm not going to look to buy somebody an hour and a half away. I'm going to look to buy the guy who's 15 minutes away. So I would create an acquisition target list that's in a spreadsheet or in some sort of software, like ClickUp, Asana, Monday, Trello, like, whatever, and write down in that profile everything that you know about the target, who owns it, how old are they, what are they doing in sales, what are they doing in their performance, like, anything that you can gather, put that in there. And then you want to reach out to them and, you know, introduce yourself and let them know, hey, I'm looking to expand my business. And when you are ready to sell, I would like to buy it. And then each quarter you want to reach out to them. You want to see how they're doing. Your goal is to build a relationship. So find something that you can share. I'd rather be friendly with them than to have some sort of hostile relationship that's on the acquisitions. On the development side, create another list to track potential new neighborhoods that you would like to expand to. And you're in the retail business, you want to establish a relationship with multiple commercial real estate brokers who can send you potential properties. Sometimes it takes a long time to find something new, and so you want to always be looking. And then the fifth thing I do is, is what I call the start and stop exercise. This is one of my favorites. It's you ask yourself two questions. What is something that I am not doing that I should start doing? And what is something that I am doing that I should stop doing? Think about that. So what is something I'm doing that I need to stop and what is something that I should be doing that I need to start now? Your answers will help you decide what direction that you personally need to go in for the next quarter. For example, you should not be doing anything that you can hire to someone to do for $20 or less because your time is worth way more than 20 bucks, right? So you can hire someone to do your bookkeeping in the Philippines for $7 an hour. You can hire salespeople and give them a strong commission to go out and close new business. And as the leader, your time should be allocated on the highest dollar per hour activities. The things that you enjoy doing plus make you a lot of money, such as maybe closing the big account, such as making new deals, expanding into new markets. Every business owner goes through this evolution of replacing themselves as they grow. So you may start as the person who actually paints the house. And then you replace yourself by hiring other painters so that you can focus on the sales. And then you hire a sales team to take over the sales. And then you become the regional manager overseeing multiple sales guys. And then you promote someone on your team to take over as a regional manager so that you can go and launch a new region from scratch. And then eventually you build this massive company. You can replace yourself as the CEO and then you can focus on the next biggest activity. The biggest bottleneck in growing your business is you. I recommend identify. What do you need to stop doing? What do you need to start doing? This is a great way to accelerate your growth. And finally, taxes. Everyone's favorite subject. You need to prepare for quarterly tax payments. If not, this can be a huge cash crunch on your business. As your business income starts to accelerate, so does your tax liability. And come April, you could get whacked with a massive tax bill that you are not preparing for that can totally wreck you. So we do is set up a separate bank account just for taxes. And we follow this process. In April, we get our tax bill, we get our estimated quarterly payments for the next year. So let's say Those payments are $20,000 a quarter that we're going to have to pay. So then I set up a recurring transfer of fifteen hundred dollars per week, which would move money from my operating account into my tax account. So it's my own little automated savings. And at the end of the quarter I reassess our income and, and then I adjust that weekly contribution based on how the business is doing. If we're doing really well, I may increase that amount. And if we're not doing well, maybe I'll lower A little bit. And then when those quarterly payments come due, I make those payments out of that tax account. And then the goal, if we, if we did the math right, is that the next April, when our, when our tax bill comes due, we true it up. And so any additional taxes we have, hopefully we have that money sitting in that tax account. And. And if we overfunded it, right, if maybe we got a big tax savings or whatever, we didn't do our math right, we have a bunch more money sitting at tax scale than we think we need. That becomes now a profit distribution. You can take that money because you already plan on spending it and you did it. So you should take that money and reward yourself. Now, your quarterly should look like this. The columns are the quarter, so quarter 1, 2, 3 and 4. And then the rows are the categories, right? There's going to be invoices, sales, payroll, always talking about stuff. We're looking at our turnover percentage and in any major category, sales. So for me, I'm looking at brakes, tires, maybe maintenance. Your categories are going to be different. You need to identify those based on your business and what makes sense for you. Now we're off to the big annual goals. This is where you assess how you did for the past year and then create a roadmap to go forward. I would block off two dedicated days to do this exercise. Ideally, you go off site with your entire leadership team and it's a good idea because this strengthens your team's relationships. Everybody bonds everybody and it gets everybody on the same page of understanding where do we come from and where are we going? You should also make it fun. So go shoot guns, go go karting, have a nice dinner, like whatever your team would enjoy. Also make it fun. Go to a baseball game, go shoot guns, go karting. Nice dinner drinks, like whatever your team would enjoy. Buying an activity to do after you finish your business for the day. And so again every year, three big numbers, invoices, sales and payroll. The trend of your invoices and sales will dictate the direction that you're going to take. So if over the whole year your invoices are down, then you need to focus on identifying the core issues, like why did we lose our customer account? And then come up with an action plan. Same for sales. If your sales are down, you really got to get into it. Is it people? Is it process? Is it pricing and payroll strongly connected to your profitability. If you were paying an extra 5% in payroll and you did, that's 5% out of your pocket. That you should have to reinvest in the business to grow, to get rewarded for taking on all the risks that are involved in owning a business. And if your payroll is out of control, it's going to be hard to make money. It's going to be hard to grow. But if your payroll is good now, you've got flexibility, you can have more fun, you can create some more incentives and you can roll with it. So the first thing you do is create a three year vision. You want to zoom out even more. Like, what does success look like in three years? How big is your company? What are your sales? What are your profit? How many locations do you have? Are you in multiple states? Have you expanded into other lines in the business? Or are there specific competitors that you're looking to buy out? What does your lifestyle look like? How much are you working? Are you golfing? Are you traveling a lot? People often overestimate what they can get done in a year. And they wait, underestimate what they can get done in multiple years. You know, our brains are programmed to think in linear terms, step by step by step. But in reality, a business can grow exponentially. You can double it in a year and then double it again, and then double it again. Before you know it, you're a little $500,000 a year. Business is now doing $4 million. And that this three year vision will help provide directions for setting up your targets for the upcoming years. Set annual goals. So number two, you want to set two to four massive goals. Things that are going to truly move the needle here. Less is more. I recommend reading the book 10x is easier than 2x. It is one of my favorite books and this is what it talks about, that it's way easier to grow by 10x by having less things to focus on. That if you focus on a lot of things, it's harder to move the needle. I have a tip here. Whatever goals you set, take a picture of them and then set your screensaver on every single computer in the company to talk about that goals. They should be front and center of every single person. And then you want to review those goals every month, every quarter. Every time you meet with your team, you talk about, these are the big goals that we set for the year. And this is how we're doing so in the auto repair business. You know, our goal every year is to grow our sales by 15% while increasing our customer count. And another big goal could be to like roll out digital vehicle inspections, right? So technicians are using iPads or texting people Pictures and stuff. And if you have a project like that, be very specific in what defines success. Otherwise you're like, hey, I'm going to roll this thing out. Well like you may roll it out, but are we using it? Is it helping? Is it driving the sales? Maybe that's how we're going to grow our sales by 15%. Just make sure you're specific in your projects because you want there to be no question on if we're succeeding or we're not. The second thing we're going to do is employee reviews. So it's important that each team member gets a one on one to review their performance, areas of improvement, what are their personal goals? And for years we avoided doing these out of fear that everyone were to ask for a raise every January, December, whatever it is, everyone will want more money and it's like a tough cash flow time for us and we wouldn't want to do it. Compensation is brought up and we are prepared by laying out clear objectives that must happen to earn the increase. And we would rather be in control of the conversation versus getting blindsided by, you know, matches, offer, I'm quitting or whatever it is. These one on ones could also provide a wealth of ideas, but make sure that you write them down, whatever suggestions that people have, and then celebrate it when those new ideas get put into action. The third thing we're going to do every year is we're going to identify the next key hire. What is the most critical role for you to hire next? Where are you weak? Where are you trying to double down? Is it more technicians? Is it salespeople? Is it operations? Is it a bookkeeper? Is it a district manager, operations mayor, coo, cfo, like whatever that org chart looks like for you. Figure out the next key role that gets you to the next step. And as a business owner, your goal should be to constantly figure out how to replace yourself. And you do this by just asking yourself, hey, what is that low value task, right? What are those $7 an hour tasks you need to stop doing and then just start working your way up? And that next key hire should align with that big goal. And, and there's annual goals in the three year vision and all that stuff. The fourth thing I look at is doing a debt review. I'm going to go all in on my debt, I'm going to look at my business debt, any real estate that I own, my personal debt, and I want to know how much do I owe, what are the interest rates, can I refinance or pay off any of the high rate ones. Are there any balloon payments that are coming due that I'm going to have to be prepared for either with a payment or a refinance? Debt can be a great tool to accelerate your growth, but it also can be your downfall. And and paying off a loan removes a weight from your shoulders. It's one less liability, it's one less thing in your brain. Like I recently paid off $200,000 in debt that was at 4% interest. Now you may think, hey, from a math perspective, that's stupid, right? I was earning 5% on that same money in a money market account. But from a mental standpoint, by freeing up this $200,000 off our balance sheet, off my brain, off my shoulders, it allows me to be more creative with which could lead to cash flow growth that's 10 times whatever the like interest rate arbitrage that I lost. So if you don't have one already, you need to create a debt tracking sheet to list out every loan you have, the lender, the interest rates, the balloon payments, and then track it every month and then every annual to look to make decisions on paying off early refinancing or just letting them ride. So I know we had a lot here, but tracking the numbers that matter and ignoring the rest will have a massive impact on your cash flow. And as I mentioned below, everything I talked about is in the checklist. You can click the button below to download it and I'd love to hear what you think. So drop any questions or comments you have below and I'll see you on the next video. Cheers.