transcript
Speaker 1:
[00:05] Look, we all saw it during COVID, one headline changed the game, and businesses were folding faster than you could say PPP loan. But it's not just a pandemic, you've got tariffs, trade wars, a regulation change, a freak accident, a lawsuit, a black swan event, something you never saw coming. And if you're not careful, one unexpected hit can knock you all the way back to square one or take you out completely, but it doesn't have to be that way. Today, EntreLeadership's head coach, John Felkins, is going to walk you through a four-part framework we've been teaching for years. One that's helped thousands of business owners build durable, resilient businesses. So if you're worried about the next big disruption, well, listen in.
Speaker 2:
[00:54] Thanks, Dave. This reminds me of a client we worked with who, his whole business model was, he would go get a multi-million dollar loan, buy a bunch of equipment, and then sell it to the government. And it worked perfect for years until it didn't. There was a government shutdown. He had taken the loan, bought the equipment, and then the government refused to buy the equipment from him. He had all the debt and all the inventory and no place to go with it. I had told him, listen, we build our business on cash, work at the speed of cash, and he never really bought into that. But when this happened, I got a text from him one day, and he said, okay, fine, cash is king. I see what you're saying. Now, I want you to know, he worked his way out of it. He got through it, but it almost did him in. He just hadn't counted the cost. He hadn't taken into consideration the risk that was involved with all of that debt. If you're a business owner who's losing sleep at night, wondering what would happen if the market shifts or the government changes the rules again, or the tech you rely on suddenly becomes obsolete overnight, you're not alone. The truth is, a lot of businesses look successful on the outside, but are just one unexpected event away from disaster. Here's the problem. Most businesses are actually fragile. They aren't built to take a hit. And when something they can't control does hit them, like tariffs, a lawsuit, new regulations, they don't bend, they break. So, how do you build a business that's durable and doesn't crumble under the pressure? There are four key things you've got to have in place if you want your business to be able to take a hit and keep going. First, you've got to do a real budget. Most businesses don't have a budget. They have a bank balance. They're running everything out of a checkbook, looking at last month's numbers and hoping it tells them what to do next. But that's like driving a car using the rear view mirror instead of looking out the windshield. A real budget is a spending plan for the future. You decide on paper, on purpose, where every dollar will go before the month begins. That's how you control your money instead of letting it control you. Some of the numbers you need to know in order to plan ahead include your revenue projections, your fixed expenses, your variable expenses, your savings, and if you got debt, your payments and balances, and of course, your profit margin. So, stop reacting and start planning. We've got an article with the exact steps on how to create a business budget, and we'll link it down in the description. Number two, stay on top of your accounting. Most small businesses fail because of poor accounting. You can't guess your way through numbers. You've got to actively manage them. That means, in addition to your budget, you also need to understand your accounts receivable and accounts payable. You need to stay ahead on your taxes and know how to read key financial reports like your Profit and Loss Statement, your Balance Sheet and your Cash Flow Statement. Listen, this isn't just your CPA's job. While you don't have to be a financial expert, you do need to know what's going on in your business.
Speaker 1:
[04:13] You run a business, so you already know that bad information leads to bad decisions. And everyone is talking about AI. But AI is only as good as the data behind it. The best AI is built on the best data. That's why I recommend NetSuite. NetSuite is the number one AI cloud ERP and more than 43,000 businesses run on it, including us here at Ramsey Solutions. Their AI isn't bolted on. It's built in. And it connects everything that runs your business. Accounting, inventory, customer data, all in one place. Because when your numbers are connected, AI actually works like it's supposed to. NetSuite's AI helps flag cash flow problems, spot inventory issues, close your books faster, and cut down on manual reporting. No more guessing, no more spreadsheet chaos. Just clear numbers and real insights so you can lead with confidence. An investment in NetSuite is an investment in clarity. If your revenue is at least seven figures, go to netsuite.com/ramsey for a free product tour. That's netsuite.com/ramsey.
Speaker 2:
[05:32] Number three, build retained earnings. Here's a wild idea. What if your business had money in the bank for when things went sideways? We coach business owners to build three to six months of operating expenses in retained earnings. This is for emergencies like making payroll even when revenue dips, or covering repairs or lawsuits without panic. It's also for opportunities like snagging discounted equipment or buying out a competitor. Having extra cash on hand allows you to operate from a place of strength instead of desperation. Finally, number four, get out and stay out of debt. To be clear, we don't believe in debt, not in our personal lives and not in our business lives either. Listen, I know that might blow some of your minds, but that's how we've always done things. This entire place was built with cash, because debt doesn't just increase your risk, it multiplies it. It turns small business problems into business ending problems. You don't need a brand new truck when a used one will do just fine. You don't need to lease a shiny office space with Herman Miller chairs, and you definitely don't need to be booking first class flights on a credit card. Those things might look impressive, but being all flash and no cash makes your business more fragile. Because when you're committed to monthly payments, if revenue dips even a little, you're in trouble. Guess what? The market doesn't care. Neither does the landlord or the bank that holds your note. That's why at Ramsey, we build our business at the speed of cash. We rent until we can own. We buy used. And if we can't afford something, we don't buy it. Period. That's not playing it safe. It's being smart. Because the goal is to build a business that survives. Here's the deal. You don't own your stage of business. You rent it. And the rent is due every single day. You might be a trailblazer right now. But if you're not careful, one storm will send you right back to the treadmill stage. Or out of business altogether. So if you've been flying blind with your finances, hoping you'll figure it out later, I'm here to tell you hope isn't a strategy. Start with the basics. Do a budget. Handle your accounting. Build up your savings. And avoid debt. You do that, and you'll have the kind of foundation that doesn't crack under pressure. We know there's a lot coming at anyone running a business right now. And we want to hear from you. What's the one threat keeping you up at night? Drop it down in the comments and let us know what you're facing.
Speaker 1:
[08:06] This stuff works. We've taught it for years. We've seen it change the game for thousands of small business owners. And it can do the same for you. So if you want to build a stronger, more durable business, go ahead and book a free 30-minute consultation with one of our coaches. We'll walk you through where you are financially, what's putting you at risk, and give you a game plan for moving forward with confidence. Just click the link in the description. If you've enjoyed today's episode, be sure to like, share, and subscribe for more great leadership content. I'm your host Dave Ramsey, and this is Entre Leadership.