0:00
Have you ever said, I made money this year, but I don't know where it went, or worse,
0:05
on paper, on profitable, but my bank account says otherwise.
0:08
Well, today we're going to expose the four biggest profit lies in business.
0:12
And if you don't understand these, you will always feel broke no matter how much revenue
0:18
Today's episode is brought to you by Yard Book, the all-in-one CRM for your lawn care business.
0:25
And as an exclusive partner of this podcast, you can get started today and begin simplifying
0:29
your business and maximizing your profits.
0:32
Sign up now at YardBook.com.
0:35
The link is in the show notes.
0:39
Time now for Profits with Pageak, any central podcast for you in the green industry who are
0:44
looking to unlock the full potential of your business.
0:48
Posted by John Pageak, you're a certified financial coach.
0:51
The show features in-depth discussions with successful entrepreneurs, thought leaders,
0:56
and industry experts providing practical advice and proven strategies on financial planning,
1:02
operations, marketing, and sales.
1:05
Profits with Pageak has valuable insights and action steps that you can implement today
1:09
for creating long-term success.
1:12
Now, here's John Pageak.
1:22
Welcome to Profits with Pageak.
1:23
The podcast we talk about business strategies and financial insights for the green industry.
1:27
I'm your host John Pageak, and today we're breaking down something that every business
1:31
owner thinks they understand, but few actually do.
1:36
And we're talking about profit and not just profit, but the different types of profit
1:41
and the lies that come with them.
1:43
Because if you don't understand this, you'll be chasing the wrong numbers, making bad decisions
1:52
There is confusion around profit.
1:56
It's a very simple word.
1:58
But most business owners, they use the word profit like it means only one thing.
2:06
But there are multiple versions of profit.
2:09
You've got gross profit, your net income, EBITDA, and cash flow.
2:16
And each one tells a completely different story.
2:19
And what's the problem?
2:20
If you focus on the wrong one, you could be working harder than ever and still losing.
2:25
So here are the four profit lies.
2:29
And line number one is, my gross profit looks great, so I'm good.
2:33
Well, gross profit is simply your revenue minus your cogs, your cost of goods sold.
2:41
You know, it's the direct cost to perform the work, okay?
2:48
It sounds simple, right?
2:50
But here's where guys get it wrong.
2:52
They look at strong margins and think, I'm crushing it.
2:56
Meanwhile, they might not be looking a little bit deeper and looking past that number
3:01
and realizing that their overhead is bloated.
3:04
That equipment is draining cash.
3:06
Their marketing is inefficient.
3:08
A gross profit doesn't mean that you're profitable.
3:12
It means you've created the opportunity to be profitable.
3:15
So if your gross profit is bad, you don't have a business.
3:20
But if your gross profit is good, you still might not have a truly profitable business.
3:27
And line number two, your net income says that you're profitable.
3:33
Well, net income is what's left after, okay?
3:38
All your expenses are accounted for.
3:41
You know, you've paid your taxes, all the things, right?
3:44
And this is the number of most people point to and say,
3:48
You know, some of them don't actually even account for the taxes.
3:52
They just see that we made some money and then they forget Uncle Sam's got his hand out saying,
3:59
You know, you better open up that wallet to fork some cash over into this big palm right here.
4:06
Otherwise, you're going to prison.
4:10
But, you know, here's a problem.
4:12
The net income includes things like depreciation and accrual timing, non-cash expenses, you know.
4:20
So you can show a profit and still not have money.
4:24
And when you look at it, you know, your net income is your report card.
4:30
But it is not your bank account.
4:32
Lawy number three is EBITDA means that I'm making money.
4:37
Now, EBITDA, it's EBITDA, okay?
4:42
People say it differently than I do, but it's okay.
4:46
Earnings before interest taxes, depreciation, and amortization.
4:52
EBITDA, that sounds fancy.
4:58
And the thing is, you know, to calculate that, there are some people that will point you
5:04
to calculate or some things like that that will show you what your EBITDA is.
5:10
But you know, it's mainly used for investors, buyers, and banks, which, I mean, that's
5:19
But here's the danger.
5:20
People treat their EBITDA like it's real money, and it's not.
5:25
It ignores the equipment purchases, the loan repayments, the money, the real cash,
5:32
the real cash that's leaving your business.
5:35
And when we really look at EBITDA, it's what your business looks like to someone who
5:42
doesn't have to live in it.
5:45
So this is like more firm investors that maybe want to buy your business, okay?
5:52
And lawy number four, if I'm profitable, I will have cash.
5:57
And this is the most dangerous one.
5:59
You know, you can be profitable on paper, you could be growing, and you could be doing
6:03
everything right, and you could still go broke.
6:09
Because cash flow is timing.
6:11
You know, when the money comes in, when the money goes out, if those don't match, you're
6:19
So at this point, you know, profit is actually theory when cash is the reality.
6:25
So here's how you fix this.
6:28
You know, you stop chasing profit as a single number and you start understanding the
6:34
And this is exactly why I teach budgets, break evens of bottom lines because your break even
6:39
controls your gross profit, your budget controls your spending, and your bottom line becomes
6:45
And that's where the profits are, you know, the bottom line.
6:49
When you know your numbers, you price with confidence and you sell with clarity and
6:55
And most importantly, you stop feeling broke while doing big revenue.
7:00
So you know, just real quick, you know, some of you might be thinking, hey, paycheck,
7:05
you know, you're the budget break evens of bottom lines guy, you know, why are you being
7:09
critical about this profit here?
7:13
And it's not that I'm knocking them, they're essential.
7:16
But here's what I see.
7:17
When a business, excuse me, when I tell a business owner to operate within a budget,
7:23
they feel restricted.
7:24
And in my world, a budget doesn't restrict you, it gives you permission to spend, it gives
7:29
And if you really want to understand your numbers, you know, I just recommend heading over
7:33
to johnpagiac.com and check out budgets, break evens of bottom lines.
7:37
But the big thing is when you start to get confused between the gross profits, the net
7:51
income, your EBITDA and the cash flow, when you don't have clarity on those things, even
7:57
though you could still show that you're profitable and you could actually still see it in your
8:02
bank account, it's not as refined.
8:06
You know what I mean?
8:07
It could literally be like a big chunk of clay, right?
8:12
You just dug up some clay, slapped it on a, a play, it was like, yes, here we go.
8:17
This is wonderful, right?
8:20
But it's not as much as, it's not worth as much as if you were to take that clay, that
8:27
big old chunk of clay, maybe put it on a spinning wheel and craft a vase out of it.
8:32
You know, you remember that movie Ghost where, you know, you had Patrick Swayze and Demi
8:37
Moore and he, you know, not to ruin the plot line, but it's been like 40 years.
8:43
But you know, she, Patrick Swayze passes away and, you know, so the stuff, but he, you
8:48
know, he's behind her and sculpting the clay and whatever, yeah, anyway, I've been weird.
8:55
But anyway, the thing is it's like that big chunk of clay isn't as worth, isn't worth
9:00
as much in its raw form and you could have raw profits, but you could have a much better,
9:10
more amazing clarity and, you know, higher end profits and everything.
9:15
And you sculpt that lump of clay into something beautiful.
9:19
You have to refine it and that's where I'm getting at with this.
9:26
Back when I was getting my long-care business off the ground, I was juggling routes, invoices,
9:30
and customer notes with paper and prayers.
9:32
It was chaos until I found the art book.
9:34
The art book gave me the structure.
9:36
It helped me track chemicals route efficiently, invoice faster, and most importantly, it
9:41
helped me grow a profitable business.
9:43
If you're tired of duct-taping your systems together, go to yardbook.com and sign up
9:48
And if you're ready to go premium, use promo code Page Act to get your first 30 days
9:53
So regardless of, you know, where you're at right now, there's three steps that you could
9:58
take that I'm going to share with you that you can, uh, that will help you.
10:03
And hopefully you've already done these things and I'm just kind of preaching to the choir.
10:08
But if not, I hope that, you know, these three things can help you and turn your next season
10:16
into a truly profitable, uh, truly profitable season for you.
10:21
So the first one is know your job costs because if you don't know your costs per hour or
10:26
per property, you're just guessing at your gross profit.
10:30
Number two is stop trusting net income alone, okay?
10:34
Compare your net income to your actual cash in the bank.
10:38
They don't match, figure out why.
10:40
And number three, track your cash weekly, not monthly.
10:45
This is a huge one, okay?
10:47
Some guys, they don't even do it quarterly.
10:49
They might just do it at the end of the season.
10:52
And that is not a very wise thing to do, you know, you got to keep your finger on the
10:57
I know you're busy with actually operating and doing the work so that you get the cash
11:02
coming in, but you have to track these things.
11:05
And I find that tracking your cash weekly is really, uh, one of the most, uh, efficient
11:12
ways to find out whether you're making money or not because, you know, cash problems,
11:17
they don't always show up in your PNL, like over time, it's like, if you, if you sit on
11:25
that number and you're looking at it, you could watch it like a hawk, whether it's going
11:29
up or down and not get muddled, you know, the waters get muddied when you have like an
11:34
entire season, uh, of, of numbers you got to sift through.
11:40
And, um, you know, you need to have visibility right now, not later.
11:48
It's easy to see a fish and clear water.
11:49
It's like, oh, yeah, there's a pike over there.
11:51
I want that pike, you know, get your polarized glasses and everything you can see kind
11:56
of through the, the, the water, the reflection on the water and everything, but, you know,
12:00
if it's really muddy water, it's like, oh, you're just fish and blind, you know, you
12:03
don't know what your, your target is.
12:06
You don't know where to throw the bait, you know, nice chunky spinner bait getting thrown
12:10
up underneath them, you know, weeping willows and stuff, you know, that's where the fish
12:15
looked to hang out.
12:17
But again, you know, forgive my analogies, but, you know, your visit, you need to see right
12:24
now where your cash flows is, not down the line here.
12:30
So let's bring it home.
12:32
Your gross profit tells you if your work makes money.
12:35
Your net income tells you if your business makes money, your cash flow tells you if you
12:41
should stay in business and your EBITDA tells someone else what your business is worth.
12:48
So if you're, if you've ever been confused about your numbers, you're not alone, but
12:53
now you don't have an excuse.
12:55
So this week, pick one job, break it down, what did it bring in, what did it cost, what
13:03
did you actually keep?
13:05
And if you can't answer that, that's where you start.
13:09
So I hope that you have enjoyed this episode.
13:12
As always, God bless, he's pushing through and we'll catch you on the next one.
13:17
Thank you once again for listening.
13:19
If you've enjoyed the show, please leave a review and share it with fellow business owners.
13:24
Your support means the world to me and helps keep the show going strong.
13:27
I want to give a special shout out to our friends at YardBook.
13:30
Their continued support has been instrumental in bringing this podcast to you week after
13:35
If you haven't checked them out yet, visit YardBook.com and see how they can give you the tools
13:40
to streamline and manage your long-care business.
13:42
Also, don't forget to explore the resources and upcoming events that I've collected just
13:46
for you in the show notes.
13:48
These are curated to help you stay ahead in your business with the latest tips, tools,
13:52
and networking opportunities.
13:54
Whether it's a new tool and insightful article or an event you don't want to miss, I've got
14:00
Until next time, keep pushing through and God bless.