Today’s episode is the last of a 5-part series that touches on everything you need to cover to get your wholesaling business to the next level. And as cliché as this may sound but we’ve definitely saved the best for last!
In this episode, Todd discussed accounting and the importance of knowing your numbers.
Why is covering both fundamentals key to your wholesaling success?
For starters, it will give you a clear insight into what’s working and what is not. More importantly, it will enable you to make decisions that are based on logic as opposed to emotions.
So if you’re ready to see your profitability triple over a 6-month period, don’t miss this episode!
- The importance of watching the inflow and outflow of your money
- Why you need to understand your marketing numbers
- Why having a bookkeeper is crucial
- What a P&L (profit and loss) statement does
If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!
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Todd Toback: Hi, this is Todd Toback and welcome to the fifth episode of a five part series on taking your wholesaling business to the next level. Now, if you haven’t listened to the first four episodes in this series you have got to go back. Start at episode one, and then take each episode until you arrive at episode five. So if you’ve listened to the first four episodes, you’ve probably heard a little bit about acquisition, disposition marketing, and automating all of those streams in your business, so that they’re happening without you every day the mail is going out. Your pay per click advertising is running on Google or Bing or Facebook. Your disposition team or your personal assistants is dealing with the cash buyers and appraisers and inspectors and the title company and deals are happening. Wires are coming into your account and you’re starting to get a big breath of fresh air. This is awesome.
Right now, you may have been discombobulated before, running to paycheck to paycheck, running to get out to the marketing and running to meet with the sellers and cash buyers and staying behind. But if you listened to episodes one through four, you’re starting to get a taste of that freedom, a highly profitable wholesaling business that you’ve dreamed of, the reason why you got into this business. And so what I’m going to do in this episode is talk about something that is really one of the largest keys to success, in my opinion, something I learned the hard way, and that is really knowing the numbers and accounting in your business. Now before you stop this episode, let me tell you, this is probably the most important podcast episode in this series. You must listen to this. If you take this one piece of advice in your business, you’re going to see your profitability literally triple over a six-month period. So trust me and hang on for this episode, it’s going to be worth it.
So let me take you back to when you first started wholesaling or any business for that matter. You were moving, you were shaking, you were excited, you were hustling. Maybe those first calls started to come in from motivated sellers and you were pumped. And you ran out and you heard someone who was motivated and you locked up that contract and you were very excited. You sold it to a cash buyer and you got your check from the title or escrow company and man, it feels good. And if you’re first starting out, I think it’s really important to start out there, getting that check is really validating. The business is new and it’s scary and you’re uncertain and getting that quick win, it’s huge. But shortly thereafter there has to be a shift and when you realize that this is a business.
It’s not a hobby, it’s not some MLM multilevel marketing company get rich quick scheme, is that you have stumbled upon a very real profitable business that will bring value to the market year after year after year. And so we have to treat this thing like it is, a cash flowing business, an asset to your family, an asset to your legacy and asset to your personal net worth. We have to take our business serious. You’ve got to get serious about the serious things and that’s the numbers. And so that’s really watching the inflow and the outflow of money. This is going to enable you to make the critical decisions in your business so that you can take this from a hobby, which will take you from deal to deal to something that’s going to generate real sustainable cashflow without your direct involvement, at least for a majority part of the week.
In my wholesaling business I spend no more than seven to eight hours a week in this thing, and that’s probably generous. And so watching the inflow and outflow of money is going to be so critical. So imagine your wholesaling business. Now you’ve got your first check. Pretend like you’re flying a plane and you got in, you’re flying this plane and it’s a big, big plane and you’re flying across the country from California all the way to the East Coast. And pretend like you’re trying to fly this plane without any compass, without any direction. You’re just generally going from East to West. Do you know that just a 5% difference, five degree difference if you left from San Diego … And this is probably not exactly accurate, but it’s pretty darn accurate … that if you left from San Diego and just had a 5% degree in difference that you could end up from, let’s say one person in Virginia, and another person end up in Florida. And that’s just a one cross country flight for five hours. Imagine if you did that over a course of a year.
And so it’s really important. Accounting and numbers is the compass of your business that tells you which direction you’re going. It tells you what’s working and what’s not working. And so when you have accounting or you’re running your marketing numbers, it’s going to tell you where to go. So let me tell you why we don’t do this. We don’t do this because it’s not fun, right? We don’t do this because it’s not a skill set that we like. We don’t do it because we don’t think it generates revenue. But the power of understanding your numbers, your marketing numbers, is that you understand what’s working and what’s not. And more importantly, what’s not.
There’s nothing more frustrating that spending money on mailing or paper click advertising or cold calling lists or skip tracing that doesn’t work, because you’re going to see your expenses go up and you’re going to see your income go down. The time where you spend your energy is going to be in the toilet. And if you hire somebody, they’re going to be discouraged and people are going to quit. And before you know it, you’re going to be a one man show. You might as well have a job. But once you understand the numbers you’re putting your team in a position to win. You know which marketing works, you know which mail pieces to send out. You know if your cold callers are performing, you know which list to skip trace. You know what’s profitable and what’s not, and it’s going to give you a huge amount of confidence.
So imagine that you’ve got a sheet of paper. It’s a profit and loss and it tells you exactly where you’re making money every single month. So now you can understand where to send the marketing, where to spend your lists, where to spend your time and energy and you didn’t really have to pull this list. It just shows up in your mailbox once a month, your email box: fully printed, ready to go and it’s got some numbers and at first glance you’ve got a dashboard. Picture that big plane now, a dashboard that tells you you are headed directly to Key West from San Diego, and you’re going to get there at exactly 4:56 PM.
How good does that feel? So why wouldn’t we do this? Why don’t entrepreneurs do this? I’ll tell you why. Because it doesn’t fit within our skillset and we hate it, and we don’t want to take the patience and we don’t want to … At least for me, you don’t want to take the time to do it and it’s overwhelming and you feel bad and guilty that you haven’t done it. And going back through your banking statements and your credit card statements is a little frustrating and tiresome, and let’s be real, it’s not fun. You don’t think it’s going to make you any money. So let me give you a little hack on how to get your numbers in order so that now you can make an educated decision and now get this out of your hands for good, so that that report is going to be popping in your inbox every single month without your effort.
So the first thing I would do is go on upwork.com and hire a bookkeeper. Now if you haven’t hired a bookkeeper or you already have one, great, you don’t need to change. You can go to upwork.com, find one, or just Google one in your area, or if you’ve got one, keep it. Now number two, and here’s the secret by the way, is that you don’t need to go and fix everything that’s in the past. Today is a new day. It’s a day of a new habit that’s going to change your trajectory for the rest of your wholesaling and real estate career. How awesome is this going to be? By the way, if you want to hold cash flowing rentals and apartment buildings or grow, this is going to be critical. You’ve got to understand this. Understand this and you will be really rich. If you don’t you will lose money on free and clear rentals. Trust me, it can happen, I’ve seen it.
So at the end of every week moving forward … Let’s pretend like today is Tuesday. Every Friday spend 15 minutes setting that week’s expenses. Now that’s it, only this week’s expenses. Send it to your bookkeeper and just tell your bookkeeper what all those were for this week and next week. Now if you’re wholesaling, you’re probably only going to have seven or eight transactions, no big deal. It’s going to take you no more than 15 minutes. Now at the end of the week after you send it to … Have your accountant or your bookkeeper send you an updated P&L. Now do that every single Friday for the next four weeks and at the end of four weeks, your bookkeeper’s going to see the majority of your expenses and what they are and how they should be categorized, and you’re going to have your first P&L, your first profit and loss. How awesome is that?
Now you want to continue to do this for 90 days because they’re going to make some adjustments. They’re going to have some questions. There’s going to be some things in the report that’s going to be wrong. Don’t get frustrated, let it out a deep breath and do it again. 15 minutes, 15 minutes, 15 minutes, 15 minutes. Then month two, you’re going to have a new P&L and it’s going to be even better. Then month three, by month three you’re going to have three months of great data in which your profit and loss is going to be on point, and you’re going to have 90 days of history to be able to see where you’ve been making money and where you’re going to lose money. By now, you’ve already started to make course corrections.
So something that our next level wholesaling students do is that first week, their first assignment is to crack open their books to see where they’re losing money. We had one student, Zach Booth, who literally cut out 75% of his marketing expenses his first week in the program. He saved $60,000 a year, I think, his first day in the program. How exciting is that? Now, don’t worry about the past. Now once you’ve got this first 90 days dialed in, you can go back and fix the rest of the year if you want to, but don’t put pressure on yourself. Just look in the future. Start today. Get good data. You don’t have to go back because now you have new habits. Now by now, your CPA or your bookkeeper should have very little questions. You’ve taken the time, you’ve had the habits, and now that 15 minute appointment with yourself on Friday is probably five minutes, only five minutes. You could probably eliminate that after 90 days and then answer your questions from your bookkeeper once a week or 15 minutes.
Now once you get this down, your personal assistant can handle this for you, and now you’re just looking at the P&L once a month. How awesome is that? Now if you’re not doing this, you don’t know the numbers. You don’t know your books, your mind is clouded, you have stress, there’s a lot of negative emotion. You’re making decisions on emotion. You don’t know what’s working and what’s not and really you’re not basing it on logic. Now if you do have these numbers, now everything is based on logic. Profit and loss, P&L statements, they don’t lie. They don’t lie. And what it does, it enables you to tell the truth to yourself and grow and get to the next level. It really, really, really allows you to do that.
Now, here’s the real key, the last step. Now you’ve worked in this for 90 days, only 15 minutes every Friday, that’s it. Small commitments, right? Get out of the way. Let your assistant or a VA, whoever’s charging money on your credit card, your account, communicate with your bookkeeper weekly or monthly for you, and you’re only answering questions really once a month, at most once a week, and you’re not going to have to worry about this. And every month, now you’ve got that P&L. So if you’ve enjoyed this episode, I know it’s not as sexy as hiring an acquisition manager, a disposition manager or that personal assistant, but let me tell you, once you know your numbers, the world will open up to you.
You can expand, you can hire people. You’re going to have a ton of confidence, right? Knowing your numbers is going to make you really, really, really confident. It’s going to give you a lot of clarity. Now if you want to know more about our next level wholesaling coaching program, go to wholesalinginc.com/nextlevel. In there actually, you can book an appointment with one of our specialists to really assess where you’re at and to see if you’re a fit to take your wholesaling business to the next level. Talk to you soon.