Posted on: May 11, 2022
WI 948 | Money Managing


Are you managing money in your wholesale business? Are you keeping track of your KPI’s correctly? Well, today, Chris Arnold has special guest Larry White to discuss the money side of wholesaling. Larry has some great tactics that will help you be more effective in terms of money management.

Key Takeaways

• CPA bookkeepers handle the numbers so your business can run efficiently.
• Cash is oxygen for your business.
• Keep 3 to 6 months of cash available for your business.
• Breakdown of how your business revenue should be used to cover marketing, payroll, etc.
• The major KPI you need to focus on and why they’re important.
• Your CPA will help you plan for success.

#Replay Money Managing for Wholesaling by Chris Arnold ft. Larry White

Are you managing money in your wholesale business? Are you keeping track of your KPIs correctly? Well, today, Chris Arnold has special guest Larry White to discuss the money side of wholesaling. Larry has some great tactics that will help you be more…

Episode Transcription

Welcome to the show. As always, I’m excited to have you with us. I got a little special treat for you. We are going to go down the path of money and metrics. This is what you’re going to get. If you’ve been in the business a year or two years, you’re newer to the game, and you’re trying to understand the ins and outs of what it means to run a business, I’ve got a guest that’s going come in and talk about a few things that he wants you to know about money and metrics in the first year to two years of you running your business.

The two things I see that hurt businesses are the fact that money is mismanaged and metrics or KPIs are overlooked. I see this all the time. For a lot of people, they want to kick this can down the road and go, “I’ll get to the KPIs a couple of years down the road when I have more time where I start to understand the money side as I start to make it.” What we want to challenge you on is that it is backward.

The most important thing in your business is to understand the money and the metrics from the very beginning because they matter most. I have Larry White on with us. I love this guy. He has been a mentor to me. He is a confidant. He also is a fractional chief financial officer in my business. He consults my company. We’ll get into a little bit about what that means. What’s up, Larry? Welcome to the show. I’m glad to have you.

Thanks for having me. I appreciate it.

Before we dive into a few things that they need to know, people hear the word chief financial officer and they might not understand what that means. Can you help people understand the difference between someone that is a CPA/bookkeeper, you might call those people controllers, and someone that is a CFO or Chief Financial Officer. What is the difference between those two?

A CPA, controller and bookkeeper are the folks that put the numbers together for you. If you were to take a look at a number line, look at a continuum, and ask what they do, they look at everything from today going into the past. They look at everything historically. They produce the information that needs to be accurate and timely. They look at everything from the past going to today’s date. A CFO takes that information and utilizes it to forecast and predict what may happen going forward based on what happened in the past. They’ll also take a look at profitability and how you take that and utilize it as a weapon going forward to make the most money that you can.

You’re saying that the skillset between a CPA, bookkeeper and a CFO is entirely different.

It’s very different. I’ve come across quite a few people that would say to me, “Why would I want to engage a CFO when I already have a bookkeeper or controller?” A lot of those folks were business owners. The folks on the show would say, “I have that person, so why would I need somebody like you?” The difference is if you try to ask them for strategy or, “How do I do what I do? How do I take the business forward? How do I continue to make more money?” You’re not going to get that from a CPA. You give them information so that they can prepare a tax return. The bookkeeper prepares the numbers for the CPA who then prepares the tax return, but they’re not going to exactly tell you what to do with your numbers, what they mean, and how to interpret them so you make more money and cashflow.

When you don’t have those cash reserves, people tend to panic and make bad decisions on pivoting the business.

Going years back, my thought process was, “I don’t have a CFO. I don’t know what one does but I know that I need one.” That’s all that I understood. Once I met Larry and we engaged and he started helping me out, I then understood the value of a CFO. That’s where I started. I was like, “I know I need one. I’m not sure why because I know that’s bigger boy level to play there.” Let’s get to the meat. We’re going to hit on a few things about money and metrics. What people that are newer to real estate and investors who are trying to build businesses need to know. Let’s go with this first one. Cash is oxygen.

There are a lot of questions around, “How much cash should we have in reserves? I need to spend the money I’m having to grow my business. I close the deal and I want to reinvest that in my company to do bigger marketing and to make the snowball. At the same time, I know that I can’t spend all of it. I’m confused. I don’t know what cash reserves should look like.” Help us understand why this is so important when it comes to cash being oxygen, and then practically, how much should people be keeping in reserves.

Given what I do for a living, I’m pretty conservative by nature. Given what happened this year, because this year has been the greatest anomaly in our lives, we’ve seen a lot of businesses struggle and a lot of businesses do well. What I have found is those that have done well planned for the rainy day. Cyclically in business, it seems like every 8 to 10 years, there’s always a downturn. There’s always something that we get concerned about that could drain all of our cash reserves.

I’m always of the opinion that we should always have 3 to 6 months’ worth of cash available. If we never did another transaction or we didn’t have any revenue in the door, we have enough to pay our bills as we would at home to cover six months’ worth of expenses even if we had no income coming in the door. What I find is that when you don’t have those cash reserves, people tend to panic and make bad decisions on pivoting the business, going in a different direction, and trying to figure out strategically how they will navigate this difficult road.

I find that folks that have that cushion or that 3 to 6 months’ worth of cash have the ability to spend the time to evolve other revenue streams or evolve other directions to go in without making bad decisions because they know they can pay their bills. They wake up in the morning and they’re comfortable. They’re not happy with the situation, but they have the ability to make better decisions knowing that they’re not going to go out of business if something trips them up. They have the ability to make a change in terms of pivoting their business to make sure that they stay in business for the long haul.

I’m newer to real estate so I’m like, what does 3 to 6 months of expenses include? Is that for my salary or if I have another payroll in the company? Does that include marketing? Does that include software? Is this every expense I have and I take that number and I multiply that by 3 or 6? How do I mathematically come up with 3 to 6 months of expenses?

The way I look at the real estate business is there are four different buckets of expenses. You’ve got the commissions that you pay to your real estate folks, but that’s more commission-based, so if you’re not making a sale, you’re not having to pay that out. That goes out. Automatically, you’re going to be saving it. If you didn’t have a transaction, you wouldn’t have to be paying those commissions because you didn’t have a specific transaction. You wouldn’t have to pay those folks, but you’re looking at marketing, payroll, and other operating expenses, which would be everything else.

That’s software, rent if I had one, a fax machine or a cell phone. It’s those types of stuff. When you say 3 to 6 months of expenses, it’s enough to cover your marketing, payroll, and everything that you’re spending money on the operational side and you multiply that by 3 to 6. Here’s my next question. Why 3 months versus 6 months? That’s a span there. I’m thinking, “Should I be at 3, 4 or 5 months?” How does someone dictate whether they should be between 3 to 6 months? How do I decide that for myself?

WI 948 | Money Managing

Money Managing: Every investment that you make, whether that be in people or marketing, the purpose is to increase your top line and the amount of cash flow you’re getting out of the business that you personally don’t have to work for.


That’s a judgment decision, to be honest with you. I know for myself, the more cash that I have in hand, the more I can make a better decision. I can sleep at night and know that I can pay my bills. I like to have a lot of cushions personally, and that’s more of a personal decision. Others are going to have a completely different thought process. They’re like, “I’m not worried about it. I can bring in money in three months.” They have that ability and they don’t get concerned about that stuff. I always worry about whether I can sleep at night. That’s a personal decision, but I would say it’s a minimum of three months and anything over that, you have the ability to make decisions to pivot the business and to continue to stay in business for the long haul.

If you’re reading, what we’re saying is it depends on how risk-averse you are. I like to say it depends on how well you’re sleeping at night. If you got three months reserved and you’re still not sleeping well, then maybe you need to kick it up to 4, 5 or 6. Let’s move on to the second piece. Percentages matter and we’ve already opened this up, which is great. I love this because a lot of new people I know when I was newer struggled with this, and that is when you look at your business based on those four categories.

This is a very simple way to create silos of expenses in your company. Let’s say those again. It’s your commissions that you pay out to your acquisition managers if you have any. You have your marketing silo, your payroll silo and you are in that payroll, and then your operation silo. Here’s the question that I think is important. We define revenue as the total amount of profit that you’re bringing in every month. We’ll utilize some simple numbers. Let’s say that I bring in $10,000. If I’m bringing in $10,000 of revenue each month, what percentage should that $10,000 make up of those four buckets and what percentage should my profit margin be? I don’t think most people know what a baseline is for this. Let’s start to break this down.

I always like to work from the bottom up. Most people in real estate say, “How much money and how many transactions can I make? What’s my revenue?” It doesn’t matter if you’re not putting any excess cashflow or profit on your bottom line. I like to look at everything in percentages and say, “How much profit on the transactions or the revenue that I’m making will flow through to my bottom line?” My rule of thumb, especially in this business, based on my experience is I always like to see 25% in profit, and then I work backward and I say, “How much then should I be spending on payroll, marketing, operating expenses, and on commission?” For purposes of the folks on the show, what I always like to talk about is I get 25%, and then out of that 100% of the total picture, what we do is we’re going to probably spend about 15% in commissions.

That’s to the acquisition manager.

I would like to spend about 20% of my total revenue on the payroll.

That’s wages, VAs, or anyone that you’re paying to do labor within your business.

25% on marketing, and then 15% on everything else. That’s for your operating expenses, software, and all that kind of stuff. If you were to do the math and say, “My revenue is 100%,” deduct all of those things and you should come down to about 25% profit.

Numbers are a weapon. They’re a roadmap.

Let’s break this down. First of all, if you’re a solopreneur, you don’t have the overhead. This isn’t going to be in the sense of you being in 25%. You are going to be way below that. You have no expenses. You have no acquisition managers, and that’s fine. Know that you’re running a very lean, mean, and healthy model. What we’re saying is you might want to stay there. There is nothing wrong with looking at what you’re doing and going, “I want to stay nimble. I don’t care about building out a team. I’m going to stay small, lean and mean, and I’m going to run 50% plus a profit margin.That’s fine.

Others are going, “I want to build this thing into a business. If I build it into a business and get out of me having to run all the day-to-day and be responsible for me, then I’m going to have to scale and that’s going to cost money.” The percentages that Larry is giving are based on the fact that you’re looking at building a team structure, and this would be roughly a healthy model for a team structure.

This is a basic guideline. You might have shifts in percentages based on how you run your operation, your payroll or other different things like this, but this at least gives you a baseline to look at. Let’s break this down a little bit more, and I want to repeat it real quickly. It’s a 25% roughly profit margin, 15% for acquisition manager, roughly 15% for operating costs, about 20% for payroll, and 25% for marketing. What do you want to elaborate on this with these percentages here?

You talked about scaling, which is important. What’s important here is it will give you the ability to scale your business. Some folks may be sole practitioners and they’re saying, “I’m bringing in 75% of my revenue. I’m able to keep that,” but you’re going to be limited in growth. You’ve got to spend money to make money as we all know.

If you have the ability to bring in a team, maybe you can take that from $250,000 a year or $500,000 a year that you’re bringing in to $10 million a year. If you’re bringing in 25%, I would much rather have 25% of $10 million as opposed to 75% of $500,000 where you’re limited by your own ability to scale because you can’t scale yourself. What’s important is every investment that you make, whether that be in people or marketing, the purpose of that is to increase your top line and the amount of cashflow that you’re getting out of the business that you personally don’t have to work for.

I love it. The big thing we want you to understand is to begin to look at your business in percentages. If you’re looking to grow or scale, you’ll make the most sense by taking the 4 or 5 areas that we’ve talked about and understanding them as silos and percentages of revenue. If you begin to look at your metrics and your money that way, your business will start to make sense to you a lot faster.

Let’s go on to this last thing, KPIs. I don’t think there’s anyone here that hasn’t heard, “Track your numbers. Know them.” I want to know from a CFO’s perspective why you think this is important because I’m going, “I know it’s important, but you’re going to have to deliver me a serious why for me to open this up because it drains me. It is a mountain to think about tackling, but I know that I need to do it.”

By the way, if you’re tuning in and you want to put a face with the name, you can always go to YouTube. Check us out and subscribe at Chris Arnold – Real Estate and see what’s going out there. Come take a look at Larry and me hanging out on video. Let’s talk about the numbers or the KPIs. What are the reasons why I need KPIs and tracking?

WI 948 | Money Managing

Money Managing: Things change in the market. It is what it is, but you have to put a stake in the ground and give yourself the opportunity to say, “This is where I’m going to be.”


Numbers are a weapon. They’re a roadmap. They’re important. What do we always say? It’s an easy anomaly, but failing to plan is planning to fail. It’s very simple. If you want to go from New York to Boston or New York to Philadelphia, you need to have a roadmap. You can’t just get in the car, put your finger in the air and say, “I’m going to get there from here.” You always need a roadmap, and that’s the benefit of having numbers being your weapon. You need to plan.

Where do I want to be in six months? Where do I want to be in a year? Where do I want to be in a year and a half? How quickly do I want to grow my business? All of these are checklists and they are roadmaps along the way that tell you, “I’m getting this business to where I want it to be so I can have the lifestyle that I ultimately want.” If you don’t do that and put goals and a roadmap in place, you don’t know what you’re shooting for and you don’t know if you’re going to get there from here.

I like that phrase that the numbers are a weapon. It’s this idea of taking the math that exists in your company and shaping that into a sword or a machete chopping through the business jungle. That’s the way you’ve taught me to understand numbers. Numbers are a weapon if you understand them, and to have that weapon is such a powerful tool to be able to move forward with what you want to accomplish in your life.

The next one on why KPIs are important is forecasting. I know when I came to you, you started talking about forecasting and I was like, “I can forecast in real estate?” I struggle with this. We wrestled through this. You were like, “You’ve got to learn to be able to forecast what’s going to potentially happen in 3 or 6 months.” You take this out an entire year. Let’s talk about the value of forecasting if you have your KPIs and your metrics

All of this comes back to the ability to plan and to give you a guideline of where you expect to be. We all know that things come up. Anomalies come up. Things change in the market. It is what it is, but you have to put a stake in the ground and give yourself the opportunity to say, “This is where I’m going to be.” If you don’t reach those goals, then what it does is it gives you enough time to say, “If I need to pull back on expenses or I want to invest more in the business because it’s doing well, what do I need to do? How much cash do I need to put into the business in order to achieve those goals from a forecasting perspective?” It’s all about planning. It’s also about cashflow preservation, which is important.

Let’s say that you had planned at the beginning of the year that you’re going to do a million-dollar top line, and based on our math, you’re going to do $250,000 in profit. What happens if you get halfway through the year? If you say, “Here are our results for the first part of the year. We expect that same trend to occur in the second part of the year.” It then gives you an opportunity to maybe understand where you might possibly need to pull back on expenses to maintain the cashflow that you had planned for. It’s all about planning, creating the roadmap, and giving yourself the opportunity to maintain cashflow even if you have a down year.

Let me ask you this. If somebody came to you in a downturn and said, “I need help,” and you went in and realized there was no tracking of KPIs, metrics and so forth, how effective could you be in even helping someone that didn’t have that data? How much trouble would they be in a downturn?

Know what you would want to get in and at least take a look at something historical, then it gives you an idea of where we think we’re going to be going forward. We just set up a structure. The whole point of this thing is a lot of people are afraid to talk to a finance person because people get embarrassed.

Every expenditure in the business should yield a return.

You’re not going to grow your business unless you go open a kimono. You got to let somebody into the financial side and take a look at what’s going on. You got to drop the ego.

Any finance person that makes you feel bad about not planning and about not doing what you should do doesn’t work for me. I’m in here to help. I’m in here to take what happened in the past, not point fingers and figure out how we move the ball forward and get it right going forward. What happened in the past is what it is. I don’t expect people to know what I know. My job is to make it as simple as possible so that somebody could understand and move their business forward on the back of a napkin.

If I can do that and help people who don’t understand finance that well, then I’m doing my job. I’m not here to make people feel bad because they haven’t planned. We put a stake in the ground and figure out based upon what the business can do and get somebody doing what they love to do and what they’re good at. I take the rest of it off their hands so that they can do what they need to do and guide them in a certain direction.

That’s well said. We’re starting to wrap up here. Someone might be reading this and maybe want to reach out to you because they got some questions or they’re like, “I like this guy.” You won’t toot your own horn but I’m going to push you to it a little bit. For people that don’t know your background, what’s your pedigree? Where did you come from?

I’m a recovering CPA because I’m an entrepreneur by nature. I just happen to know the finance and accounting stuff. I’ve worked for startups all the way up to $400 million companies. I was the CFO of Elizabeth Arden Red Door Spas. We had locations all over the country. I have also worked for the head of GoDaddy, Bob Parsons. I was his personal CFO. He’s worth about $3 billion. I head it up for the finance side in his family office.

I also started up my own company. I made flame-resistant clothing for oil and gas and public utilities. I had to set up production lines in Latin America, so I learned how to speak Spanish. I had the opportunity to raise capital and get a company sold. It did pretty well on the sales side. I’ve seen the gamut. I’ve worked in real estate and a bunch of different industries. For me, it’s just a math problem. The thing that I love more than anything is I love helping people achieve their dreams. If I can be a help and a conduit, that’s where I live and breathe because I love to see people do well. That’s what’s fun for me and why I do what I do.

If someone wants to reach out and learn a little bit more about you, where do they find you?

I have a website that people can take a look at. It’s You can also email me directly at Say hello and I’ll respond. If I can be of help, I’d be glad to be of help.

WI 948 | Money Managing

Money Managing: If they’re not yielding at least 3 to 4x on your spend, you’re probably spending too much on it and need to go in another direction.


I’m glad that you and I crossed paths years ago. You and I are always working on projects, which is exciting. I’m glad to have you in my corner as well. You didn’t know I was going to ask you this question, but you know the ins and outs of my business and you know that we’ve been utilizing radio as a marketing channel, you’re in there looking at what each thing we do does and you always say $3 to $4 is a healthy amount, what are your thoughts as a CFO understanding all the marketing channels we do and the usage of radio, and the value of that as a marketing channel for us as a company?

I like to think that every expenditure in the business should yield a return. We always need to ask ourselves that question. I’m not spending just to put butts in seats, as I’d like to say it, but they should be helping yield a return. They should be either contributing to revenue or helping to reduce expenses. What I mean by that is that if you’re spending on marketing, my rule of thumb is you should be able to evaluate each of the specific marketing channels. That may be direct mail, radio, TV or web. It may be a different number of different things.

You need to take a look at those types of things separately and understand what each of those channels is contributing to your top-line revenue and your profitability. If they’re not yielding at least 3X to 4X on your spend, you’re probably spending too much on it and probably need to go in another direction. That will help maintain your profitability now and into the future.

You taught me that thoroughly, and that’s why for us, radio has passed the litmus test working with Larry because out of everything we’ve done, it has consistently been somewhere around $3 to $4 return depending on the year. In previous years, you can go back and say we were pretty much around $3.50. If you guys want to know, Larry was a part of that decision-making and has kept radio on because he believes a $3 to $4 return is healthy for our marketing channels. If not, he would tell us to scratch it and get rid of it.

As always, if you’re interested in learning more about radio and utilizing that as a marketing channel with your business, check us out. Go to and book a call. Let’s see if your market is open. We sold out a lot of markets at this point. A lot of people are beginning to utilize radio and going, “There’s no one in my market. What do I have to do to take this over? It’s wide open.” It has been cool to see the returns that we’ve been able to create for a lot of different investors around the country.

Check us out at Larry White a.k.a. Blanco, I appreciate you coming on and sharing with everyone a lot of the wisdom that you instilled in me over the last several years of you and I working together. To the rest of you, thank you so much. We will catch you soon when we add more value.

Thank you.


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About Chris Arnold

Chris Arnold is a 15-year Real Estate veteran who has closed over 2500 single-family real estate transactions in the DFW metroplex. Chris is the founder of multiple companies that are managed by a US virtual team, which allows Chris to run his organizations while living in Tulum, Mexico full time. His passion for leaders has led to the creation of Multipliers brotherhood which serves the top 5% of real estate entrepreneurs out of the US. Most recently Chris has launched his REI Radio coaching program. This program is designed to teach real estate investors the marketing stream that everyone knows about but NO ONE is doing!

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