Simple Numbers, Straight Talk, Big Profits!: 4 Keys to Unlock Your Business Potential

by Greg Crabtree

Discover where your cash goes (or ask your accountant to help you) by using a format similar to the example at the beginning of the chapter. Set aside your taxes in a separate account on a quarterly basis regardless of when it has to be paid to the tax agencies. Calculate how much cash you need to get your line of credit to zero. Borrow term debt only when you have a clear strategy about how you are going to generate the profits to repay the debt. Understand that you probably won’t be able to take distributions while you are repaying the debt. Once you get your business out of debt, do the same for yourself. Yes, that means paying off the house! Build cash by retaining profits until you hit your core capital target. Remember, you can retain only about 60 percent of the profits because you have to pay taxes. Take distributions on a formal basis each quarter only after you have covered your taxes and hit your core capital target.