Million Dollar Producer Show
The Million Dollar Producer Show™ interviews highly successful financial professionals, thought leaders and organizations in the financial services and life insurance industries. This podcast is here to help answer the key question: “What are the insider secrets to stand out in a noisy marketplace and consistently attract and convert high value clients?” To get answers each week, subscribe to the Million Dollar Producer Show.
Million Dollar Producer Show
038: Unlock Your Business Potential: Strategies for Cash Flow Management, Tax Savviness, and Planning Your Business Exit with Tina Pittman
In this episode, I have the pleasure of hosting Tina Pittman, the author of "Unlock Your Business Potential: Achieving Financial Success with Cash Flow Management." Tina will share valuable insights and transformative strategies from her book. Together, we'll explore the vital importance of managing cash flow for business success.
Beyond being a guest, Tina is also a valued client. Her journey to writing this book was influenced by her deep involvement in ongoing learning and her wish to share her broad expertise in a clear, accessible way. Her book reflects her deep understanding, offering actionable advice for business owners to improve their financial outcomes through better cash flow management.
Essential Cash Flow Management
- Traditional cash flow management can present obstacles in identifying the most effective strategies and tools.
- Business owners may find themselves without clear guidance on maintaining organized financial records, which is crucial for visibility and control over cash flow.
- The process of improving cash flow management through conventional methods can be slow and may not always lead to cohesive or comprehensive financial strategies.
- The approach outlined in the book offers a more integrated and strategic framework for enhancing cash flow management, ensuring all financial activities are well-coordinated.
Insights Gained from Authoring the Book
- Writing this book gave Tina a chance to refine her ideas and services, focusing on the most effective ways to help business owners achieve their objectives.
- She encourages entrepreneurs to shift their perspective: to stop merely working in their business and start strategically working on it, using their expertise for broader impact and planning ahead for success.
Proactive Tax Planning
- Tina delves into the importance of forward-thinking tax planning, discussing strategies like tax forecasting and advanced tax-saving techniques.
- An illustrative case study in the book shows how smart investments, such as in business finance insurance, can lead to significant tax benefits, offering a new angle on effective tax management.
Planning for Business Exit
- The book touches on the vital topic of preparing for a business exit, underlining the need to appraise and boost a business's value well before deciding to sell.
- Tina emphasizes minimizing the business's reliance on its owner to ensure it remains operational and appealing to prospective buyers.
The Advantages of Virtual Services
- Tina is a strong advocate for embracing virtual services, which allow business owners to tap into specialized expertise without geographical limitations.
- This approach is particularly relevant in today's business environment, where virtual collaboration can result in more personalized and impactful advisory services.
About Our Guest:
LinkedIn: https://www.linkedin.com/in/tinapittman/
Website: https://pittman-cpa.com/
Email: tina@pittman-cpa.com
About Your Host: Paul G. McManus is an accomplished author and expert in helping financial professionals grow their businesses. With over eight years of experience working exclusively with financial professionals, Paul has helped his clients generate tens of millions of dollars in fees and commissions.
Claim your free audiobook copy at: www.theshortbookformula.com
Welcome to the Million Dollar Producer Show. Brought to you by more clients, more fun. I'm your host, paul G McManus. This podcast is here to help answer the key question what are the insider secrets to stand out in a noisy marketplace and consistently attract and convert high value clients? To get answers each week, subscribe to the Million Dollar Producer Show Today. I'm honored to welcome Tina Pittman to the show. Tina is a client of ours and we recently had the privilege of helping her write and publish her book Unlock your Business Potential Achieving Financial Success with Cash Flow Management. I'm very interested to dive into Tina's background and what her new book is all about. Let's get to the show.
Speaker 2:Hey, tina, how are you doing Good to see you. Hey, great, it's good to see you.
Speaker 1:It's been a little bit since we published your book. I want to say we did it late last year and the book is called Unlock your Business Potential Achieving Financial Success with Cash Flow Management. While you talk about a number of different key topics that we'll get into during today's interview, the main thing that you really stress throughout the book is cash flow management. What led you to want to write this book?
Speaker 2:I've done a lot of continuing education, where you can take your business and offering the different types of services Through all these years. It's a accumulation of knowledge and I haven't seen anybody put anything together to tie all these pieces together. It was a great opportunity to get my thoughts down on paper and then share them with others.
Speaker 1:The reading is better than oral explanation, yeah definitely and, like we said about, it, gives you, as the author, an opportunity to really think through, because you have, I want to say, decades two, three decades of experience and I'm sure that you've learned a lot, captured a lot of insights. And what I find is great about the process of writing a book is that it helps you, as the author, just clarify your own thinking. What do I think and what do clients, what value do I provide, and why did they come to me? It just made me expanding upon that a little bit. What was that process like? For you just to have a chance to sit down and go through this process of writing the book and gather your own thoughts?
Speaker 2:The hardest part was getting the thoughts out of me and trying to explain each of the concepts, but also, at the same time, it helped me to clarify my services going forward. I don't need to do everything, I just need to get the business owners get their goals and set them forward to their opportunities and reaching their goals. That's basically one thing I really learned from writing this book.
Speaker 1:As a business owner myself and knowing a lot of business owners and having had multiple businesses in the past, I know how important cash flow management is. What do you see as the biggest challenges or struggles when it comes to the work that you do and, by extension, what you talked about in the book in helping business owners get a better handle of their cash flow? I can imagine that's like a hot button for a lot of business owners.
Speaker 2:Yeah, what I found is business owners they want to do everything, do it their sales, but they don't actually have any accounting records to back up what they're doing. When it comes to tax preparation. It's very unorganized, and then we're trying to play catch up. If they don't have clean, good books that are kept up on a regular basis, they don't know what their cash is. They might look at their bank account, but they're not considering what hasn't cleared. Then they might overextend themselves. That's when, then, it starts to get to be a snowball. They start borrowing money, and that really is not a good, healthy thing for a business owner to do with their company is to keep borrowing and not fixing the issue.
Speaker 1:I can think from my own past experience especially when I was starting out and I didn't have necessarily a ton of money at my disposal that you're just looking at paying your bills and you might get on some credit cards just to free up some cash flow. Then if you're not careful, you could end up paying a lot of interest and then that's just going to create long-term negative. I think you use the word snowball, but it can really impact in a negative way. Is there anything else about cash flow that you'd like to share?
Speaker 2:Yes. Whenever owners are trying to accomplish everything and be hands on everything, their mind gets all jumbled up. They can't set priorities. Unwind yourself. Read the book. It will give you a clear indication of what you need. The business owner is at a higher level than what they really think they should be. They need to start working on their business instead of in their business. But the book does explain areas where they can really advance and start utilizing their knowledge to produce a good product or service. Then their retirement opportunities will just come naturally to them. It won't be a forced. I've got to do retirement, I've got to put money aside. These opportunities allow them to increase their cash.
Speaker 1:You've been a CPA and again, you've had lots of experience and a variety of roles. Just take us back and talk about what did most people do or not do when it comes to taxes, and how are you different in terms of? I would call it a more proactive approach.
Speaker 2:So what we hope our clients do is to tax forecasts at least four times a year. Okay, that gives them they know what their tax liability is going to be and how much cash they need to set aside. Now, upon different qualification, they might have be able to look at the options of advanced tax strategies that can help reduce those taxes.
Speaker 1:What's in the advanced tax strategy.
Speaker 2:The advanced tax strategies. If you are earning at least $250,000, there are more like you spend money, but you get four or five times back in tax savings than what you spend, so you get a really good return on investment. It's a portfolio that you would consider a rapid return on your money for that current year. It's not one that you keep rolling over.
Speaker 1:So I have found a lot of business owners dread paying the tax bill because that ends up being their highest bill Is there any specific strategy or anything, or maybe a story or case study in terms of a client that you've worked with and you've helped them save on taxes that you can share?
Speaker 2:A few that have been really successful this past year that quickly reduced their income. For example, we have a business finance insurance strategy where you pay for the insurance upfront but it's finance, so that you don't have to worry about the cash flow.
Speaker 1:Okay.
Speaker 2:So if you're a million dollar earner and want to eliminate half of your income, you can get a policy for about $500,000 and it can go up. It depends on what your assets are, your income and all that. You can almost totally eliminate your tax liability. So our case study was a million dollar earner. He chose, or he qualified for, $545,000 in business insurance. That is a deduction on his return, so it cut his taxes down to maybe $50,000 versus a couple hundred thousand. So if you think about that investment, he did spend $100,000, but he got $50,000 more in tax savings that he doesn't have to pay in. So that's $50,000 cash in hand. That's amazing.
Speaker 1:And that's legal correct.
Speaker 2:Yes, it's legal. High rating insurance company that finances it. The policy holds the policy and then there's a financing company that will finance it for you. Okay, so what happens is your cash basis taxpayer. You get the whole deduction in that first year, with some proper planning. Yes, it is definitely legal.
Speaker 1:And do you have access to that money?
Speaker 2:The money for the tax savings. So if you've already paid in your taxes, you'll get that refund back when you file your tax return. If you have not paid your taxes in, then it reduces what you're going to have to pay the IRS. If you haven't paid your estimates in, then that's cash that's in your pocket immediately.
Speaker 1:So, in other words, a lot of the tax savings things that I think a lot of CPAs or accountants talk about, for example, is put your money in a 401k, ira, etc. And you capture tax savings that year, but you also don't have access to that money. It's tied up in a retirement account. I want to make it clear what you're describing is the best of both worlds, meaning that you get that tax savings immediately and it sounds like it can be quite significant the way that you articulated it but you also have that cash flow. You have that money in hand that you can use at the same time. I think that's unique.
Speaker 2:So not like the retirement savings you want to get a portion of your taxes back of that money, say 20% tax savings. Instead, you're getting four times what you paid and dished out originally. You're getting back on the tax savings. So you're really increasing your cash flow versus reducing your cash flow.
Speaker 1:So where we met originally was through a group called the due diligence project, who I know the founder there is to you and a number of CPAs or virtual family offices that are there. Tell us a little about that, because I think a lot of people have an idea of their CPA in a certain bucket, where it's more what I've described as compliance work, where it's you go to your CPA to tell you how much you owe. If you've had a good year, it's be grateful that you had a good year and pay your bill.
Speaker 2:So the due diligence project is really where I got started to thinking differently. Even though I was looking at proactive tax planning before due diligence project, I really didn't have enough strategies that were worth money. With the due diligence project those are the strategies that are fatigued, reviewed before it ever gets to be offered by a CPAs have really advanced me into understanding how to help a business owner, how to reduce that income on that tax return, how to actually keep their cash versus paying in those estimated tax payments. I used to always say I'll help you skip your next tax payment, but now I can actually really help.
Speaker 1:I was thinking from a business owner perspective. You helped me my cash flow. You helped me keep my money away from Uncle Sam. Now the final thing I want to ask you about is you also help business owners and I'm going to talk about this in the book exit their business as well? Tell us if you would. About what does that mean? What kind of high level? What do business owners need to think about when they're thinking about exiting their business?
Speaker 2:A lot of business owners consider exiting their business by just selling it, or they can sell it to their employees. But one thing that they're missing there is certain factors that should be in a business to get more, be evaluated more so that the investor will purchase that business. The sale of the business becomes a substantial importance to the business owner because that is a retirement. So what happens is they can get an evaluation as their business is now versus what it could be. So the evaluation can tell them what it's valued at now and what the potential valuation will be. The difference between those two is your value gap, and that's where we help our clients to close that gap, to get smaller and smaller, get them closer to what they really could get for their business, and that's what we call there's growth drives that we review with the clients and take steps to increase that value.
Speaker 1:I can agree strongly with what you said about just again. Myself and people I know is that, as a business owner, my money is largely in my company. So question about this and the question is when should a business owner start thinking about determining the value of their business and how they can increase the value of business?
Speaker 2:They should at least give their self five years to make those improvements into their business. You don't want to implement too many too fast because if that creates a growth spurt for you, that can create other issues and you don't want the other issues with it because not always increasing your revenues is going to give you the same results that you want, especially to increase the value of your company. It can be internal things, processing, there's various things. Hr is considered into our growth strategy. There is policies and procedures that gives you your company of value. Marketing is another area and that's where if you grow too fast could put you into a danger area and then your company could fail because you can't escalate your process fast enough. So allow yourself at least five years to see that growth and increase value of that company.
Speaker 1:And, like we said, where you start getting a current value and then you're able to help people get a possible value based off of the market, industry standards etc. That creates kind of a present picture and a potential future picture and that really, I would imagine, creates the game plan If you want to be able to retire. As an example, sell your business for five million versus two million and what would that difference in three million do for your retirement? Because so many business owners have their money tied up in their business. That is their investment. So whatever they sell their business for by and large is how they're going to live their retirement.
Speaker 2:Correct that retirement is a key thing. Even if you're young, even if you're in 30, 40, it's still your retirement tool.
Speaker 1:One of the things that I've learned. I'm working on my own business and trying to scale it and talking to a lot of people similar to yourself that do business exits, and one of the key things that's really struck a chord with me is the idea of owner dependency. Right, so if you're a small business and you're it's really a glorified job that you have. Perhaps maybe it's bigger your key to all the processes are too much. So when a buyer comes in, what needs to happen so that the buyer is more willing to invest in by your business if it's not so dependent on the owner?
Speaker 2:Yeah, that's the major key thing is to earn your needs to be out of that daily operations of the company, and that sometimes is a very hard thing to do for a business owner. Myself, I like to be hands on, so a lot of business owners they have to step back and start planning also for if they do sell the business, what is their next step.
Speaker 1:He goes back to what you said about working on the business instead of in the business. Now, that's a concept that we've all heard in your experience. How easy or difficult is that to get people to actually not just understand it intellectually, but to take those actions, change those behaviors, etc.
Speaker 2:For some people it comes easily, so we're the ones that are more hands-on. It becomes more difficult, but when they have someone helping them to reach their goals, that person will help them to understand what needs to happen and you become accountable to that person and they become business owners. Become accountable to me.
Speaker 1:Tell me more about that. So I'm a business owner. I want to get your help in accessing my business in five years. What does that process look like in terms of how that process works?
Speaker 2:So what we would do is have questions that you would need to answer. We will come back to what is the best way to get rid of that problem that is lowering your value. Sometimes we have to bring in experts to help in those certain areas because we don't know everything and, especially if it's manufacturing, we might need to have a professional that handles that specific product or service that is that company does. So we work on those and get those. They will see a noticeable increasing value as each thing, each item their task list is what I want to call it is hit on and corrected within their company. It could also mean, too, that to get the business owner out of the business, you need to have a team player that can advise their management team or their staff how to play together and eliminate the less need for the business owner to be there directing them. That gives a lot of value increase into a company when that happens.
Speaker 1:Is there any question that I haven't asked you about the book?
Speaker 2:There is One thing I wanted to address is Business owners are really fixed on. They're so used to dealing with someone that's local to give them advisory services. Start considering to widen your connections. Consider virtual services. Then you can have the best on your team and that's not always local who can be best fit for your team. Ever since COVID I've been really moving towards the virtual and it's like I can help people differently. I don't have to have a storefront. You really get specialized service where people are concentrating on helping you to meet your goals.
Speaker 1:I totally agree. I've been running a virtual business since 2015, to your point. When you look at it that way, you can get a specialist right. Your specialties, as you're outlining the book, is cash flow management, is proactive tax planning, is business accident. If you want some of that really understands those one of those three things, then you want someone.
Speaker 1:You're not limited by your local geography. You can perhaps interview a couple of different people, but you can get the right fit for you, correct, as the publisher of your book. Is that? One way for you to do this and do your due diligence is to get, if you're interviewing, three specialists right Maybe one local, one, virtual, maybe one other one? How do you do due diligence? See if they have a book, go get a copy of their book, read their book, see if they're a good fit, if they align with your vision and values, and if they do, then that's an easy way to do due diligence because you already feel like you know them coming into the process. With that in mind, where can a listener get a copy of your book and or reach out to you if they want to have a conversation?
Speaker 2:It can reach out to me my email is Tina at pitman-cpacom, or they can actually go directly to Amazon and buy the book there. Unlock your business potential and it's worth the investment.
Speaker 1:Perfect, and we'll have the email and the link to Amazon and the show notes below. So, tina, thank you so much for your time today. I definitely enjoyed working with you and writing and publishing the book. I'm excited to see all the success that you have going forward as you continue to help business owners manage their cash flow proactively, reduce taxes and exit their businesses.
Speaker 2:Thank you, Paul, for having me. It really enlightens me, makes me excited for what I do. I can help people and business owners move past the hurdles that they've got.