The Anatomy of Building by Josh Rosenthal

Today we can finally apply everything we've learned this week and see how the knowing CCC can help. In this episode you'll see how to shorten your CCC. And you want it short. Understanding this is directly correlated to keeping cash in the bank.Understand this, and you will be in the top 5% of small business owners and gain a huge advantage over your competitors as you control lifecycle of your cash.——————————Sealevel InsightsJosh Rosenthal, founderDSB Podcast - dsb.today/podcastDSB Videos - dsb.today/youtubeSealevelinsights.comBurn rate This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Today is the last input in the CCC - DPO (Days Payable Outstanding). How long does it take you to pay your bills? It's simple and its the last thing you need to know to calculate your CCC.——————————Sealevel InsightsJosh Rosenthal, founderDSB Podcast - dsb.today/podcastDSB Videos - dsb.today/youtubeSealevelinsights.comBurn rate This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

We address the next metric in the CCC formula today - Days Sales Outstanding. It's simple. This is the average time it takes for your customers to pay you after they've received the product. One step closer to running the CCC and controlling it.——————————Sealevel InsightsJosh Rosenthal, founderDSB Podcast - dsb.today/podcastDSB Videos - dsb.today/youtubeSealevelinsights.comBurn rate This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

In order to calculate your CCC you have to understand the inputs into the formula. The Days Sales of Inventory tells us how many days of inventory your business holds on average on any given day. We like quick CCCs. We can't control the CCC unless we actually understand it. If you can sell through your inventory more often (increase sales or decrease inventory) you will see a quicker CCC.——————————Sealevel InsightsJosh Rosenthal, founderDSB Podcast - dsb.today/podcastDSB Videos - dsb.today/youtubeSealevelinsights.comBurn rate This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

The Cash Conversion Cycle speaks to the give and take of cash in your business. I think of it like the tide moving back and forth on a beach. It's different in different seasons. If you can understand your business' CCC, you can then start to pull the levers on it and shorten it if need be. This means you can move cash out of your business and back into it faster.——————————Sealevel InsightsJosh Rosenthal, founderDSB Podcast - dsb.today/podcastDSB Videos - dsb.today/youtubeSealevelinsights.comBurn rate This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Understanding IRR, ROI, NPV, and all the other finance abbreviations is important in helping you understand investing in your business, new projects, new assets, and more. You don't have to be an expert, but you do need to absorb the lingo and be able to engage intelligently about it. It could be the difference between you growing or stagnation.——————————Sealevel InsightsJosh Rosenthal, founderDSB Podcast - dsb.today/podcastDSB Videos - dsb.today/youtubeSealevelinsights.comBurn rate This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

We're in the weeds here. But we have to play around here for a bit to understand some bigger concepts of ROI and IRR. And why IRR is the better choice when assessing a potential investment. The key to this is found in the NPV. The ROI doesn't solve for the NPV. The IRR does. Meaning, time matters when considering returns.——————————Sealevel InsightsJosh Rosenthal, founderDSB Podcast - dsb.today/podcastDSB Videos - dsb.today/youtubeSealevelinsights.com This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

We determined that the ROI is vague. People don't always understand it. In general, everyone wants to know what their return is going to be on cash they put into a business. But we need to factor in the length of the project and solve for it. ——————————Sealevel InsightsJosh Rosenthal, founderDSB Podcast - dsb.today/podcastDSB Videos - dsb.today/youtubeSealevelinsights.com This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Everyone wants to know what their ROI is going to be. But the terms is too vague. It means something different to everyone. And most of the time it just means a simple interest calculation which isn't really a helpful calculation in vetting an investment opportunity. It's too limited. ——————————Sealevel InsightsJosh Rosenthal, founderDSB Podcast - dsb.today/podcastDSB Videos - dsb.today/youtubeSealevelinsights.com This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

It's compelling, I know. Your Point of Sale system tells you that you qualify for more money than you've ever taken before. And it will be in your bank account tomorrow! I've done this several times. It really will be in your bank account tomorrow, but be careful. Nothing will sink you faster than this money. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

In this episode we dispel a myth and define the three core SBA products. The Microloans, 7(a), and a 504. Take some time to listen to this and do your own research on the SBA. They're a phenomenal tool for growth-minded business owners or business owners who just want to refi they're debt and lower their monthly obligations. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

If you don't keep your books, we can't answer this question. So please keep your books. If you hold too little cash it shows that you're either reckless or not hitting necessary revenue. If you have too much it tells me you don't have vision for excess cash. Or possibly your threshold for risk is pretty low. Either way, your cash holding strategy tells us a lot about you. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

The Acid Test is like the current ratio except it doesn't account for inventory. This tells you us what happens in the event you can no longer convert your inventory to cash. This means we are only accounting for cash and receivables when assessing your cash situation. We want you to be able to cover current liabilities without having to sell more inventory. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

When analyzing an existing business, I always start with the Current Ratio. This assumes you keep good books. If you do, this ratio tells me if you're holding a reasonable amount of cash. It might show you're insolvent and it might show that you lack vision because you have too much cash. But we can't analyze it until we know it. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

The myth is that if you're good at your craft you should start a business. This is a myth. If you're a good plumber, then focus on plumbing. Running a business requires a business partner long term. In the short term you can do it all probably. But not for long. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Real estate is a growth tool for business owners. And not just real estate investors. Every business owners needs real estate to leverage for growth capital. The first question a banker will ask after establishing the use of funds is 'do you have any real estate'? This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Sometimes people who love you and want to see you succeed also want to give you money for your for your dream. Take it well. Hire an attorney. Get the right paperwork. Treat it with respect. Pay it back. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Nothing is as important to as cash in the bank. Phil Knight from Nike in his book Shoe Dog said to always pay your most important supplier first and on time. Do that. Keep them happy. Oh, and know that there's a huge difference between when a bill due versus when a bill is late. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Everyone wants to have a great idea. And everyone wants to make money on their idea. But very few know how to navigate the distance between the two. It's hard. It's a grind. But learn to traverse it, and you are more likely to make it happen. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Cash's most boring use is sitting in a bank account waiting for unknown catastrophes. Build out a rainy day strategy that doesn't require committing your cash to low interest savings accounts. Get a LOC instead and deploy your cash more wisely.That doesn't mean spend the cash you have. It could mean putting it in higher interest rate (but still liquid) situations. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

There are a lot of Capital Sources out there. What source is the best for your needs? Today is all about where you go to get money. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Most business don't keep their books. And at the end of the year they over pay an accountant to do just enough to make the IRS happy. Don't get me wrong, we want to make the IRS happy, but keeping your books is more about helping your run a quality company. If you want to be a good business owner, be in your books weekly. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Every small business owner needs three layers of good people around them. 1. Board of Directors - if you own 100% of your business this may not apply.2. Board of Advisors - these people help you in a different way than a board of directors.3. Good friends.Don't waste any of these relationships. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

Your dream lives based on cash in the bank. A great product is necessary, but businesses survive all the time with a mediocre product. But no business survives without cash. Today, I push you back into your dream. What drove you to start your business? If you're running out of money and your discouraged, start by going back to your dream. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

The Daily Small Business Podcast is all about keeping cash in the bank. There's nothing more important than cash in the bank as a small business owner.This is a podcast that will help small business owners better learn how to stay solvent. Because this is how the dream gets off the ground and/or stays alive. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com

My name is Josh Rosenthal and I'll be your host Charged with will condensing complex small business finance and accounting ideas down to 60 seconds.  Every day of the week. In the last 14 years I've opened 11 retail locations, 2 warehouses, done a few real estate deals, written two books, purchased two companies, gave one back, planted a few churches, released 9 albums as a s s, started 5 100 mile runs and finished only one.  No matter how well or poorly my projects are doing the hardest and most important thing I do is hustle to keep cash in the bank.  Without it my dream fails.  The DSB is designed to help you either get your dream off the ground or keep it alive. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit joshrosenthal.substack.com