You’re the Bank

What if the very thing that sets you apart is the key to everything you're striving for? Welcome to Uncommon Edge, the podcast for those who are done with the ordinary and ready to own what makes them different. I'm D.J. Newman. And if you're here, it's because you. Know you're built for more. You're uncommon by design, ready to break boundaries and build a life of purpose, success and impact. Each week, we'll dive into hard hitting strategies, raw stories from the trenches, and the tools that will sharpen your edge. From game changing lessons to deep diving interviews, this is your space to rise up, build, and make your mark. Whether you're growing a business, dreaming of starting one, or looking to level up in life, you'll leave each episode with insights and inspiration to make it happen. You weren't designed to blend in. You were designed to stand out. So if you're ready to defy the norm and bring out your best, let's dive in. Get to work. Your journey to owning your Uncommon edge starts now. Picture this. Your busiest stretch in years. Crews are booked out, phones are ringing, and Friday morning you're moving money around just to make payroll. If you pay anybody on commission, that might not be a picture. That might actually be your Friday. So where'd the money go? I'll show you and I'll show you the one conversation that fixes it all. Welcome to the uncommon Edge. I'm D.J. Newman. Let me walk you through how a good month leaves you absolutely broke. See, this is a conversation that I've had with many clients over the years as well as is a position that I've even been in at some points in my career as I was going through the school of hard knocks, learning, learning this stuff because I didn't have the people in place to teach me this stuff at that time. Maybe you had a big job, a long one that is running for weeks on end or whatever it might be. Nothing that has a quick pay behind it. Your cruiser out and you're paying for them. Materials, fuel, weeks of nothing coming back in. When you have all this stuff rocking on this job, does this sound familiar? You know, the work's done. The money is just not here yet. So you look at two scoreboards when this is happening and they both tell you two totally different stories. You first look at your P and L and you're looking at the bottom line. It says, hey, I'm winning. I have profit. It makes sense. Like, I've got all my numbers in line and I got everything rocking. I'M exactly where I want to be, profit wise. But then you open up your bank account and it says, nowhere near close to the same story. How can both of them be right? It's because profit counts the invoice, right? Whereas the bank accounts the deposit. See, you may have heard me say before, and you may have heard it in other places that revenue is vanity, profit is sanity. But at the end of the day, cash is king and cash flow is the whole thing. See, at the end of the day, profit is just a promise, whereas cash is a fact. And here's what's really happening during these weeks that you're putting this stuff out there. You know, your crews are having you paid on Friday. You know, the customer might pay you six weeks out. Somebody has to fund that gap. And you are the lucky winner of that prize. It was you the whole time that has to pay that. And some of you might be thinking, yeah, Dee, that's part of being a business owner. And you know, you're right, and there are times where that's the case. But if there was a way to make it so you didn't have to take on that risk or take on that responsibility to fund that stuff up front, wouldn't you like to know how you might be able to do that? See, you're the bank. Your money is paying for the job. And here's the part nobody warns you about. Every new job puts more of your journey on the street, right? When I say your journey, I mean like your money, because your money is what is going to fund the whole journey. You know, busier can equal deeper debts. Growth costs cash before it pays cash back. And this might sound like common sense, but getting busier can potentially make it worse, not better. Because if you're not priced properly, and I think I've used this example on the show before, but I'm gonna say it again, because it makes so much sense, is imagine you own a fruit stand, right? And you have these watermelons, and these watermelons are a cost to you of, let's say, a dollar each. And you, not paying attention to what you bought them for, are selling them for 90 or 80 cents apiece. And you're thinking yourself, man, I am selling out like crazy. I need to get more leads coming in here so I can, you know, keep this. These watermelons rolling. But all that's really going to do is get you out of business faster because it wasn't priced profit profitably enough. Or the other thing could be true where you're priced Profitably, maybe you're making 10, 20 cents a watermelon or whatever it might be, but you're forking out all the money up front and you're not getting that money back. And you still have to make the payroll because you're basically being the bank. So again, getting busier can make this worse, not better. Now let me show you where a lot of owners make it worse without even knowing it. And this boils down to two different leaks that could be happening in your business that you might not even be aware of. The first one is your pay plan. Maybe you built your pay plan years ago to motivate people, maybe never once checked it against the bank account. This could be how you're paying your salespeople. This could be how you're paying your production staff. And it has to be a win win situation. When you make decisions in your business, it is super important to make decisions based on your business first. Then your employees, team members, and then your clients. And before you say, hey, wait, wait, wait, wait, what do you mean? Because I've always been told, hey, customers first, customer's always right. Think about it this way. If you are not making sure that you are getting the proper cash flow and profit into your business, the oxygen, the lifeblood of everything that rolls into your business, it will slowly die without that oxygen. And if the business dies, there's nothing left for the employees. There's no employees or team members to employ because the business isn't there. And if there's no employees, there's no customers that can be taken care of, right? But if you put the proper oxygen and lifeblood into your company, it's just like on the airplane, you gotta put the oxygen mask on first. If you put that oxygen into your company first and you make business based decisions first and foremost, that takes care of that business, then takes care of the employees and the team members. And you gotta set it up so it does take care of them. So when the company wins, the employees, when the team members win, it has to be that way. Because when you have happy employees and motivated staff, they naturally will take care of your clients. So in, in essence, you are putting your clients first by, by doing this. So you got to make sure that your, your, your pay plan is set up properly to be able to fund that, that oxygen, you know. And so I want you to ask, I want to ask you something like, are you paying out on money that you haven't collected? And something else happens. The second you pay early, they already got theirs. There's no reason to chase the customer for collections and the collections lands back on you. And you might be thinking, well, yeah, that's my responsibility as a business owner. That's accounts receivables department or, or whatever. But what if you figured out a way to make the commission structure where, you know, you pay the commissions out on cash collected, not on the job sold. Because if you pay it out on the job sold, well, you're just playing with Monopoly money. Heaven forbid something happens, you don't ever get paid on that job. Okay, great. So they brought a job in, you put out all the money to get the job rocking. And, and it doesn't, you know, the systems aren't in place to get you paid or something goes wrong, you don't get paid. Well, what happens then? So that's not a win for you. It's definitely not a win for them. So you got to figure out how you can make that a win win and pay out commissions on cash collected. And nobody's chasing that money but you. When it's not on cash collected, I guarantee you the sales staff will help out on getting that cash collected because they've already built a relationship with the homeowner or the business owner, whoever the customer is, where they can go and say, hey, you know, we gotta get paid here, you know, whatever that conversation is. And there's a second leak that happens as well during this whole thing, but it's worth a minute to talk about is paying commissions off the top line instead of off the gross profit or production pay off of the total revenue instead of the gross profit. Because, see, thin jobs subbed out work, you know, whatever it might be, they do great. And you make almost nothing because it's not structured properly. So, you know, when the estimators out estimating it incentivizes them when you pay out on gross profit for them to make sure that they put in enough to be profitable, because that's what they're. They get paid on. So it's. These are two different things that you can look at. You know, paying on revenue rewards, the jobs that don't make you any money. There are salespeople there, I've seen it firsthand, that will literally give stuff away. Anybody can give stuff away, but it takes true skill and craftsmanship to be able to sell the thing. But if you're doing things in a pure motive to make, you know, the right decisions and make sure that the customer is taken care of, then, you know, at the end of the day, they are set up in a way that they pay out really, really well because the clients are paying properly. So here's what I believe, and I'm going to say it as strong as I can. Nobody designs it this way. It just happens. Anyway, every pay plan does something to your Fridays. And chances are, if you aren't taking good, long, strong look at how you are paying your sales staff and how you're paying your production staff and incentivizing them. So it's a win win. If you don't do that properly, you can kill a very profitable business because you're going to be going through cash flow constraints. If you're operating on QuickBooks or another accounting software, you can go look at your statement of cash flows. It's going to paint a picture for you. And I want you to understand that your pay plan is a cash flow plan, whether you built it that way or not. So here's the hard part. It's not really hard, but some people don't like uncomfortable conversations. And sometimes we got to do hard things. And the fix takes very, very short to explain, maybe 10 seconds to explain. Commission gets paid when the customer pays. That's it. No new marketing, no new hires. That's the whole fix. You have that conversation with your salespeople that, hey, we're paying commissions now on cash collected, and here's why. And you explain the benefits to them to do so on the job security and all that other stuff. And you can set it up however you want to do, whether it's paid out at the time of payroll on cash collected, or you pay it out at the end of the month or whatever your system is, but it doesn't get paid until cash is collected. And they need to understand why that's a benefit. And I get that there are some scenarios where this just isn't possible. And they do make specialized, you know, financing for that. And when you do that, and you make that decision to do that, if that's the choice that you're making, do it intentionally, not because, hey, this is just what I got to do. Like, there are a lot of creative ways that you can do this. And what I want to ask is, so why doesn't everybody do it? You have to sit across from your salespeople, maybe your best one, they'll call it a pay cut. Top guy might walk. So you keep writing checks and, you know, keep borrowing. To these people, it's not a math problem. It's a conversation nobody wants to have. And having these hard conversations in a correct fashion will help both you and them. And really that's about who you have to be. You don't want to be the bad guy. Meanwhile, you're the bad guy to your own bank account, to your family, to their families. You need to sit down and own the outcome of the cash flow of your business. This one's on you. And here's how I'd say it to them. It's not a pay cut. It's the same commission. It lands when the money lands. Now I've got a reason to have you help collect and an honest note. Switching revenue to profit is a real pay change because it's a different conversation. It's actually ability for them to make more because the more profitable a job is, the more that they can make. So you can actually go out and target more profitable jobs. There's more strategies, like playing chess when everybody else is playing checkers. You got to paint the picture as to why this works for them. And here's where it can get really fun for you and them. When you do have that cash come in, make it a celebration, especially if it's a larger commission amount. We would pay out our commissions, you know, on a monthly basis or a quarterly basis, depending on what commission levels and stuff like that the team was on. And we would get like those big Publisher Clearinghouse checks and make it a celebration, make it a little friendly competition and hit it there. You'd be shocked when they knew checks were about to be coming out. How quickly people, people were like, hey, I got to make sure the money's coming in and they're helping. It's a team sport. It's a high performance team sport. When you're doing it this way and setting it up this way, and it's. And when you got the right people on the team, it's absolutely fire when you see all this stuff start to come together because they start to understand what it is to make sure that the business is healthy and profitable. And you understand that when a business is healthy and profitable, you feed it back into your team. And there's a lot of different stuff. If you want help setting up performance pay or a commission structure, those things that we can help you on. And then there's one other part that I want to land with on you guys here, and it's one that I didn't really know about until I had an opportunity to work with. We had our CFO. She was the ex director for finance at Dr. Pepper, the chief financial officer at Dr. Pepper. And she was talking about like, there's a number gap between the time you get paid versus the time you pay out. You know, these are things that we would start to monitor by the days, right? And I really want you to think about this. If you are paying out, acting as the bank for payroll or whatever, you're also doing it for the vendors and your subs. For example, if you have bills that are coming in and you have to pay those bills at the end of the month, sometimes you're doing checkbook banking, right? Bills are in, you pay your bills, money comes in when it comes in, and as long as there's so much in the bank account, hey, you're good. That's amateur level stuff. If you turn around and start looking at ways of like, hey, look, on average I'm paying my bills in 30 days, right? Or whatever, but I'm getting paid in 25. That five day gap is the thing that is going to be making or breaking your cash flow because you're getting paid faster than you are paying out and that is the whole gap. Whereas if it's the other way around where you're paying in 30, you're not getting paid for 45. That 15 day gap is a cash flow constraint and it's quietly killing your business. So start paying attention to the days that are in that gap. Process of paying out versus money coming in. What does that gap look like? And start tracking it. So here's one thing this week that I want you to do. Pull your receivables. The oldest invoice, pick up the phone, not email and call. That's the assignment either you or someone on your team make sure it's done in a sequence that is on a regular. So that way you can collect that money coming in. It is so easy to be out there working in the field, doing whatever that you gotta do. And you're just chasing the next dollar, forgetting about all the dollars that are falling out the leaky bucket that you have. That is your business because of the cash flow constraints. And the one question that I want you to sit with when you pay commission, has the customer paid yet? And if the answer is no, you're the bank. You can either choose to continue to be the bank or you can choose to stand up and make a stand right now. And it doesn't even have to be anything aggressive. It's just something that will work with your crew to make it a real positive. But these are things that you need to look at when you're building these things out. So if you want help figuring out how long the bank in your business is rolling like this. That's what we do with owners all the time. You just check us out@ UncommonVentures.net or you can take a look at the UncommonEdgePodcast.com that all has the information there. And you know, I want you guys to really be as profitable as possible and in your business. But by profitable I mean cash in hand, profitable, cash flowing business. That's what this is all about and I want you to be aware of it. So if this made you think a little bit today, give us a like and follow wherever you may be watching. And until next time, stand out and stay sharp. You've been listening to the Uncommon Edge with DJ Newman where average goes to die and your next level begins. If you're ready to go deeper with real strategies to build a stronger business and a stronger life, head over to Uncommon Ventures.net new episodes every week. Now get out there and do something Uncommon.