Sean Meyer

Great advice, and the main thing I hate about the "never work a real job" culture. Does working in a corporate environment absolutely suck? Of course it does, but it gives you experience you'd never have otherwise, making the whole self-employed thing exponentially easier because of it.

The best productivity hack I've ever found has nothing to do with software, systems, or a morning routine. Not because those don't help either, but because none of them matter much if your energy is all over the place. For me, that's been the ketogenic diet - I've been doing it on and off for over 10 years now, and every time I've taken a break, my energy has fallen off a cliff. Most people treat productivity like a time problem. More apps, better calendars, another planner... always trying to squeeze a few more hours out of the day. But most of the time, it's an energy problem. Think about what a typical workday looks like for a lot of people: *Big carb-heavy breakfast, then a crash by 10:30 *Coffee and a snack to push through until lunch *Lunch, then a 2pm fog where the hard work just doesn't get done... That's not a discipline issue, that's blood sugar going up and down all day. And you can't schedule your way around that. When I went keto, the biggest change wasn't anything I expected, it was how steady everything got: *No mid-afternoon crash *No needing to eat every few hours just to stay sharp *The same focus at 3pm that I had at 8am... That's the part that matters. Steady energy means you can do real work whenever it needs to get done, not just in the two good hours you happen to get each day. Stack that over 10 years, and it adds up to a lot. Don't get me wrong, I'm not saying keto is the answer for everybody (everyone's body is different, so talk to your doctor), but I am saying most people would get more out of fixing their energy than finding another productivity tool. You can have the best systems in the world, but if you're running on empty by 2pm - they won't do much. Health will always be the best productivity.

Bold Prediction: I don't think AI is going to boost productivity that much. Sure, it'll help those who are already productive, but it'll also create a "shiny object syndrome" for those who aren't. If anything, it'll simply widen the gap even more.

Be careful with anybody whose entire identity is built around a tool. Not because the tool is bad either, but because once it becomes the identity - every problem starts looking like a reason to use it. AI is the big one right now. Scroll for five minutes and you'll find the "AI Accountant," the "AI CFO," the "AI Lawyer"... everybody's putting two letters in front of their title. Makes sense at the surface, and honestly, I get it - it's the hottest thing in business right now, so leaning into it is smart marketing. But think about what that actually means. If your whole brand is "AI Accountant," every answer has to come back to AI. That's the business model. So when a client shows up with a problem, the question isn't "what's the best way to solve this?" - it's "how do I solve this with AI?" That's a bias, plain and simple. Give a guy a hammer, and everything starts looking like a nail. The thing is, clients don't care about the tool, they care about the outcome: *Paying less in tax *Having clean financials they can actually trust *Getting the loan approved without three rounds of follow-up questions... That's the part that matters. The best approach always starts there, then works backward to whatever gets you there. Sometimes that's AI. Sometimes it's a spreadsheet, a phone call with the IRS, or somebody who's sat in credit committee and knows exactly what an underwriter is going to push back on. Most of the time, it's a combination - AI handles the heavy lifting, and a person who knows what they're doing makes sure the output is actually right. AI can categorize 2,000 transactions in a few minutes, which is great. But it won't ask why your owner draws doubled in Q3, or whether that "loan" from your brother-in-law belongs on the balance sheet - and those are usually the things that end up costing you. Don't get me wrong, I'm not saying AI isn't useful (it is, and it's only getting better), but I am saying it should never be the thing driving the decision. The AI wave is real, but riding it isn't a strategy. Focus on what actually moves your business forward, then use whatever tools get you there - whatever they happen to be.

Most business owners don't have a vision problem, they have a math problem. Not because they're bad with numbers either, but because once they get a good idea - they want to start moving on it right away. So the idea gets a few numbers on the back of a napkin, everything looks good, and they figure the rest out as they go. Does it work sometimes? Sure. But when it doesn't, it usually costs a lot more than the time it would've taken to plan it out upfront. Let's say you're running an $8M business and want to open a second location. The napkin version looks something like this: *New location should do about $2M a year *We run about a 10% net margin, so that's $200K in profit *Costs roughly $300K to open, so we're paid back in 18 months... Simple, and honestly, not crazy. The problem is the napkin assumes the location shows up at full speed on day one. Put real projections behind it, and year one looks a lot different: *Revenue ramps to maybe $1.1M, not $2M (new locations take time) *At a 35% gross margin, that's about $385K in gross profit *Rent, a manager, four staff, and everything else runs about $471K a year - whether sales show up or not... That's an $86K operating loss before you've even looked at cash. Then you've got roughly $121K tied up in receivables (assuming customers pay in 40 days), plus about $56K a year in payments if you financed the $300K build-out. So instead of putting $200K in your pocket, year one pulls about $263K out of the business. That's the part that matters. The idea might still be a great one, by year two or three it could be everything you pictured, but now you know you need to fund the gap before you sign the lease - not after. And this is where projections really earn their keep. Once the model is built, you can test every move before you make it: *What happens if the space is $72K a year instead of $96K? *What if you hire the manager at month one, but staff up in phases? *What if ramp-up takes 18 months instead of 12... Each one shows you exactly what it does to the bottom line, so you're making decisions with a clear picture - instead of finding out six months later. Don't get me wrong, I'm not saying you need a 40-tab spreadsheet before you do anything, but I am saying the vision should come first - and the numbers should be what shapes it. Vision tells you where you want to go, the numbers tell you how to get there without running out of cash along the way. Anyway, something to keep in mind before the next big move. I primarily focus on commercial lending, but if you'd like help building projections like this for your own business, please send me a DM.

I understand the sentiment, and think it could be true, but also wonder how much of this "pain" comes from a self-fulfilling prophecy. Remember reading stories/posts like this when I started in business 11 years ago, naturally, had a rough start because of it. Just thought it's "what had to happen", but I've also met a lot of people who were able to skip over that and have good results since inception. Sure, there was a lot of work involved, but nothing catastrophic - so don't think it necessarily needs to be this way either. If anything, the hard part is breaking free from the mental models society likes to place on us, such as how "90% of businesses fail", but with proper planning - I don't think it needs to be this extreme either.

Most business owners know their profit margin, but very few could tell you how long their cash is gone before it comes back. Not because they don't care either, but because it doesn't show up on any of the reports they look at each month. That number is called your Cash Conversion Cycle, and it's a lot simpler than it sounds. It's the number of days between paying for something and actually collecting cash from the customer who buys it, and it comes down to three pieces: *Days Sales Outstanding (DSO) - how long it takes customers to pay you *Days Inventory Outstanding (DIO) - how long product sits before it sells *Days Payables Outstanding (DPO) - how long you take to pay your vendors... Add the first two, subtract the third, and that's your cycle. So if customers pay you in 52 days, inventory sits for 61, and you pay vendors in 38 - your cash is tied up for 75 days on every sale you make. That's the part that matters. Every dollar of revenue has to be "funded" for 75 days before it turns back into cash. When the business is steady, you barely notice, as last month's collections cover this month's purchases. Growth is where it gets tricky. Let's say you're a $12M company with a 35% gross margin, and you grow 30% next year to $15.6M. Great year, but that extra $3.6M in sales doesn't just show up on its own, it brings: *Roughly $513K more sitting in receivables *Roughly $391K more sitting on the shelves as inventory *Partially offset by about $244K more you owe your vendors... Net, that's about $660K of cash the business has to come up with - before the new revenue fully lands in the bank. Now say you're running a 6% net margin, taking distributions to cover taxes, and replacing equipment along the way. After all of that, maybe $336K of profit actually stays in the business, which covers about half. The other $324K has to come from somewhere. That's how profitable companies run out of cash, and it's why the faster you grow - the more cash the cycle swallows. Every business has a growth rate where retained profits cover the extra working capital exactly. Grow slower than that, and cash builds up. Grow faster, and you need outside money to fill the gap, no matter how profitable you are. Most owners have never seen that number for their own business, yet it's one of the most useful things they could know. The good news is the cycle works both ways. At $15.6M in sales, every day of DSO is worth about $43K in cash. Collect 8 days faster, and you've covered that $324K gap without borrowing a dime. Don't get me wrong, I'm not saying you can tighten up every number overnight (some industries just pay slow), but I am saying you should know your cycle before you sign the big contract or chase the big growth year. It also changes the conversation with your bank. "We need money" is a tough request to approve. "We're growing faster than we can self-fund, here's the gap, and here's how we closed part of it ourselves" - that's a request a lender actually wants to see. Anyway, something to keep in mind, especially if next year is shaping up to be a big one.

There's no magic formula when it comes to valuing your business, no matter how many times somebody tells you there is. Not because the math is wrong either, but because the math only tells part of the story. Most owners start with an EBITDA multiple, which makes sense at the surface. Take your EBITDA, multiply it by whatever businesses in your industry tend to sell for, and you've got a number. It's a good starting point, I'm not knocking it, but that's exactly what it is - a starting point. EBITDA tells a buyer what the business earned, it doesn't always tell them what the business is worth to them. Have a contract nobody else in your market can fulfill? That's a big deal. Own IP that's protected for another 3 years, giving whoever buys it a huge leg up on the competition? Also a big deal. Spent years collecting data on a market everybody else is trying to break into? You get the hint... None of those show up cleanly on an income statement, at least not yet, but to the right buyer - they can be worth more than the earnings themselves. That's the part most owners miss. They assume the value is sitting right there in the numbers, so the buyer will just "see it", but buyers don't go looking for reasons to pay you more. If anything, they're doing the opposite, looking for every reason to justify a lower number. So the real work usually comes down to three things: *Finding the benefits that aren't obvious (most owners are too close to the business to notice them) *Figuring out who those benefits are actually worth the most to *Packaging them in a way that buyer cares about - what it saves them, what it protects, and how fast it gets them somewhere they couldn't get on their own... Don't get me wrong, I'm not saying you can slap a crazy number on a contract and call it a day, but I am saying a lot of owners leave money on the table - simply because nobody ever made the case. That's how everything in the business world works, whether you're selling a product, getting a loan approved - or selling the whole company. The value has to be there, but somebody still has to sell it. Anyway, something to keep in mind, especially if an exit is anywhere on your radar in the next few years - as these things are a lot easier to build up (and document) ahead of time.

And/or thrown in jail. Always annoying when you don't have this for reference.

I actually Lol'd when reading this, maybe because I wrote a post that had the same gist earlier today.

Funny, but this is a legit mindset for many.

I really think we should have "AI Games", where it's a Pros vs. Joes edition. * Electrician who hates advertising, vs copywriter with 20 years of experience * Garbageman vs. CPA *Songwriter vs Experienced Divorce Attorney... Then give them both the same access of AI tools, and see who provides a better outcome. My guess is (obviously) the latter, meaning copywriter, CPA, divorce attorney - but it'd be a great experiment to validate this regardless.

Speaking from experience, he's only (half) kidding.

Nature has a funny way of forcing people to evolve, whether they want to or not. Not in a "survival of the fittest" documentary kind of way either, but in the way it quietly takes whatever you're comfortable with - and makes it worth a lot less. Accounting is one of the best examples I know of. Back in 1999, accountants could charge a lot for bookkeeping, simply because it was time-consuming and required specialized knowledge. If you didn't have that knowledge, it was nearly impossible to figure out, so you paid somebody who did. Then QuickBooks came along. Still somewhat time-consuming, but you didn't necessarily need a Master's in Accounting to figure it out - especially if you ran a simple business. *Prices dropped *"Lower skilled" bookkeepers came in, ones who could do good enough *Real accountants got pushed into something more valuable... Which typically included Tax planning, compiling statements - the type of work software couldn't do on its own. Not fun at first, but that's exactly what nature does, takes away the easy stuff - so you're forced to move up. Now we have AI, and the same thing is happening to everybody involved. Bookkeeping isn't really a valuable service by itself anymore, and honestly, a lot of what got "pushed up" 25 years ago is starting to get pushed again. Don't get me wrong, I'm not saying accountants are going away, but I am saying the bar keeps moving - and if you're advanced enough…there's still plenty of opportunity. That's the part people tend to overlook when they get excited about a new tool. No matter how good the software is, you still need the right person inputting the right information, then reviewing everything to make sure it's actually correct. For me, that's commercial lending. The average business owner wouldn't know where to start with a loan request, so even with AI, they end up creating the wrong output - it just looks a lot more polished. *Projections built on numbers a bank won't accept *Collateral based on what you paid, not what an asset could be resold for *EBITDA that ignores the distributions you're taking to cover personal taxes... All things AI will happily put together for you, because it doesn't know what an underwriter is going to push back on - it only knows what you told it. Garbage in, garbage out, just faster and with better formatting. Anyway, here's the main point I'm trying to get at. Tools keep getting better, which is a good thing, but they don't replace knowing what to ask for. If anything, they make the expert more valuable, as somebody still has to know whether the output is right before it lands on a banker's desk. Nature is going to keep pushing, it always does - the trick is making sure you're working with somebody who's already evolved.

I always love logging on here in April and October, great reminder of how glad I am to have exited the tax game years ago.

Cheerios

It always amazes me how many business owners focus on the wrong thing when making big decisions. Not because they're careless either, if anything it's usually the opposite - they're trying to be smart, but the "smart" thing they're chasing isn't the thing that actually matters. Tax is the one I see the most. The business has a good year, December starts creeping up, and the owner calls their CPA with the same question: "How do I lower my tax bill?" Fair question, and a lot of times, the answer is some version of: "Buy equipment before year-end, and use Section 179 to write the whole thing off this year." From a tax standpoint, it works. Let's say you buy a $100K truck, and your combined tax rate is around 30%. You just knocked roughly $30K off your tax bill, so everybody walks away happy. But here's the part that tends to get skipped - you spent $100K to save $30K. If you actually needed the truck, great, you were going to buy it anyway and the write-off is a nice bonus. If you didn't, you just traded $30K in tax savings for: *Cash that's no longer sitting in the bank (or a down payment if you financed it) *Monthly loan payments for the next 5-7 years *Insurance, maintenance, and upkeep on something that's mostly sitting in the lot... And on top of that, Section 179 doesn't make the tax disappear, it mostly just moves it. You take the entire deduction upfront, so there's nothing left to depreciate in future years, and if you sell the equipment down the road - a good chunk of that deduction gets "recaptured" as ordinary income. So now you're out the cash, stuck with the payments, and a decent portion of the tax you "saved" could be coming back around later anyway (forcing you to continuously plan around this). Don't get me wrong, I'm not saying tax planning doesn't matter - as a former EA, I'd be the last person to say that - but I am saying it should never be the thing driving the decision. Cash flow will always be the most important metric, so focus on that first, as other items may sound great at the surface - yet have adverse effects later on.

Sad how true this is. I've never understood how some business owners find their bookkeeper, and how some bookkeepers think they're even remotely capable of doing the job. Most common sign seems to be negative long-term debt, unsure how they even get Quickbooks to do that, but it goes well beyond this issue. If AI can even put a balance sheet together that almost balances, I'm excited for the future.

One issue I've always found with the CPA designation, is how it's extremely vague and can be perceived a gazillion different ways. "Oh, you're a CPA? Great, I have a question about Estate Tax"... When in all reality, there's a good chance that person hates tax, and just likes making sure financials are clean. Not saying that's the case with all of them, but I am saying there's a lot of specializations that fall under this umbrella, and the designation itself certainly doesn't make them an expert in everything involved. With that said, I wholeheartedly agree with the post below. A semi-common issue I've seen over the years, is tax planning at year-end. Business owners will ask how to mitigate their taxes, so CPAs will tell them, maybe doing something along the lines of buying equipment at year-end and using Section 179 depreciation. From a tax perspective, this works great, but then months later the owner realizes he has a lot of cash outflow for something he didn't really need - creating an overall "net negative" in the business.