How To Maximize Profits And Cash Flow With Alan Miltz

0:00The numbers belong to everyone. And then we thought, how can we create a concept in the most simple way that would drive profit, cash, and valuation uplift? This is a guy who has built multiple companies, invested in multiple companies, written massive bestselling books. My role is critical in improving profit, cash, and value. I can see what I need to do. You got to do two times profit, three times cash, and ten times value. So what I say to business, your story is like reading a murder mystery. You read chapter one of a murder mystery, you never know who commits the crime. Al Miltz is our guest here on the Big Success Podcast.

0:39What is your definition of success or what does success mean to you? So for me, it's called life balance, family, health, and definitely how I'm impacting the world. What's your formula for how success happens? Every single day, you say to yourself, what is the number one thing I need to do for today? And you focus on the number one thing and you repeat, repeat, repeat, but you have disciplines. There's a saying you have that is revenue is vanity, profit is sanity, and cash is king or queen. Explain that one to us a little more. Every business I go into very eloquently describes their revenue, their margin, their profit.

1:20And I then ask the next question, You've done well, your revenue, your margins, your profits up, tell me your cash flow. And around the room, I get multiple answers, which are always wrong. One of the biggest issues for me in business is I hate surprises. And cash flow is an absolute blind spot in every business. The accounting profession, which I'm part of, is amazing. The more complex we make reporting, the more sophisticated business thinks we are. My philosophy is the opposite. Imagine if everyone understood your story and we taught them the techniques how to make the story better. And the story, the result of your story is your cash, not your profit.

2:03Explain to everyone what are the seven levers and how can they use them to get more bottom line profit and cash? So the technique which we came up with at Cashflow Story, there's only seven levers that can improve your profit, your cash, and your valuation, financial levers. They're for-profit levers, so price, volume, margins, and overheads. And in working capital, your collections, your inventory, or work in progress in a service company, and your payables. So in every transaction, every person in your company should be thinking how many 1 % or one day changes do I need to make? It's the repetition of these changes over and over that will deliver the company you've dreamt of.

2:55So dive into the for-profit drivers then. Take us through each of those and give us what are one or two things we can do in each of those areas to be more successful? 50 % plus of companies I see. You'd compare the relationship of price to volume. What does a 1 % price increase do? versus a 1 % volume increase due to profit and cash. And in many companies, price might have a 10 to 20 times more impact than volume. Your salespeople are then going out and saying, let's give a discount to sell more. Everybody needs to understand. So if you think about the seven levers, price and volume are the KPIs of the sales and marketing people.

3:42Cost of goods are the KPI of operational people. And overheads is everyone. How can everyone not know how they can impact your performance? So the power of one is such a simple concept. And that's why in the global bestselling book, Scaling Up, which I'm a co-author, the power of one became the heart of the cash section, because these are the levers that every person can understand. Teach people that 1 % power of one rule. I think that's an important thing to focus in on. Yes, in every single business, the first thing I do is I run what I call a masterclass on finance using the concept of simplicity.

4:23I then say the DNA of your company is the power of one. So imagine you've trained the people and then you put the seven levers up on a whiteboard and you have a meeting with sales, marketing, operations, finance, and lever by lever you workshop. Where can we put prices up? And then you rank from most to least sensitive. And you go through lever by lever, and then you choose the top six or seven ideas. And you repeat this over and over again on a daily, monthly, quarterly basis. You will not believe the turnaround in your business. You go through in detail how 1 % can make such a massive difference.

5:04What's your thinking there? How did we come to that thinking? So I'm a co-founder of a company called Cashflow Story. So Cashflow Story is aimed at the storytelling of the business. What do the numbers mean and how do you improve it? It's all about improvement. And our philosophy is about simplicity. The numbers belong to everyone. And then we thought, how can we create a concept in the most simple way that would drive profit, cash and valuation uplift? And after many years, I can promise you tens of thousands of hours, we created the power of one concept. I can teach the most non-financially literate person to understand the power of one and to say, I get it.

5:53My role is critical in improving profit, cash and value. I can see what I need to do. Why don't business owners focus on the value of their company? Why are they so focused on revenue and profits? Because revenue is vanity, profit is sanity, cash is king. That's the fundamental. As CEOs, we're typically non-financial. Your management team is typically non-financial. Everyone understands the concepts of your profit, revenue, margins, profit, and interpret it the same way. So because of the way we've been educated, we focus on simplicity being profit. And Brad, there are four chapters to a financial story.

6:40Chapter one is profit. We all get it. Equally important is chapter two, your working capital, your collections, your inventory, or work in progress and how you pay your suppliers. The rest of the balance sheet are called chapter three. and this is what your management team cannot control. And I call that your other capital. The result is cash. So what I say to business is your company, your story is like reading a murder mystery. You read chapter one of a murder mystery, you never know who commits the crime. You guys are reading chapter one profit of your story, you never know what happened to your cash.

7:19And you wanna understand your business become a four chapter company. You fix the four chapters by the power of one. And that's the Big Success Podcast for today. Hopefully you took a lot of notes, learned a whole bunch, and if you need to go re-listen to it, we dropped a lot of information right there today. Big success is what it's all about. And by the way, if you haven't subscribed, hit that subscribe button so you're here with us every single week on the Big Success Podcast. I'm Brad Sugars. That's BS. Big success is what we're shooting for. Check the show notes for all the links. Make sure you follow through.

7:51Keep learning. Keep coming back. Oh, and by the way, Share this with any of your friends who you know are up for success. I'll see you next week on the Big Success Podcast.