Joe is a Harvard business best-selling Author and Founder of Setpoint Systems and the Business Literacy Institute. He provides venture capital seed money and enjoys mentoring startups.
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- Financial Intelligence– Joe’s book
- Business-Literacy – Joe’s website
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3 Key Points:
- The reason every person starts a business is for the money.
- Your dreams will never be realized if your business is not profitable.
- Always look at your cash flow to evaluate how well you’re doing.
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Time Stamped Show Notes
(click the time stamp to jump directly to that point in the episode.)
- [00:50] – Everything that’s happened in Joe’s career started with SetPoint
- [01:03] – His goal was to make SetPoint an open financial company
- 01:26 – He developed a methodology for teaching finance—this led to him writing a best-selling book, Financial Intelligence
- 02:13 – Joe was on Episode 245 of Entrepreneurs On Fire
- [02:42] – His area of expertise is in understanding how to make money in a business
- [03:38] – Share something we don’t know about your area of expertise that as Entrepreneurs, we probably should: Unlike what management believes, many executives don’t understand finance on a basic level, so Joe and his team developed a questionnaire to help them
- [05:38] – Joe is involved in several businesses, including a small medical group that is trying to build a cash-only doctors’ medical network
- [06:52] – The only reason you start a business is to make money
- [07:38] – “If you can’t make money, your dream will never be realized”
- [08:13] – Founders need to understand that they need someone on their team to help them grow a profit
- [09:30] – Two engineers came to Joe to build a partnership with him because they needed a transparent financial system in place—this is what led Joe to start teaching finance
- [13:53] – Private equity group project
- [14:31] – Angel investors project
- [15:00] – Between the two, there are different points in the deal
- [15:36] – When making a deal, make sure you work with someone who knows your industry
- [16:09] – Any business owner SHOULD focus on EBITDA (earnings before interest, taxes, depreciation and amortization)
- [16:55] – “If your business is $1M EBITDA and your multiple in your industry is about 5, chances are groups will offer you $5M or 5 times your EBITDA, subject to an audit called due diligence”
- [17:14] – The second method is discounted cashflow – the EBITDA forecast for future cashflows will be discounted through NPV (net present value)
- [19:10] – What is the one thing you are most FIRED up about today? “I’m most fired up about all the business opportunities out there”
- [19:43] – “Profit is NOT cash”
- [20:54] – Everybody focuses on profit and EBITDA but really, the focus should be on one’s cash flow
- [21:20] – Cash flow shows on the balance sheet and cannot be cheated
- 22:16 – Check out Joe’s book, Financial Intelligence, and his website, Business-Literacy
- [22:54] – “If you’re profitable, your idea will live”
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