May 19, 2026

Cash Management

Show Notes
Transcript

Michael Barbarita of Next Step CFO and Powerful Business Strategies will discuss Cash Management – When I was in the ski business which is clearly a seasonal business, I never needed my line of credit. This show identifies what needs to be done to properly manage your cash.

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WEBVTT

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Hi, you live then too, censure.

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Wow, crazy Young.

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This is pipe Man here on the Adventures pipe Man

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W four c Y Radio with our positively pipemin segment

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and specifically our resume expert in business with some powerful

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business strategies. So let's welcome to the show. Michael Barbarita

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from Next Step CFO.

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How are you fantastic? Thank you for having me, Dean.

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So today I want to talk about the lifeblood of

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a business, cash management. And before I go into the detail,

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let me just tell you a little story. So when

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I was in the ski business, and you can imagine

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the seasonality of a ski business, ski business really runs.

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We used to let it run from the end of July.

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We actually had a sale in July to kick off

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the season and it ran essentially to the end of March.

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Now people were still skiing in April. So I don't

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want to and people should just to continue to ski

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in April. I don't want to discourage anybody, but from

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a retailers standpoint, that was generally the season, and we

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closed for the summer. And we closed for the summer

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because if we sold any summer goods we would have

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carryover in it. Yeah, and we were ski specialists. This

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was a ski specialty store. We didn't sell aqualungs in

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the summertime. We didn't sell you know, bikes or any

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of that summer stuff. And the reason is is because

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we were we weren't good at it. The cel crew

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was always lousy, even for the for my competitors who

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did it. And you always have carryover, and that carryover

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is cash that's sitting in inventory. So what we did

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is we closed period. We paid the people. We paid

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our people a legitimate salary, uh, you know for the

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thirty nine weeks of the of the ski season whatever

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it was.

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And and they loved it. By the way, they got

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three months off.

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It's like teachers, right, that's right.

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It was just like it was.

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It was very similar and they loved it. But at

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any rate, it was it was because of cash management,

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because we didn't want to have carry over in areas

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that we weren't even specialists in that we would sell

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very little off.

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Well not only that, but you got bills that you

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still have to pay, like turning the power on and

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everything else where. You're not jerraing revenue.

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That's right. Now, here's the thing. We never ever used

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or touched our line of credit.

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HM. That's agressive, right, And.

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The reason right, I mean a totally seasonal business closed

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three years out of the three months out of the year,

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and we never ever touched our line of credit. And

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the reason is is because of our cash management. And

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what that cash management involved was negotiation with the vendors,

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so we would buy. So what we would do, Dean,

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is we would sell through as much as we could

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from July to through December, okay, and then in January, February, March,

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we would buy closeouts or inline product, but it would

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always be dated in September October, and so we would

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sell all that product and not have to pay any

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bills on it. That would finance our summer, and then

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when we had our big sales in September, we would

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easily be able to pay for the product that we

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already sold.

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And so it worked out. It just worked out famously.

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But it's all about understanding your revenue inflow, with your payouts,

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with your your cash dispurstments.

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That's all it is.

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And I think it's true of any business really in

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any industry, not just a seasonal one, because every business

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has ups and downs, and I can certainly relate because

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I used to be in retail in the pool and

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spa business which was the exact opposite of your season.

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So you know the story used to sell Christmas stuff

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during the winter, but you didn't really make money. The

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business didn't make money. The salespeople didn't make money. So

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you had to learn how to manage your income and

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not you know, and realize to amortize it over the year.

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And so I would sock away money for those winter

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times that were were late.

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Right and yeah and right, and that was smart.

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Uh, but you know, and you had that's another thing

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you had to save, right, So that that that really

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makes a big difference when you're managing your inflow and

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your outflow. A lot of business owners don't understand. And

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by the way, as a retailer at the time, I

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don't know if they even do it now. But we

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used to have layaways where people would put fifty percent

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down and paying thirty days. So we had receivables. Those

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are receivables, yeah, you know, so we had a manager.

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Even though we were a retailer, we had to manage receivables.

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And at the time, this is in the Stone ages

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of course, but at the time, it used to take

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two days for the credit cards to clear. Now it

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usually just takes a day.

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But it used to take two, soime long. Sometimes American

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Express was always longer.

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They were paid right, right, right right, So yeah, so

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that was a problem then too, and we had to

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manage that those receivables. And so we had receivables and

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obviously we had payables, but they were managed because weotiated,

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and we negotiated the terms, and we might have bought

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a little more sometimes, but it wasn't more than what

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we needed. It was because we knew that when we

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bought something in January and February, we'd sell it all

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by September. So you know, we're pretty confident about that.

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But I want to just name another couple of places

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where cash has hiding places. You know, prepaid expenses.

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What does that mean.

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Well, a lot of people pay for trade shows in advance,

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they pay for insurance in advance, so they have to

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pay any kind of finance fees. Those things are prepaid

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and those have to be considered in your cash flow calculations.

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The other hiding place is capital expenditures. You know, when

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you put five thousand down on a thirty thousand dollar

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truck or fib that's a cheap truck, fifty thousand dollar truck,

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sixty thousand dollar truck. You put ten grand down, you

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have to account for that ten grand. That doesn't show

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up on the p and L the balance sheet. Okay,

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there's an asset, so you have to be careful. The

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same thing with prepaid expenses. That's that's not on the

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p and L.

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That's on the balance sheet, so you don't see it there.

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You might make money, but.

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Your cash is flow. It might be because your prepaid

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expenses are higher, your capital expenditures were high, and your

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outlay associated with it. Now and the case in the example,

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I gave you ten thousand down, sixty thousand dollars truck.

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That's a fifty k loan, no problem. You know, the

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fifty k pot is no problem, but the ten k

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is because that was an outline.

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That was an outline.

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The other thing where there's opportunity for cash is in

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customer deposits. Take deposits that only increase your cash flow.

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So these are the so there, these are the cash

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management opportunities that we found so that we didn't have

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to go into our line of credit. We had a

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four hundred thousand dollars line of credit. We didn't go

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into it once and we didn't have to because we

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managed our cash that effectively.

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And you and anyone can do that well.

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Another thing too, is like my dad used to do

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uh in his spa business. He used to do he

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didn't want people to pay in full. He wanted them

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to only pay a deposit because the earth thing is

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is what if somebody changes in their mind by time

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they get a delivery and then you have to give

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them back a refund that you may not have. So

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that this way, he took small deposits, so if that

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ever happened, it was a big deal. But also on

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the other side, he had cash flow coming in because

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as deliveries would go out, you got the cash flow

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coming in that you didn't already spend because you had it,

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paid it for it, right, got it?

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No, I mean it's all about understanding what your flow is. Yeah,

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if you understand how money comes in and goes out,

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it's manageable. And but it might take some negotiation with vendors,

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it might take it, you know, or or with customers,

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depending upon your situation. But but if you understand the flow,

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then you'll you'll should.

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Have no problems.

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I've also found generally that your months that your flow

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of revenue is the lowest, your flow of expenses is

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usually the highest. You know, like there's a lot of

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times in certain industries and clean mind where a bulk

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of your annual bills are in one specific month.

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Right, that's right, that's that's definitely difficult.

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Uh.

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But but you know it in advance. You do know

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it in advance, so it can be manageable because you

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know in advance. A lot of a lot of business

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owners don't really have put it out that foresight that's

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needed in order to manage a situation like that, so

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they get surprised by it absolutely or they make excuses

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that it's going to come, and that's the end of it.

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I got to manage it when it comes.

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You don't have to manage it when it comes if

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you manage it before it comes, exactly.

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You know, we learn them boy scouts, preparation.

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Be prepared, Be prepared.

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So how do people reach out to you for more

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information on this and other powerful business strategies that can

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help them?

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I mentally, well, Dean, I'd like them to go to

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our website NEXTSTEPCFO dot net. I'd like them to go

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in the right hand corner where they can have it

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is an orange button that says fine hidden revenue in

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less than ten minutes and that is take by taking

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an AI business assessment. It takes less than ten minutes

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to do. There's no judgment, there's just good answers. And

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those answers come in the form of three strategies that

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you're not implementing, that are hiding in your business, with

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an explanation of how to implement those strategies. So it's

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a tremendous tool to be able to just get you know,

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start thinking strategically. And this tool drive takes less than

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ten minutes to do, less than ten minutes I've done.

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I've had business owners do them as little as five minutes,

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and most of them the average is about seven minutes.

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So you could do it at any time.

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It's free. You could do it in the middle of

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the night if you want to. But you'll get the

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answers that it'll get your thinking. I'll tell you that

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that I can tell.

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You well amazing. Once again, I'm mental help to our

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businesses out there in the world, and I really look

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forward to next week because that's one of my favorite

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subjects and that's mindset. So we'll see you then, Thanks THEE.

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Thank you for listening to the Adventures of plate Man

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on w for CUI Radio.

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