What is Profit Mastery?
TL;DR = financial tools & guides for SMB owners written by SMB owners
Welcome to Profit Mastery!
First, an introduction
We’re a 40-year old company training thousands of business owners each year to read and use their financial statements (check us out at www.profitmastery.net).
This newsletter will share practical guides, financial tools, and concepts. It’s meant to be easy-to-use and easy-to-read since most business owners come from a non-finance background.
PM was founded in 1983 by Steve LeFever, a former banker and entrepreneur. He took some core SMB financial concepts and turned them into a very comprehensive 2-day curriculum. Previously, this curriculum was taught exclusively in-person during a 2-day bootcamp. Today, we teach this program in-person and virtually, along with other workshops.
My partner and I came into the picture around 2020 when we attended a virtual session of Profit Mastery University. The program was fantastic. Even as a CPA and CFA, I came away with several new tools for running our businesses.
A few years later, we (Circle City Capital Group) acquired Profit Mastery and began adding lessons and learnings into the classes and programming.
Next, an intro to the author
My name is Colin and I’m an “entrepreneur” (I use quotes because my entrepreneurial endeavors were all done through acquisitions). Since 2018, my partner and I acquired 15 companies and 1 piece of real estate (plus I’ve personally done another 2 acquisitions dating back to 2016). [you can connect with me here.]
Most refer to this as Entrepreneurship Through Acquisition (ETA).
I’m the finance and accounting side of our partnership. Professionally, I spent time as an accountant, worked at an investment firm analyzing and investing in public companies, and had a brief stint in private equity buying small businesses. My partner brings operational expertise to the table. It makes for an excellent partnership honestly.
We run a holding company (HoldCo) of disparate businesses with very different financial and operational profiles. It’s cliche, but it’s our little Berkshire Hathaway in a sense.
Profit Mastery was a 2023 addition to this HoldCo and I currently act as President & CEO.
The lessons run deep in this combo accounting, investing, SMB, pool of experience and I enjoy writing on topics touching all 4 of those subjects (hence the newsletter).
>> Here’s a podcast I did with Acquiring Minds in 2024
Next, some lessons
Fellow business owners will relate to many of these.
It’s not all glory and success. This path is incredibly challenging, frustrating, and taxing both mentally and physically. But there’s nothing quite like that feeling of rolling up your sleeves and reaping all the reward for your hard work.
If I were talking to myself 10 years ago, here are some quick pieces of advice I’d offer up:
Find a good partner with the same goals, a different worldview, and an opposite skillset to yours (share the risk, reward, workload, and capital required to get started)
Business ownership is incredibly lonely at times and very few people (if any) will truly understand what you’re dealing with — this is where a partner, support groups, mentors, etc. come in
The SBA 7(a) program is an excellent route to acquire an established business when you don’t have lots of equity (cash) lying around
On the other hand, buying a business with 90% leverage + personal guarantees is a seriously risky commitment with little room for error — it can, and will, cause some sleepless nights
Passive investors or silent partners are a great way to reduce risk — if I could do it again, I’d use more of this
No one is there to tell you what to focus on (”shiny object syndrome” is a real risk for every entrepreneur) — be methodical about stepping back to see the big picture and focus on needle movers
There is a time to focus (go deep) and a time to explore/tinker (go wide) — recognizing these “seasons” is not difficult when you’re in it
Build some buffer into your projections — whatever you think EBITDA, SDE, or earnings will be after you close, it’s at best a 90% confidence interval
You need more working capital — after you’ve penciled in the total capital you need to buy a company, add more... managing an undercapitalized business is tough (especially with 90% leverage!)
Last, the newsletter
Why write on Substack?
My reasons are twofold: 1) Substack has a large audience which should extend the reach of our 22,000 email subscribers; and 2) I’m hoping to get more interaction using a social platform (direct email newsletters are great, but only a small subset truly interact with the content).
So if you like the content, have thoughts or comments, or specific topics you’d like to read about, let me know!
Most of the content here will focus on financial management for small businesses (accounting, finance, ops, M&A, etc.).
Hit subscribe and learn a few things about finance + operating small businesses.
Cheers,
Colin