There is one metric that trumps every other right now.

It’s called being cash neutral.

Here’s what this means and I cannot stress this enough. 
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Cash neutral means that you are not burning any cash reserves.
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Let’s say you take in $15,000 in revenue and you spend 10,000. 

On the surface this looks like a good month with 5,000 in profit. 

But here’s where it goes sideways for gym owners that do not understand this concept.

When you have 5,000 in profit you can expect to pay about 30% of it to taxes. 

So there’s $1500 that needs to be socked away so you don’t get stuck with a tax bill you can’t afford.

This leaves us with $3500 to cover two more things.

1.  Debt
2.  Owner’s draw

Any debt on the company is pulled from profit and lets say in this case you have 2K a month in debt from money you borrowed to open your gym. 

This leaves us with $1500 for owners draw. 

Let’s say you pull 2K this month for some things to around your home. 

Well, this just put out of cash neutral status. 

In this scenario, you’d technically be burning $500/month of cash even with $5,000 in profit. 

This is the reason why it can feel like your turning a profit but not growing the cash in your bank account. 

Here’s the important point:

In normal times this small burn may be ok if you have sound cash reserves. 

During a pandemic where cash is your absolute most precious resource, this must be avoided.

Today I’m bringing in Finance Expert, Mike Waldron, to unpack this concept with the members of the SPF Mastermind.

He’s going to talk about the power of the cash cushion, why you need it for many reasons and a step by step process to achieve this all important cash cushion. 

To get access to this footage and $250,000 worth of money making resources

Apply for a spot in the SPF Mastermind here.

Vince Gabriele