May 19, 2020

The Six Keys to Building Wealth

business tips
Greg Crabtree
money matters
Bizclik Editor
5 min
The Six Keys to Building Wealth


Written by Greg Crabtree

Most entrepreneurs fall for the idea that the only way to build wealth from their business growing is to sell it. Since very few sell for the mega millions they dream of, I think they are missing out on the real secret. A profitable, well-capitalized business can be your ticket to a life full of wealth building. Here are six keys to make your business work for you.

Key #1 – Get profitable

Entrepreneurs often sacrifice profits in the name of growth. Most do this as an excuse because they are not willing to make the hard decisions to get profitable or have no clue as to how to do it. If you make the statement that you are “reinvesting in your business” it should mean you have left all of the after-tax profits in your business to help fund the lag between cash flow and profits, not that you are accepting losses.

There are times when you will have a period of losses before you grow to the level that can be supported by the infrastructure you are building. However, many businesses can grow and still remain profitable as they do so. You should challenge any assumption that you should accept losses until you grow big enough to cover them. If you are convinced there is no other way, then prepare the company with enough cash reserves to get through the loss phase or be prepared to raise capital to fund it.

Key #2 – Don’t cheat yourself with owner wages

If you are playing the typical games with owner compensation by paying yourself a low salary and taking distributions to cover your living expenses, you have just distorted the true profit picture of the business. Stop lying to yourself and take a true market wage for the role any of the owners are truly working for in the business. You may find that you will make your true salary plus have profit on top of that!

Key #3 – Live off your salary and leave the profits in the business

Now that you are taking a real market-based wage for the “job” you have in your business, you need to live off the net wage and leave all of the after-tax profits in the business to let it grow. It may sound enticing to borrow funds for growth or even attract investors, but both of those complicate your life as an owner and add to your risk, because of the expectations banks and investors have for repayment.

A business that has 10% or better profit can provide a return on equity of 50% to 100% per year, so why would you want to starve your business by taking unnecessary distributions out of it until it is mature? I think it would be tough to replicate that rate of return in other investments.

Key #4 – Profit patterns

Once you establish your initial profitability, you want to grow by gravitating your focus toward the patterns of profitability that exist in your business. Whether it is by customer profile, location, line of business, product, or service, analyze what works and move towards the most profitable pattern that can be repeated. You will always have a few patterns that are one of a kind, or even the foolish customer that overpays because they can. But you cannot build your business on a pattern that cannot be replicated. Also, you have to isolate the bad patterns and either fix them or eliminate them.

Key #5 – Get fully capitalized

The simple definition of fully capitalized for most businesses—what I call your “core capital target”—is having two months of operating expenses in cash with nothing drawn on a line of credit. This also means that you have set aside and excluded any taxes due from this calculation. The quarterly drill becomes a series of five steps:

  1. Are you at your core capital target? If not, get back to work and fix profitability. If yes, go to step 2.
  2. Is there any big expenditure you need to keep accumulating capital for (i.e. equipment, building or acquisition of competitor)? If yes, keep accumulating, if not go to step 3.
  3. Take excess funds over your core capital target and get your personal wealth healthy (get out of debt, pay off house, build your emergency fund of 6 months living expenses). Once completed, go to step 4.
  4. Identify a core wealth target external to the business and build financial assets to that target (typically $1 million to $5 million).
  5. Once you are above the core wealth target, consider expanding into other businesses and becoming a “portfolio entrepreneur” instead of a serial entrepreneur. Most small businesses have underutilized executive talent and they can be used over multiple businesses to add value to you and their careers.

Key #6 – Manage your portfolio

Whether you only have one business or many, they need grooming and your attention. If you are drawing a salary, earn it. If you have become an investor with hired management, be Chairman of the Board. When one of your businesses has run its course, selling often maximizes the net outcome. If you have someone that comes along and wants one of your good businesses more than you do, definitely consider selling. But once you have established your financial foundation, consider the options of selling versus having an active business to be involved with. Many entrepreneurs sell their best business creation and never find another business as good. Consider that having a great business to be involved with has value beyond money. Weigh the option to sell carefully!


Follow these steps to build wealth from your businesses and leave the option to sell as a last resort instead of the first idea. You may find you enjoy your business more, and that you are building a stable foundation of wealth that will last for your lifetime as well as your heirs’.

About the Author: Greg Crabtree has worked in the financial industry for more than 30 years. He founded Crabtree, Rowe & Berger, PC, a CPA firm dedicated to helping entrepreneurs build the economic engine of their business. Crabtree leads the business consulting team, helping clients align their financial goals with their profit model and their core business values. He is the author of Simple Numbers, Straight Talk, Big Profits! For more information, please visit:

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Jun 8, 2021

Six issues at the top of tax and finance leaders’ agenda

Kate Birch
4 min
As businesses accelerate their transformation journeys, tax leaders are under increasing pressure to add strategic value. Deloitte reveals six tax trends

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.

According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.

And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.

Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.

Trend 1: Businesses seek more strategic counsel from tax

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.

According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”

Trend 2: Tipping point for resourcing models

Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.

Trend 3: Digital tax administration is moving faster than expected

in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.

"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."

Trend 4: Data simplification and lower-cost resourcing are top priorities

Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.

At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”

Trend 5: Skillsets are shifting

Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.

Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact 

Trend 6: 2020 brought productivity improvements

Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.

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