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Cash Flow Over Profits
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Cash Flow Over Profits
When was the last time you heard a business motto so strong, you had to meet its creator? I get a lot of pitches from business leaders, but the CEO of IdeaPros truly snagged my attention with his trademark (and I mean literally trademarked) mantra fuck average, be legendary.
In the mood to dive deep into a refreshing take on entrepreneurship? Fred Cary is an entrepreneur and business thought leader with over three decades of experience in creating transformative strategies that have generated billions in corporate value.
From the value of failure to managing cash flow to tips on selling tech services, here’s what Cary shared on a recent bonus episode of The Business of Tech.
Fuck Average, Be Legendary (and make sure you fail fast)
We began our conversation in the obvious place: how did Cary’s motto form? In his own words:
“So many of us want to have extraordinary lives. We want to have the best of everything, be able to travel when we want, work as little as we want, have the best house, the best car, the best wife or husband, flawless kids, and a great dog that doesn’t bark at people. But the reality is to have that extraordinary type of life, you have got to do extraordinary things. And most of us go through every single day not doing anything that’s out of the ordinary.”
To escape this quicksand of comfort zones, Cary encourages people to do one extraordinary thing every day. And this doesn’t have to be too high-pressure, like when Cary wanted to become a tech guy (despite having no training in the space), so he made himself read one chapter of a tech book a day.
Cary has founded over ten companies throughout his career, so I was curious if there was one moment in particular when this motto formed. His answer was simple: every time he’s failed. He’s learned over and over again that although pain is part of the business process, you don’t have to settle for failure.
I think a lot about failure myself; I’ve always said that the best thing that can happen to something is success, the second best is failing fast so you can move on, and the worst is failing so slowly, you don’t even realize it’s happening to you.
So, I asked Cary the big question: how can you know when you’re failing?
“Recognizing failure begins with recognizing your own flaws and understanding that just because you believe something, the market may not agree with you,” he said.
He agrees that fast failure is key, and it can only happen when you’re flexible enough to pivot and follow the flow of the market.
Cash flow over profits?
Another one of Cary’s main philosophies is the importance of cash flow over profits. We all know that a cash flow business without profit isn’t the goal, but how can entrepreneurs strike the right balance?
Cary explained that entrepreneurs with small businesses (the $1-3M range) fall into the trap of admiring their contracts and deals and thinking they’re doing amazing on their P&L. But when they look in their actual bank accounts month to month, they have nothing.
“The very first thing I tell any CFO that I bring on board to work for me is don’t let me run out of money. And that’s what you get when you start focusing on your cash flow,” he said.
According to Cary, this problem can be even worse for well-performing businesses. Even if they’re doubling every month, they often get stuck waiting for invoices and using last month’s cash paid for this month’s expenses. Again, in his own words:
“Always be mindful of the cash you have in the bank and the cash that’s coming in, despite what your P&L says.”
Because MSPs lean heavily into MRR, I asked how we should tactically manage monthly cash flow. His advice is simple: get a fractional CFO. It took him a decade to figure this all out, so no matter where you are in your career, Cary sees value in tapping outside help.
Who Cary likes investing in
It’s always interesting to hear what people like Cary look for in budding entrepreneurs. I asked how he spots future success stories, and he threw out a few indicators:
A great idea at the right time. He routinely takes people as early as the idea stage.
Entrepreneurial spirit. Specifically, he looks for people who can embrace failure, pivot, and learn when things aren’t working out right.
Hating where they are. He prefers entrepreneurs who are starting a business because they’re unsatisfied in life over people who see entrepreneurship as a side hustle.
“I look for that pain, that hate, that real desire to change my life. Because if you have somebody who wants to change their life, you’re going to work extra hard and make it happen. If you have somebody who wants to side hustle and see where it goes, they’re not going to put in the sweat equity it needs to take to go ahead and be successful.”
Finally, because he steps in as a co-founder and takes a minority interest, he looks for leaders who align with his organization’s core values.
Pro tip: don’t sell technology
I was also curious if Cary would agree with my premise that every company is a technology company.
Spoiler alert: he doesn’t. In fact, he doesn’t recommend that anyone, even those in tech, view themselves as a technology company.
“You can’t sell your cool products and great expertise,” he said. “You need to be selling pain, and you need to be selling solutions that address the issues that they have.”
He used car dealerships to illustrate this. Cars are technology, but no one goes shopping for a car with a transmission or cylinders in mind. But perhaps he does. Use technology to solve problems.
“Get to the things that they’re concerned about instead of saying, oh, the technology, let’s go sell technology. No – sell pain, sell solutions, sell the things that the CEOs of those companies stay up worrying about at night. Then later on, after you get the ticket, then you can talk about the technology with their own technology specialist.
Looking ahead
Cary’s work spans a lot of different industries, so to wrap things up, I asked what emerging trends will have the biggest impact on the entrepreneurial world over the next couple of years.
The answer shouldn’t surprise you: AI. He emphasized that even though everyone is already obsessed with integrating AI into their business, this is only the beginning.
“But AI five years from now, It could be scary as hell,” he said.
We’ve heard this advice before, but it doesn’t hurt to hear it again. Going back to slow failure:
“Everybody needs to be looking at AI every day and see how it can make their organization better. The failure to use it can make your competitors swallow you up before you even realize it,” he said.
For more entrepreneurial insights from Cary, you can head to www.IdeaPros.com and become a free member for weekly advice. You can also follow him on Instagram and Threads @officialfredcary.
What do you think of Cary’s advice? As always, my inbox is open for questions, stories, or whatever else is on your mind.
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