John Quattrocchi was interviewed on Franchise Business Radio about financial jargon, tax advantages, building a proforma and more. Below are some interview excerpts. By Pamela Currie
John Quattrocchi was interviewed on Franchise Business Radio about financial jargon, tax advantages, building a proforma and more. Below are some interview excerpts.
Currie: Often, prospective franchisees will hear: ”You should be able to break even or start cash flowing in five to six months.” What is being communicated here?
Quattrocchi: What they’re trying to say is that your expenses will be exceeded by your revenue after a period of six months. That doesn’t mean you’ve recaptured your entire initial investment, but what they are saying is that after six months, if your total expenses are $8,000 a month and your gross income is $8,500 a month, you are potentially pulling profit out of the business rather than having to put more money into the business to have it sustain itself.
Currie: Explain another common financial acronym, EBITDA.
Quattrocchi: So that’s “Earnings Before Interest, Taxes, Depreciation and Amortization.” Basically, what we’re talking about is hard cash flow out of the business. (Tune in to learn more about this.)
Quattrocchi: You know, I’m reaching the time of year where people are coming to me and they reached that period where their positive in their income. So, they made money in 2022, and now we’re sitting in March of 2023 and income wasn’t tracked for the year. Suddenly, owed is $50,000-$70,000 in taxes because it wasn’t planned for properly. We didn’t manage it. We didn’t know how much was being made on a month to month to pay estimated taxes. I like to say the only thing worse than having to pay a lot in taxes is having it be a surprise to you and then you gotta stroke a check to the IRS for $70,000 before tomorrow. That’s a situation we never want to get in. So that’s why we use another cliché: “What is properly measured can be effectively managed”. Then things don’t go out of control.”
Franchise Business Radio is a platform to bring together franchise professionals to connect, educate and collaborate to serve the franchise community and those considering franchise ownership.
For the complete interview, tune in to FranchiseBusinessRadio.com.
Find Franchise Business Radio on Spotify or your mobile podcast app.
Pamela Currie has 20-plus years in franchising. As a certified franchise consultant, Pamela helps individuals make an educated and informed decision when selecting a franchise. Pamela enjoys being a resource and partner in helping people find a franchise that aligns for them. Interested in franchise ownership? Contact Pamela, Pam@FranchiseIntellect.com for a complimentary consultation.