Simple Numbers, Straight Talk, Big Profits!

What if running your business didn’t require mountains of spreadsheets and anxiety-filled budget meetings—but instead could be a straightforward system built on four simple numbers? In Simple Numbers, Straight Talk, Big Profits!, CPA and entrepreneur Greg Crabtree challenges the traditional mindset that business success requires complex financial models. He argues that true profitability stems not from trick accounting or growth for its own sake, but from understanding a few clear, measurable principles that any business owner can master—no MBA required.

Crabtree contends that entrepreneurs consistently sabotage their companies with emotional decision-making and confusing metrics. They rely on revenue bragging rights instead of measuring labor productivity, or they hide poor results behind low owner salaries and euphemisms like “reinvesting in growth.” His core message: keep your numbers simple, honest, and focused on true pretax profit. When you pay yourself a market-based wage, protect cash flow, and maintain proper boundaries between salary, taxes, and profit distributions, you can finally see the real health of your business.

From Cash Cows to Sick Herds: Why Simplicity Matters

The book is built on the metaphor of a cow. A healthy business is a healthy cow—it produces steady milk (profits) over time. But when you treat your business like a barbecue—consuming all its resources for short-term satisfaction—you kill the cow. Simplicity allows you to track whether the cow is being fed (labor efficiency), milked properly (profit margins), and protected from waste (taxes and debt). Complex accounting hides these truths; simple, clear numbers expose them.

Crabtree repeatedly illustrates his points with real-world client stories from companies struggling between startup and $5 million in revenue—the most perilous stage he calls “the black hole.” Many founders assume growth will cure low profits; instead, growth amplifies inefficiency. Crabtree’s approach reorients entrepreneurs to master “business physics”: the immutable forces of cash flow, labor productivity, debt repayment, and taxes. Like gravity, these forces apply whether you understand them or not—but understanding them transforms chaos into control.

The Four Keys: Simplicity that Scales

The book’s foundation rests on four interconnected keys that unlock profitability: (1) owner compensation, (2) establishing real profit targets, (3) managing labor productivity, and (4) prioritizing cash flow. When these principles align, even small enterprises can grow toward sustained wealth. You’ll learn to stop confusing salary and distributions, aim for the true breakeven point—10% pretax profit—and manage labor dollars like an NFL coach under a salary cap.

Crabtree compares winning businesses to championship sports teams that allocate talent to maximize performance within strict limits. Like the New England Patriots under Bill Belichick, you must extract the highest productivity per dollar spent. Overhiring, labor creep, and emotional pay raises break the salary cap and send profits plummeting. Instead, disciplined measurement of gross profit per labor dollar turns employees from cost centers into growth engines.

Why Most Entrepreneurs Fail at Financial Clarity

Most entrepreneurs, Crabtree observes, misunderstand their own financials because they focus on vanity metrics or outdated accounting conventions. EBITDA, for example, looks sophisticated but ignores real costs like interest and depreciation—two factors that determine the survival of smaller firms. Traditional budgeting also lures owners into spending money they don’t have. Instead, Crabtree introduces forecasting as a dynamic process focused on what’s actually happening and what’s coming next. With regular rolling forecasts, small businesses can anticipate trends earlier than Wall Street analysts.

Throughout the book, Crabtree’s financial advice is grounded in human behavior. He knows entrepreneurs avoid tough choices when emotions interfere—whether that’s keeping an unproductive employee out of loyalty or dodging tax bills in fear. Simple numbers, he insists, strip away the emotional fog. When your data is straightforward, decisions become clear: cut waste, manage labor, build cash, and grow only from profits—not debt.

Why Simplicity Unlocks Prosperity

The core argument of the book is both philosophical and practical: simplicity isn’t just easier—it’s the only way to make enduring profits. You don’t have to be a financial expert to run a successful business; you just have to know what numbers actually matter. Crabtree’s approach democratizes good finance, making it accessible to anyone willing to look honestly at their data. The result is freedom—from debt, confusion, and fear of taxes—and a clear roadmap to build wealth over time rather than chasing temporary revenue spikes.

In Crabtree’s world, profits aren’t luck—they’re physics. Once you understand the variables, you can design a business that obeys natural laws: if your cow is fed (productive labor), clean (managed cash flow), and protected from predators (taxes and debt), it will thrive and multiply.

By the end, Crabtree offers entrepreneurs a liberating message: create a business that pays you properly, funds its own growth, and competes through efficiency—not desperation. Simple numbers, straight talk, and disciplined profitability don’t just make you rich; they make your work sustainable and meaningful. This is the clarity that every entrepreneur chasing stability—and sleep—has been looking for.

Crabtree begins where most entrepreneurs stumble—the owner’s salary. According to him, you must pay yourself what your job is actually worth in the market, not what you wish it were. Otherwise, your financial statements lie to you. You’re either overpaying yourself and bleeding cash, or underpaying and exaggerating profits. The fix is deceptively simple: identify your market-based wage and treat distributions separately as returns on ownership.

Salary vs. Distributions

Owners often confuse their role as employee with their role as shareholder. A salary pays for your labor; distributions reward your investment. Crabtree recounts advising a couple who thought they were making a 20% profit until he recalculated their salaries at market rate—suddenly, they were earning just 5%. Their financial triumph vanished, revealing the truth that distorted pay inflates results and clouds judgment.

Sweat Equity and Fairness

If your business can’t afford your market wage, you’re creating sweat equity—the capital value of your unpaid effort. Keep an explicit record of it instead of pretending the business is already profitable. Crabtree uses a vivid farm analogy: every entrepreneur owns a cow. You can either milk it daily through disciplined pay and profit, or slaughter it for a one-time feast. Paying yourself too little and taking distributions is the equivalent of eating your cow before it matures.

Leadership and Money Partners

Underpaying yourself also complicates relationships with investors. In businesses with “money partners” and “effort partners,” the investor should recoup funds first, but the active owner still needs fair compensation. Crabtree insists that fairness doesn’t mean equality—it means clarity. Friends splitting equity evenly without defining pay and leadership roles doom themselves to conflict. A true CEO must lead the wagon train and carry a defined market salary. Anything else invites dysfunction.

By separating wages from ownership returns, you stop lying to yourself about success. The result is transparency: you’ll see your business’s real profitability, its sustainability, and whether it’s truly ready for growth. This discipline is the first step toward financial maturity—and peace of mind.

Most entrepreneurs celebrate breaking even; Crabtree says that’s when you’re dying. A company below 10% pretax profit, he argues, is on life support. Profit isn’t an optional outcome—it’s oxygen. It sustains your business through downturns and fuels growth. Using simple math and relatable examples, he explains why managing for a minimum pretax profit of 10–15% is now the real breakeven point.

Gross Profit, Not Revenue

Forget the vanity of revenue. A million-dollar business with high materials and subcontractor costs may have the same economic engine as a $400k service firm. Crabtree strips labor costs out of the cost of goods sold to reveal a clearer gross profit—a number you can actually manage. What matters is how much you produce after those direct costs, not how many zeros you brag about.

The Black Hole Between $1M and $5M

Crabtree vividly describes the growth stage between $1M and $5M in revenue as “the Black Hole.” During this period, businesses must hire expensive managerial and functional talent before they can afford them. Owners assume scaling will solve low margins; instead, new hires drain revenue. Without strong profitability before growth, the Black Hole devours businesses. Only those with careful hiring and capital reserves survive the trek—like wagon trains that pack enough provisions for badlands ahead.

10% Pretax: Life Beyond Breakeven

Through examples and graphs, Crabtree shows how cash flow lags behind profit at every level—5%, 10%, and 15%. At 5%, you drown for five years before recovery. At 10%, you dig out in 33 months. At 15%, you become cash positive in under two years. This “business physics” demonstrates why aiming for 10% profit is survival, not ambition. Every hire, expense, and pricing decision should align with that gravitational law.

Profit isn’t about numbers—it’s about discipline. Entrepreneurs who grasp this truth build lasting wealth instead of chasing illusory revenue highs. Crabtree’s mantra echoes through the book: profitability beats growth, every time.

Labor, Crabtree insists, is your most powerful and dangerous cost. Every dollar of labor must produce measurable gross profit. When it doesn’t, your company slides toward the black hole. To control this, he borrows the concept of a “salary cap” from the NFL, which forces teams to get maximum performance per dollar spent. Winning businesses, like the New England Patriots, excel because they get more productivity for the same pay.

Calculating the Cap

In Crabtree’s formula, a million-dollar business should allocate only $500,000 to total wages after subtracting fixed nonlabor costs. If you exceed that cap, your profits collapse. You can either (1) cut salaries, (2) hold pay steady until revenue grows, or (3) increase gross profit before adding staff. These decisions aren’t ethical dilemmas—they’re physics. When he coached a client to cut an unproductive $75,000 employee, profits instantly returned to 10%.

Productivity Equals Survival

Even owners themselves aren’t exempt. Flying in twice a month while still taking a full salary means you’re lying to yourself. Productivity must be measured honestly across all roles. Crabtree’s metric—gross profit per labor dollar—turns this into a hard target. For his own firm, he expects $1.80 of gross profit per $1.00 in labor. It’s not about overworking people; it’s about balancing output and compensation.

Labor efficiency, in other words, is the heartbeat of profitability. When you measure it monthly and track trends, you’ll see where your business leaks cash—and how to stop it. Managing the salary cap isn’t about cutting people; it’s about using them wisely to win your own championship season of profitability.

Most owners look at a P&L and wonder, “Where did the money go?” Crabtree answers with his theory of business physics—the four forces of cash flow: taxes, debt repayment, core capital, and profit distributions. These forces determine why reported profits rarely equal cash in the bank. When understood, they turn chaos into predictability.

The Four Forces Explained

1. Taxes come first. They represent the price of making real money, not punishment. Ignoring them leads to IRS trouble and bad decisions like spending to avoid taxes. 2. Debt follows. Lines of credit are financial drugs—they delay hard choices. True lines go to zero annually; evergreen loans signal addiction. 3. Core capital equals two months of operating expenses in cash, with nothing drawn on credit. This buffer protects against downturns and fuels opportunity. 4. Distributions come last—only after taxes, debt, and capital are secure.

Cash Cow Discipline

Crabtree warns against “cash cow disease”—spending business profits on personal luxuries and starving the company. You must feed your cow with retained earnings before you milk it for distributions. His clients who built solid capital found themselves thriving in recessions, able to buy assets cheaply while competitors died. Cash attracts opportunity; debt repels it.

Understanding these forces doesn’t just prevent mistakes—it builds freedom. When taxes are planned, debt dissolved, and capital strong, distributions become real wealth instead of emotional withdrawals. In short, obey the physics, and your business will obey you.

Taxes aren’t villains—they’re reality. Crabtree devotes an entire chapter to demolishing bad tax habits and explaining simple, lawful strategies to stay compliant while building wealth. His core lesson: quit cheating, plan quarterly, and never spend a dollar just to save forty cents on taxes.

Cheaters Never Prosper

The IRS’s “Dirty Dozen” list includes paying yourself too little as an S corporation, hiding income offshore, or running personal expenses through the business. These don’t just risk audits—they undermine honest financial data. Crabtree’s mantra is harsh but true: if you’re not paying taxes, you’re either losing money or cheating.

Timing and Safe Harbor

The best tax strategy is managing timing. Use the safe harbor rule—pay at least as much as last year’s taxes (often 110%) to avoid penalties—or the pay-as-you-go method, making quarterly payments based on actual profits. Keep a separate tax account so you never mix IRS money with operating cash.

From Nightmare to Discipline

Crabtree laments clients who spend all profits on equipment to dodge taxes, only to find themselves debt-ridden and owing more next year. His advice is simple: pay yourself a market-based wage, withhold taxes properly, and reserve quarterly amounts for business taxes. Manage taxes like any other cost—not like a secret enemy.

By embracing taxes as a measure of success, not punishment, you align your financial health with reality. The size of your IRS check becomes the simplest indicator of success—because it means you actually made money.

Capital keeps your business alive. Crabtree classifies capital into three distinct sources—your own money, other people’s money, and sweat equity—and insists you understand their price before choosing.

Your Own Money

Using your own money is painful but healthy. Entrepreneurs treat self-funded cash with respect, spending frugally because they earned it. A client who sold land to raise $40,000 started debt-free and never borrowed again. Crabtree calculates that 10–15% profitability yields a 40–70% annual return on equity—a rate unmatched by most investments. Yet risking your own funds requires discipline and readiness for slim early margins.

Other People’s Money

Friends, family, fools, angel investors, and venture capitalists each bring risk. OPM often leads to financial laziness because it doesn’t hurt to lose. Crabtree’s rule: never take investor money if you aren’t willing to meet their expectations. Draft contracts with professionals, not cousins with law degrees. Clear terms prevent resentment and lawsuits.

Sweat Equity

Crabtree calls sweat equity “beautifully American.” It’s effort converted into capital when money is scarce. Entrepreneurs can live lean while building equity through unpaid work—a year with no salary creates tangible capital on the books. When employees buy in, he advocates fairness: offer shares at discounts only if they behave like rational investors focused on return, not status.

By weighing each type of capital honestly, you avoid debt traps and emotional partnerships. Sweat equity builds focus, OPM demands accountability, and your own money ensures respect. Choose wisely, and your capital will serve—not control—you.

Forget budgets. Crabtree’s tenth chapter declares them obsolete relics of corporate bureaucracy. Budgets, he says, are licenses to spend; forecasts are roadmaps to profit. The difference isn’t technical—it’s philosophical. Forecasting focuses on what will happen and adjusts continuously, while budgets trap you in unrealistic annual plans.

The Springfield Revelation

Crabtree’s epiphany came during a visit to Springfield ReManufacturing, Jack Stack’s company famed for open-book management. There, factory workers who had never taken an accounting class could explain balance sheets and cash flow—and updated forecasts weekly. They proved that clarity beats complexity. Inspired, Crabtree began teaching clients to do simple monthly reforecasts using high-level categories: revenue, cost of goods, labor, and operating expenses.

Momentum Over Detail

If your forecast is too detailed, you’ll spend all your time updating data instead of analyzing it. Crabtree advises spending 25% of your time on what happened and 75% on what you want to make happen. Rolling-twelve data lets you see trends without seasonal distortions. The key is movement—metrics must show direction, not just snapshots.

Metrics That Matter

He introduces simple metrics: labor efficiency, days sales outstanding (DSO), and core capital targets. For example, if your A/R rises, cash is being used for growth rather than generated. Hope isn’t strategy—fix collections with firmer payment terms. The ultimate goal: create a dashboard that speaks instantly about profitability, liquidity, and performance without drowning you in numbers.

Forecasting creates awareness, agility, and culture. It teaches everyone—from machine operators to CEOs—to see the business in motion, not in snapshots. And in motion lies profit.

What is your business actually worth—to you? Crabtree closes with a practical framework for valuation based on real cash-flow generation, not vanity metrics. His blended method combines three years of pretax profit with the equity (assets minus liabilities) on the balance sheet to reveal what he calls economic value: the true price a rational buyer or seller would pay.

Fair Deals, Not Fantasy

He uses scenarios with 50/50 partners to show how mandatory buy-sell agreements keep deals fair. If one partner wants out, the other can buy or sell at the set price—forcing honesty. A viable business must be fundable from five years of after-tax earnings. Anything higher risks collapse or lawsuits after sale. “Economically balanced deals,” Crabtree insists, ensure truth for both parties.

Five Elements of Value

Your business’s worth depends on five pillars: customers, employees, processes, core capital, and intellectual property. Each supports profitability. Loyal customers and efficient staff drive recurring profit; strong processes and protected IP build advantage; and adequate core capital fuels growth. Without these, valuation numbers mean nothing.

Profit Multiplies Value

Crabtree contrasts businesses earning 5%, 10%, and 15% pretax profit. The 5% company is worth $800k, while 15% generates over $1.8 million—three times the value, with triple the cash. This final graph drives home his philosophy: profit is exponential wealth. Whether you keep or sell, real economic value comes only from disciplined profits sustained over time.

By knowing your economic value, you stop chasing hypotheticals and start measuring reality. A profitable, cash-flow-generating business isn’t just sellable—it’s a source of peace, independence, and pride.