Confidence, not cash flow, is the real issue for many shop owners, as discussed in this episode. Chris emphasizes the importance of knowing your 'cash flow North Star'—a specific savings target that provides clarity and reduces financial anxiety. By calculating this number, owners can better manage their expenses and make informed decisions. The episode also covers common December cash flow traps and the significance of forecasting to eliminate uncertainty. With actionable advice and personal anecdotes, Chris guides listeners towards financial stability and effective leadership.
The Weekly Blitz is brought to you by our friends over at Shop Marketing Pros. If you want to take your shop to the next level, you need great marketing. Shop Marketing Pros does top-tier marketing for top-tier shops.
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Episode Summary
In Part 3 of the Finish Strong Series, Coach Chris Cotton tackles the topic that stresses shop owners more than anything else: cashflow.
This episode introduces the concept of the Cashflow North Star — the exact number that tells you whether your shop is safe, stressed, or in danger. Chris delivers a tactical, step-by-step breakdown of how to calculate it, how to use it, and how it transforms your clarity and decision-making as a business owner.
If you’ve ever felt uncertain about money, unsure about what’s “safe,” or anxious about the ups and downs of car count… this episode is your cure.
What You’ll Learn in This Episode
✔️ Why You’re Not Broke — You’re Unclear
The emotional truth behind why even profitable owners struggle with money fear.
✔️ What a Cashflow North Star Actually Is
A simple but powerful financial safety system that every shop owner MUST have.
✔️ The 3 Zones Every Shop Operates In
Green Zone — Healthy
Yellow Zone — Tight
Red Zone — Danger
And exactly what to do in each.
✔️ How to Calculate Your North Star (Step-by-Step)
Chris breaks down the full process: fixed expenses, weekly burn rate, danger thresholds, safety buffers, and the real “stop spending” line.
✔️ The December Cashflow Mistakes That Kill Shops
Lessons on:
Equipment purchases
Early tax payments
Holiday bonuses
Subscription creep
Neglected receivables
Missing parts credits
Poor forecasting
✔️ How to Forecast Cashflow for 90 Days
A simple 30/60/90 approach that eliminates fear and replaces it with leadership-level clarity.
Why This Episode Matters
A shop without a cashflow plan is a shop that’s always one slow week away from panic. When you know your Cashflow North Star, you stop guessing… and start leading. This episode gives you that power.
Sponsored By: Shop Marketing Pros
A big thank you to Shop Marketing Pros for sponsoring this episode. They’re the experts in storytelling, branding, and digital marketing for auto repair shops.
Learn more at ShopMarketingPros.com — where great shops get great marketing.
To listen to more episodes, make sure and go over to iTunes and or Spotify.
This is the Automotive Repair Podcast Network. It's your weekly blitz with Chris keeping you in the game. Most shop owners don't actually have a cash flow problem. They have a confidence problem. They're not drowning, they're just guessing. And nothing creates fear faster than guessing. If you've ever stared at your bank account and wondered,
are we going to be okay? This episode is your turning point. One number can change your entire mindset. One number can change how you lead. One number can change your whole business. And today, we're going to be talking about your cash flow nor star. You know me, if we track things and measure things, we can fix them. Also, if we track and measure our numbers based off of a great income statement or PRL, then we can figure out exactly what the magic number that we need to have.
In the savings account is a lot of times we talk about it is two to three months of your business expenses blah, blah, blah, blah, blah. Today we're going to do the math. I'm going to do it for Firestone of Durango. I'm going to tell you where my number is, where I stand against that number. We're going to check this out, okay? You know, do you want to know why money stress is harder than most anything else because it follows you everywhere. Money stress is in the back of your head. When a tech ask for a raise, it's there when a big parts order hits unexpectedly.
It's there when the shop has two slow days in a row. It's there at 2 a.m. when your brain decides it's time for financial doom theater. But here's the truth. Money stress is almost never about the actual money. Right. It's about uncertainty. The fear of not knowing the fear of being surprised, the fear of making payroll, the fear of disappointing your team or your family.
I've seen owners with $50,000 in the bank acting broke and I've seen owners with $5,000 in the bank operating like champions. The big difference is clarity. Clarity changes your posture, clarity changes your decisions, clarity changes your leadership. And that's what the cash flow North Star gives you. Everybody knows I'm the big fan of the profit first method or what we call the auto shop profits and cash flow method. Those accounts have money in it.
But what should your savings account have in it? What if everything goes to hell in the hand basket right now and you're trying to figure out, okay, what do I need to do to operate as is the other thing if you go back a couple of episodes.
We talked about having a plan in case things go south, like what do you do? Like who do you cut? What are the employees you keep? What changes? What do you do? Okay, that's a whole separate issue.
This is everything's operating fine and we have a couple of slow weeks. Okay, this is not worst case scenario. That's a whole different episode. That's a whole different podcast and I've already done it.
The cash flow North Star. I think it's a simple concept. It's the exact dollar amount in the bank where you know if you're safe, stress or in danger. It removes emotion. It removes panic.
It removes guessing and it splits into three zones green zone. You're above the North Star. You're fine. You're stable. You make normal decisions. Life goes on yellow zone.
At the North Star, your tight, be cautious, slow down, non-essential spending, double check your weekly numbers, focus in on what you know you need to be doing, which should be doing all the time.
Red zone below the North Star. This is where you switch into survival leadership, not emotional leadership. No new equipment, no new subscriptions, no extra payroll, no expansions, no gambles.
You protect cash until you get back above the line. Most owners, they live in emotional zones, not cash zones. And this North Star concept gives you clarity, not fear, and clarity is what lets you lead instead of react.
I want to take a quick minute to talk about our great sponsor. This episode is brought to you by Shop Marketing Pros. They are the best marketing team in the automotive repair industry. That's why I trust them explicitly with all of my shops and autofix auto shop coaching.
If you want more cars, if you want more trust, and you want more customers choosing you and your shop and your people in 2026, I want you to reach out to Shop Marketing Pros right now and tell them Chris sent you.
How do we calculate our North Star? We're getting tactical now, which is great. Here's how we calculate this number.
First of all, I want you to take your up to date income statement or your PRL. If you want to average a couple of months together, you can. What I did is I went back to our summer months and looked at what I thought were some of the higher expense months that we had.
I took June, July, August and added them together and then divided that by three. What you're going to do is you're going to pick a month, pick a series of months. If you want to pick the whole year, you can.
All of your expenses, rent and utilities, payroll, software, insurance, loan payments, taxes, minimum vendor payment, subscriptions, internet phones, trash service accounting fees.
This is the bare minimum of what you need to keep your doors open number. If you wanted to think doom and gloom and think some things in there that you could maybe kick out, maybe do that.
But really, this is kind of a judge for businesses normal. What is it going to take to keep that up? Cash dollar amount wise. I want you to keep that number for a month, whatever it is. And for me, that number was 79,7776.
So next we're going to divide that by four and that gives you your weekly burn rate. And that's the cost of staying alive each week. Like how much cash flow do I need to generate to stay alive?
That's 19,929,44. That's what my costs are in the shop. Now that doesn't mean what I have to sell that week in order to get that. That's just the cash I need to pay the bills.
The amount you need to do that week is going to be much greater than that because you have to turn a profit on that number.
Okay. And I need to tell everybody this every Sunday morning when the clock strikes, 12,001 and we start a new week for my guys, everybody in my shop, they need to know that I have to write a chip for 19,929.44.
And I need to share that with them. That's our weekly burn rate, right? Like again, the cost of staying alive each week. Now what I'm going to do is I'm going to multiply that number by three.
I think that three slow weeks is the danger line in almost every shop. You know, one slow week hurts, two slow week stresses you, three slow weeks breaks your cash flow.
So this is is what I'm going to say is my danger threshold. So I'm going to take that 19,929,44 multiply that times three and that gives me 59,7847.
Knowing that number, I'm going to add in a little bit of a buffer just in case. So I'm going to tell everybody out there, it's 10 to 20%.
You know, add that for a buffer, but what I did was 15%. So I took that multiplied 15% and that gave me a number of 68,756 and 74 cents.
That's what I need to keep in my savings account. And if I get below that, then I need to start some enacting some other things like am I in the green zone, yellow or red zone.
You also need to think about, is this your absolute minimum, is this your red zone number, or do you want a red zone number that's a little bit less than that.
I say you need to keep an eye on it and we need to keep that number in there. I'll also tell you as far as things go.
Unfortunately, I had to buy a new alignment machine in November. Before that, I had a little bit more than this amount in the savings.
And again, savings is not what I keep in payroll, the parts account, the operating expense account and all of that. All that stuff has money in it.
But I also, you know, am talking about the cash full north star savings account. Right now, I am failing miserably at this.
I'm making sure we're not going to buy any new equipment here at the end of the year. I didn't have to buy that equipment for a tax ride off.
And I want to talk about it here in just a minute. Our machine died completely and I had to buy a new machine.
Luckily, I had the money in the savings account to do that. Okay. But boom, now I know I have a number that I need to push forward to get into my savings.
I have a concrete, unemotionable leadership centered north star to work with my cash flow system.
And as I build money in my auto shop profits and cash flow accounts, then I can funnel money over into my savings account when I have extra in there to help build this.
Okay. Next, I want to talk about December cash flow traps, you know, December is a dangerous month because shops make predictable mistakes.
And I just talked about it just a minute ago, mistake number one buying equipment just to get the right off.
That is the dumbest concept I've ever heard of my life. And I think if your accountant is coming to you and saying, hey, go about and buy an $80,000 truck for the right off.
To me, if I had to pay $20,000 tax bill because I made so much money and I still was able to keep $60,000 in cash because most of you can't go out and buy a brand new $80,000 truck, car, whatever with cash.
Let's get that straight. I definitely don't want you going out and financing it. This is all funny money, paper money stuff.
A write-off doesn't help if you're draining cash. Number two mistake, ignoring receivables. If somebody owes you money, you call, you email, you text, you collect, I've even gone out and sat in somebody's lobby for a full day, like a full day.
Took a sandwich, took a coat, used their bathroom, sat there and stared at the receptionist all day. And when I showed up the second day, they had a check ready for me because I told them I would be back the next day.
Don't ignore receivables. If people owe you money, get that money. And then don't do business with them ever again.
If you're able to print out a receipt and be like, ooh, I made $1,000 this month but you never collected. Did you really make $1,000 on that sale?
You didn't. So let's don't pretend like we do. Mistake number three, forgetting warranty credits, cores and parts returns.
This is free money people sitting in your building. Like you should have a process already. You've been listening to me for 237 episodes by now. We've talked about it several times.
You should have a process and procedure for that. Mistake number four, overspending on holiday generosity. Don't hurt January to feel good in December.
This also goes along with if you have people that you know you're going to fire in January, fire them now. Don't carry that over into next year just because it's going to make you feel good.
They're going to be just as hurt now as they're going to be in January. Don't pay them three, four extra weeks, five extra weeks just because you need to feel better. Mistake number five, assuming January is going to save you.
Hope is not a strategy. Shout out to Rich. Forecasting is all right.
And so now I want to get into how does forecasting change everything. So now we know our north star. The next steps forecasting.
Look at last year's quarter one car count January, February, March. Multiply by your current average of pair order that revenue projection appears instantly.
Now subtract your weekly burn rate. Now you know your baseline and map out 12 weeks. Where are the slow weeks? When are the heavy weeks? Where do you need marketing?
Where do you need staffing adjustments? And now all the fear disappears because you're not hoping anymore. You're planning.
You can take this. I want you to put out your income statement, sit in the room, do the math, work through it. If you have any questions, let me know.
I think you lead differently when you know your number period. Your cash flow north star isn't just a financial tool. It's an emotional anchor. It's going to stabilize you. It studies your decisions. It eliminates panic. And it gives you the confidence you need to lead your team into a strong new year.
I want you to define your number. I want you to protect your number and lead with clarity, not fear. If you've got a topic you want me to hit on the show, email me, Chris at autofixs.com. Again, I want to thank our sponsor shop marketing pros for supporting this series and what we do.
And I want you to remember to check out all the shows on the automotive repair podcast network. I want you to download the app and keep learning from the best minds in the industry. Have a great day everybody.
You've been listening to the weekly blitz with Chris cotton on the automotive repair podcast network. Download our exclusive podcast app at automotive repair podcast network.com because the best conversations in the industry start here.
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