Patrick Traverse: Why Entrepreneurs Need Better Systems for Cash Flow, Taxes, and Investing

Making more money does not automatically create financial clarity.

Entrepreneurs can build successful companies, generate substantial revenue, and still feel uncertain about cash flow, taxes, investments, retirement planning, and where their money is actually going.

Patrick Traverse, founder of Breakaway Financial Group, joined IncomeInsider TV to explain how business owners can bring greater structure and intention to both their business and personal finances.

A former professional hockey player, Traverse is a CERTIFIED FINANCIAL PLANNER™ professional, Enrolled Agent, and Certified Exit Planning Advisor. 

Today, he helps entrepreneurs coordinate the financial decisions that are often handled separately, from accounting and tax planning to investments, cash flow, and long-term exit preparation.

Watch the complete conversation below.

From Professional Hockey to Financial Planning

Patrick Traverse’s transition from professional sports to financial planning may appear unconventional, but his interest in numbers began long before his hockey career.

Traverse explained that his former classmates would probably have been more likely to picture him becoming an accountant than a professional athlete. He had always been comfortable with numbers and financial concepts.

His experience as an athlete also exposed him to financial advisers early in life. That gave him a firsthand look at both the benefits and limitations of the traditional financial-services model.

He saw situations in which people received advice in one area of their finances without anyone coordinating the complete picture. Those experiences helped shape the type of firm he eventually wanted to build.

Traverse also carried an important lesson from professional sports into entrepreneurship: improvement must be continuous.

Athletes cannot assume that yesterday’s performance will be enough tomorrow. They must continue developing their skills because someone else is always working to improve and compete for their position.

Traverse approaches business in much the same way. He continually looks for opportunities to expand his knowledge, improve his firm, and provide better guidance to the people he serves.

What Does a “Personal CFO” Do?

Breakaway Financial Group describes its approach as providing a personal chief financial officer, or personal CFO, team for entrepreneurs.

According to Traverse, the difference between a personal CFO and a traditional financial adviser is largely the breadth of the work.

A traditional adviser may concentrate on investments, retirement planning, or a limited financial plan. When questions about taxes, accounting, or business operations arise, the adviser may direct the customer to an accountant or another professional.

A personal CFO approach attempts to connect those areas.

For a business owner, financial planning cannot be separated completely from the company. The business may be the owner’s primary source of income, largest asset, retirement plan, and greatest financial risk.

A comprehensive strategy may therefore involve examining:

• Business accounting and expenses
• Cash-flow management
• Personal spending
• Tax planning
• Retirement contributions
• Investments outside the business
• Insurance and risk management
• Business valuation
• Succession and exit planning

The objective is to make sure these decisions support one another rather than being addressed in isolation.

Visit Breakaway Financial Group to learn more. 

Financial Clarity Begins With Accurate Data

One of Traverse’s most consistent messages during the interview was the importance of having reliable financial data.

When his firm begins working with a business owner, the team may review QuickBooks or another accounting system to understand where the company’s money is going.

The first goal is not necessarily to identify a complicated investment strategy. It is to establish a clear picture of the business.

How much revenue is coming in? What are the recurring expenses? Where is money being wasted? How much profit is the business actually producing? What major expenses or investments are likely to arise during the next year or two?

Without accurate data, financial decisions become reactive.

A business owner may know that the company appears busy or that money is regularly entering the bank account, but that does not necessarily reveal how profitable the business is or how much cash is available for taxes, reinvestment, personal income, and long-term wealth building.

Once the numbers are organized, a financial plan for the business can begin to take shape.

Move From Scattered Accounts to a Financial System

Business owners frequently have money spread across multiple accounts and financial relationships.

They may have business checking and savings accounts, personal bank accounts, investment accounts, retirement plans, insurance policies, tax obligations, and outstanding business expenses. Each piece may be managed independently, with no consistent system directing money to the right place.

Traverse believes automation can help.

He compared this process to a workplace 401(k). An employee chooses a contribution amount, and the money is automatically transferred into the retirement account before it can be spent elsewhere. Over time, that consistency can produce meaningful results.

Business owners can create a similar structure across their financial lives.

Once the appropriate amounts have been determined, money can be directed automatically toward:

• Operating expenses
• Tax reserves
• Personal income
• Retirement accounts
• Long-term investments
• Emergency savings
• Future business needs
• Travel and lifestyle goals

Depending on the complexity of the business and the quality of its existing records, Traverse said the initial organization and automation process may take approximately two or three months.

The purpose is to reduce the number of important decisions that must be made manually each month.

The Cost of Waiting Is Lost Compounding

Many entrepreneurs operate without a formal financial system for years.

They pay their bills, file their taxes, keep the company running, and assume they will organize everything later.

Traverse warned that the hidden cost of waiting is time.

Compounding works most effectively when money has a long period in which to grow. Every year a business owner postpones investing, retirement planning, or building wealth outside the company reduces the time available for those assets to compound.

This does not mean every financial decision must be made immediately. It means the process of gathering information, creating a plan, and establishing good habits should begin as early as possible.

Financial progress is generally the result of consistent actions repeated over many years, not a last-minute strategy introduced shortly before retirement.

Click here to learn more about Breakaway Financial Group.

Tax Preparation Is Not the Same as Tax Planning

Traverse also emphasized the difference between tax preparation and proactive tax planning.

Tax preparation is primarily a compliance function. Individuals and businesses must calculate their income, complete the appropriate returns, and pay the taxes they owe to federal, state, and local authorities.

Tax planning looks forward.

It involves estimating future income, reviewing the tax code, considering the business owner’s goals, and determining whether certain actions could legally reduce taxable income or improve overall tax efficiency.

Potential strategies may include investing in the business, establishing or contributing to retirement plans, purchasing necessary equipment, or considering investments that receive specific tax treatment.

However, the correct strategy depends on the individual business owner’s circumstances.

A major problem arises when tax planning is postponed until the end of the year—or until tax returns are being prepared.

By that point, many opportunities may no longer be available.

Traverse said his firm often begins discussing the current year’s expected income soon after the previous year’s returns have been filed. This allows time to evaluate possible strategies before urgent year-end decisions are required.

Avoid Last-Minute Spending to Reduce Taxes

One of the most common mistakes Traverse sees is a business owner reaching the fourth quarter without a clear estimate of annual profit.

The owner suddenly realizes the company may generate more taxable income than expected and begins searching for something to purchase before the end of the year.

That can lead to unnecessary spending.

Buying equipment or making another business expenditure may reduce taxable income, but it does not automatically make the purchase a good investment.

A business owner should ideally direct money toward something that supports future growth, improves efficiency, strengthens the company, or contributes to personal wealth.

Spending one dollar solely to avoid paying a percentage of that dollar in taxes rarely creates a strong financial outcome.

Earlier planning provides time to identify opportunities that make sense independently of the tax deduction.

Related: Robo-Advisor vs Traditional Financial Advisor - Which is Better?

Stop Treating the Business Like a Personal ATM

Another issue arises when business owners do not establish a consistent method for paying themselves.

Many have a reasonable understanding of their business expenses and revenue but pay less attention to their personal financial needs. They withdraw money from the company whenever a bill arrives or a purchase needs to be made.

Traverse described this as treating the business like an ATM.

A more structured approach begins by determining what the household actually requires.

His firm may use a personal-finance platform such as Monarch to help categorize spending and understand the family’s regular expenses. Once that amount is known, the business can provide a consistent level of income rather than a series of unpredictable withdrawals.

The remaining cash can then be assigned intentionally to taxes, business investments, retirement savings, investments outside the company, and other financial priorities.

Understanding both sides of the equation, the company’s finances and the owner’s personal finances, makes it easier to decide how much money should remain in the business and how much should be distributed.

Click here to schedule a consultation with Patrick's team.

Give Every Dollar a Purpose

Traverse described a personal bank-account structure that gives each portion of a household’s income a defined purpose.

Not all financial planning is about accumulating the largest possible portfolio. Money should also support the life that the business owner is trying to create.

Traverse said many of his customers value experiences, including vacations, travel, and time with family and friends. His system may therefore include a category for lifestyle savings.

Money is transferred automatically into that account, allowing the family to plan experiences without feeling that every discretionary purchase is competing with the business.

Some entrepreneurs need permission to step away from the company and enjoy what they have built.

Traverse sometimes encourages customers to take a vacation, recharge, and return to the business with renewed energy. In other situations, he must deliver the harder message that spending needs to decrease.

The appropriate advice depends on the numbers.

The broader lesson is that a financial plan should account for the present as well as the future.

Visit Breakaway Financial Group's website to learn more.

Build Wealth Outside Your Business

Business owners often believe their company is the best available investment.

That belief may be understandable. The owner knows the industry, controls many of the decisions, and may have generated a better return from the business than from traditional investments.

However, concentrating nearly all personal wealth in one company creates substantial risk.

Traverse noted that only a minority of businesses ultimately sell successfully. An owner who assumes that selling the company will fund retirement could reach the end of a career without receiving the expected value.

He recommends pursuing two goals simultaneously.

First, build a stronger and more transferable business that another person may eventually want to purchase.

Second, use the company’s cash flow to accumulate assets outside the business.

External savings and investments create an alternative source of financial security if the company cannot be sold, sells for less than expected, or is affected by an unexpected change in its industry.

The business may be the owner’s greatest wealth-building tool, but it should not necessarily be the owner’s only asset.

Exit Planning Should Begin Before You Want to Sell

Exit planning is often treated as something a business owner begins shortly before retirement.

Traverse believes it should start much earlier.

A company that is attractive to a potential buyer is usually also a better company for its current owner to operate.

The business should not depend entirely on one person, one employee, one vendor, or a small number of customers. Each area of concentration represents risk.

A prospective buyer may hesitate to acquire a company if its success depends on the founder remaining involved indefinitely.

Owners can increase the potential value of their businesses by:

• Documenting important processes
• Building a capable management team
• Reducing dependence on the founder
• Diversifying the customer base
• Avoiding excessive reliance on one employee or vendor
• Developing predictable or recurring revenue
• Maintaining accurate financial records
• Establishing systems that can continue under new ownership

A useful test is whether the owner can leave for two weeks without the business falling apart.

A company that can operate without constant founder involvement gives the owner more freedom today and may be more appealing to a buyer in the future.

Related: What is a Fiduciary?

Recurring Revenue Can Increase Business Value

Traverse also identified recurring income as an attractive feature for potential purchasers.

When customers have ongoing contracts, subscriptions, or another form of predictable repeat business, a buyer can more easily estimate future revenue.

A company that must begin every month with no committed income may be considered more uncertain.

Recurring revenue does not eliminate risk, but it can improve visibility and make the company’s future cash flow easier to evaluate.

For entrepreneurs who hope to sell someday, developing stable, repeatable sources of revenue can be an important long-term objective.

Employees Can Use the Personal CFO Mindset Too

Although Traverse primarily works with entrepreneurs, many of the principles discussed during the interview also apply to employees.

A W-2 employee may have fewer tax-planning options than a business owner, but the basic process remains similar:

Gather the data. Understand where the money is going. Determine what the household needs. Reduce unnecessary expenses. Automate savings and investments. Evaluate available tax-advantaged accounts. Begin as early as possible.

Employees may be able to automate contributions to workplace retirement plans, individual retirement accounts, brokerage accounts, emergency savings, and specific lifestyle goals.

The system may be less complicated than a business owner’s, but consistency is still essential.

As Traverse explained, wealth building is a long game. It rarely happens overnight. It is generally created through disciplined actions repeated over time.

What Should You Ask Before Hiring a Financial Adviser?

During the interview’s lightning round, Traverse offered several suggestions for people evaluating financial professionals.

Prepare Before the Interview

Traverse suggested using artificial intelligence and other research tools to develop a list of questions before meeting potential advisers.

Presenting the same situations and questions to several professionals can make their answers easier to compare.

The goal is not to allow technology to replace professional guidance. It is to help consumers become better prepared and more informed during the selection process.

Evaluate Value, Not Just Price

Fees matter, but Traverse cautioned against judging an adviser solely by cost.

Consumers should understand exactly what services are included and decide whether the relationship is likely to provide greater value than the amount being paid.

A higher fee may be reasonable when it includes comprehensive planning, tax guidance, business consulting, education, and ongoing coordination. A lower fee may not be a bargain if the service is extremely limited.

Choose Someone You Can Speak With Honestly

Traverse compared the adviser relationship to therapy.

A financial professional may need to encourage someone to spend less, save more, take greater precautions, or make a difficult change. In other cases, the adviser may encourage the person to enjoy more of the wealth that has already been accumulated.

That requires honesty.

Consumers should feel comfortable discussing their mistakes, fears, habits, family concerns, and long-term goals. An adviser with whom the consumer cannot communicate openly may not be the right fit.

Ask What Makes the Adviser Good at the Job

Consumers often ask about fees, investment philosophy, credentials, and fiduciary responsibilities.

Traverse recommended asking another question: What makes you a good adviser?

The answer can reveal how the adviser approaches the relationship.

Some advisers may be particularly strong educators who can simplify complicated financial subjects. Others may have deep technical expertise or specialize in a particular type of customer.

Understanding how the professional communicates and delivers advice can be just as important as understanding the services listed in the contract.

Visit Breakaway Financial Group online to learn more.

Holistic Planning

Patrick Traverse’s central message was not that every entrepreneur needs a more complicated financial strategy.

It was that financial decisions work better when they are connected.

Cash flow affects taxes. Taxes affect the amount available to invest. Personal spending affects how much money can remain in the business. The strength of the business affects the owner’s future financial security. Exit planning affects how the company should be operated today.

When each issue is handled separately, opportunities may be missed and important decisions may be delayed.

A personal CFO mindset brings the pieces together.

For business owners, that means knowing the numbers, planning taxes before year-end, paying themselves intentionally, building wealth outside the company, creating systems that do not depend entirely on the founder, and using money to support a meaningful life.

For employees, it means tracking spending, automating savings, using available tax-advantaged accounts, and remaining consistent over time.

In both cases, the foundation is the same: establish a clear plan, create repeatable systems, and give every dollar a purpose.