Latest / The Money Part / Ep 3 | Profit First in Plain English: What It Is and Who It's Not For

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Ep 3 | Profit First in Plain English: What It Is and Who It's Not For · The Money Part

• 0:00
  SPEAKER_01: Hello, I'm Barb Fisher.
• 0:01
  SPEAKER_01: I'm the owner of Fisher Business, Dance into Profit, and a certified profit first professional.
• 0:07
  SPEAKER_01: This show is the money part.
• 0:08
  SPEAKER_01: The show is about the side of your business that nobody trained you for.
• 0:12
  SPEAKER_01: And I'm not here alone.
• 0:13
  SPEAKER_01: I'm here with Juliana.
• 0:14
  SPEAKER_01: You can see.
• 0:15
  SPEAKER_01: She's our chief of staff here, and she is her job here is to help us make sure we have a good conversation that's easy to listen to because me talking to nobody is hard.
• 0:25
  SPEAKER_01: So thank you for being with me, Juliana.
• 0:27
  SPEAKER_00: It's good to be here.
• 0:27
  SPEAKER_00: I know today we're talking about Profit First.
• 0:30
  SPEAKER_00: Do you want to talk about what pulled you into Profit First?
• 0:33
  SPEAKER_00: Sure.
• 0:33
  SPEAKER_00: I love Profit First.
• 0:34
  SPEAKER_01: This is an easy one to talk about.
• 0:36
  SPEAKER_01: So Profit First is a business book.
• 0:38
  SPEAKER_01: It's a book written by Mike McAllowitz, which is in plainly, it's kind of like the envelope system for savings, but for business.
• 0:44
  SPEAKER_01: And you do it through bank accounts rather than envelopes.
• 0:47
  SPEAKER_01: So it's built on the premise that you should make your profit as a matter of behavior, not as an afterthought.
• 0:54
  SPEAKER_01: It's not leftovers after dinner.
• 0:56
  SPEAKER_01: It's the way you plan your money from the beginning.
• 0:58
  SPEAKER_01: So when you bring in income, you transfer some to a tax account, some to an OmerComp account, some to a profit account, and then some for your operating expense account.
• 1:07
  SPEAKER_01: And with many of our clients, we have other goals in those businesses.
• 1:10
  SPEAKER_01: So there are more than just those four accounts.
• 1:12
  SPEAKER_01: So what pulled me to it, I got pulled to it in 2018.
• 1:16
  SPEAKER_01: And it a client told me to read that book.
• 1:19
  SPEAKER_01: And in 2018 was quite frankly when Ferguson happened.
• 1:23
  SPEAKER_01: And so I had a big sort of anti-racism awakening then.
• 1:27
  SPEAKER_01: And I promised myself, well, that was probably in 2017, because I promised myself for 2018 I would not read any books by white authors.
• 1:34
  SPEAKER_01: And I had a client of color who told me I needed to read this book, that it was really resonating with how I did a lot of bookkeeping and budgeting and things in the business.
• 1:44
  SPEAKER_01: And I read it and I fell in love with it right away.
• 1:46
  SPEAKER_01: Like I looked into becoming a Profit First professional.
• 1:49
  SPEAKER_01: I joined as a Profit First Professional in 2018 later in the year.
• 1:53
  SPEAKER_01: And it's I overhauled my own business and those of any business that anybody would let me touch.
• 1:58
  SPEAKER_01: I I think it's a great, a great system.
• 2:00
  SPEAKER_00: How has Profit First made a difference in your business?
• 2:03
  SPEAKER_00: Can you talk about what happened when you applied it to your business?
• 2:07
  SPEAKER_00: Sure.
• 2:07
  SPEAKER_01: Yeah.
• 2:08
  SPEAKER_01: So there's two big things that I think would be fun to talk about.
• 2:10
  SPEAKER_01: So don't let me forget.
• 2:11
  SPEAKER_01: But one is how it really changed my sort of ability to sleep and my wealth picture personally.
• 2:17
  SPEAKER_01: And then the second was actually when you started working and what I had to train you in how Profit First works.
• 2:22
  SPEAKER_01: So don't let me forget to mention that because I think it's important for anybody that has an operations manager who deals in the money to under to make sure they show somebody what's going on.
• 2:30
  SPEAKER_01: So to start, I implemented Profit First in my own business.
• 2:34
  SPEAKER_01: I was at a point, I was, I was running my business very efficiently.
• 2:38
  SPEAKER_01: So I, with a lot of clients, we have to work our way into some profit first allocations.
• 2:43
  SPEAKER_01: In my own business, I went all the way to like where they want you to allocate, which was great.
• 2:47
  SPEAKER_01: Like it, it really showed me that, of course, I know how to run my books and how to be profitable and run properly.
• 2:53
  SPEAKER_01: But what it really showed me was that I had the business had the ability to pay me as an owner much more than it was paying me because I had built my wage around what I had made when I was an employee years prior and kind of kept it there, gave myself a small raise each year.
• 3:10
  SPEAKER_01: But the truth is, is I grew the business.
• 3:13
  SPEAKER_01: It the business had the ability to pay me more.
• 3:15
  SPEAKER_01: And when I had an owner comp account set up, my owner comp account grew.
• 3:19
  SPEAKER_01: It just grew.
• 3:20
  SPEAKER_01: And I just kept paying myself the same salary that I'd always made.
• 3:23
  SPEAKER_01: I'm an S-corp, so I have to be on payroll.
• 3:25
  SPEAKER_01: And this owner comp account just grew.
• 3:28
  SPEAKER_01: And what happened for us, well, for everybody, COVID happened.
• 3:32
  SPEAKER_01: And in Oregon, where I live, the whole state sort of shut down.
• 3:36
  SPEAKER_01: Well, we had planned a summer trip to the beach.
• 3:39
  SPEAKER_01: And while we were there, I had, I at that point had about$90,000 in my owner comp account and profit account put together.
• 3:48
  SPEAKER_01: And we were craving looking at walls that were not the walls we looked at all the time.
• 3:54
  SPEAKER_01: So we literally went up to a real estate office and called a realtor on the window and she showed us houses and we bought a house.
• 4:02
  SPEAKER_01: So we, the house I'm actually in now was a coastal house that we bought on that weekend trip to the beach, which of course the beach for us, we lived in Portland, so it was about an hour 20 drive.
• 4:13
  SPEAKER_01: It's not like it was particularly far, but it's beautiful and it's it just completely changed my wealth picture.
• 4:19
  SPEAKER_01: And it did all that and didn't hurt the business in any way.
• 4:23
  SPEAKER_01: Like, you know, we saved over time.
• 4:24
  SPEAKER_01: It was not hard to do, and I have repeated that.
• 4:27
  SPEAKER_01: So I'm now a person who has uh several rental properties and a business, which is great.
• 4:33
  SPEAKER_01: Like it's really helped our retirement picture become clear as I am in my mid-50s now that I am not worried about what I can sell this business for later.
• 4:45
  SPEAKER_01: I I have I've I've got a much more diversified portfolio.
• 4:49
  SPEAKER_00: So it's been fun.
• 4:50
  SPEAKER_00: You talked about how when I started, I was unfamiliar with profit first.
• 4:54
  SPEAKER_00: And so coming in as an operations manager, what were some of the things that made you realize, like, oh, I need to, I need to train this person so that they're not confused by the system.
• 5:03
  SPEAKER_01: And I think about a lot when I when I have a new client and we've done their first allocations, because what happens with a lot of clients, I've mentioned this before, is that when they come in for profit first coaching, they know they're running profitably, but their operating account is just growing, right?
• 5:16
  SPEAKER_01: So think of your serving platter, like it's just growing and growing, but you don't know like what I can have of that as an owner or what do I need to do, have available for the marketing I need to do, the slow season I might have coming up, anything like that.
• 5:28
  SPEAKER_01: So how this relates is when you came in, I was so you so what happens in profit first?
• 5:33
  SPEAKER_01: A lot of times your operating account becomes a very low number.
• 5:36
  SPEAKER_01: And you you have to build a resilience to that.
• 5:39
  SPEAKER_01: Like it makes a lot of people freak out.
• 5:41
  SPEAKER_01: And when I remember when you started and we would run payroll and pay all the bills, and all of a sudden there was like no money.
• 5:47
  SPEAKER_01: And you were like, I'm breaking the business.
• 5:49
  SPEAKER_01: What am I doing?
• 5:50
  SPEAKER_01: What is wrong?
• 5:50
  SPEAKER_01: And I had to be like, okay, here's the whole cash, but here are all the accounts put together, even though you're really only managing this one or these two.
• 5:56
  SPEAKER_01: Like, here's the whole cash picture.
• 5:58
  SPEAKER_01: And it's because we squirrel away all the money on purpose.
• 6:02
  SPEAKER_01: And it made me like, it gave me fresh eyes for the program.
• 6:06
  SPEAKER_01: And even though I'd been doing it for several years before you got here, it's, I think it's an important thing to come back to those fresh eyes because I just I'd been doing it so long.
• 6:14
  SPEAKER_01: Because profit, you know, like I say, it's a behavior and we had been doing that, and I wasn't worried at all when we pay payroll and pay all the bills, like there's no money for a few days.
• 6:23
  SPEAKER_01: It's fine.
• 6:24
  SPEAKER_01: Anyway, so that's what makes me when you talk about what changed in the business, and it reminds me of you being new and being like, things are broken.
• 6:31
  SPEAKER_01: And then I showed you the financials and we were actually running plenty profitably.
• 6:35
  SPEAKER_01: But because we squirrel away all this money in different places, you just didn't have the exposure to how that worked.
• 6:41
  SPEAKER_01: So, and part of it is we got you out of a big business.
• 6:44
  SPEAKER_01: So if I think if we've gotten you out of the small business, many people are used to not having money.
• 6:48
  SPEAKER_01: But because you were out of big business, that didn't exist there.
• 6:51
  SPEAKER_00: So yeah, it had been a while since I'd been in a small business.
• 6:54
  SPEAKER_00: So I I forgot about the running lean part and I didn't realize because I didn't have as much visibility to the secret stashes of money that it it the complete picture is very different from just looking at the operating account, which is where I was mostly moving things around to and from.
• 7:09
  SPEAKER_00: So I I get it now, but I certainly was an new person.
• 7:14
  SPEAKER_00: Yeah.
• 7:14
  SPEAKER_00: New to the whole system.
• 7:16
  SPEAKER_00: And the way you describe it, it almost sounds too simple.
• 7:19
  SPEAKER_00: So what's one idea that matters the most when you talk about profit first to people who are unfamiliar?
• 7:25
  SPEAKER_01: I think if you're gonna operate profit first and you're gonna do it properly, you the the biggest mechanics that are difficult, the hardest thing to do is you have money come in one account and then you transfer it out to a bunch of different accounts and you spend it all out of another account.
• 7:39
  SPEAKER_01: So in profit first, it's called income.
• 7:41
  SPEAKER_01: You bring all the money into the income account.
• 7:43
  SPEAKER_01: From income, you distribute to several accounts: profit, tax, owner comp, and operating expense.
• 7:49
  SPEAKER_01: And all your checks, all your spending goes through operating expenses.
• 7:53
  SPEAKER_01: So what it it's it is simple.
• 7:54
  SPEAKER_01: I mean, it's as simple as the envelope plan, right?
• 7:57
  SPEAKER_01: If you were to cash your whole paycheck, if you're a double two employee, you cash your whole paycheck, you take it all in cash, and you put your mortgage in one envelope and your groceries in another and utilities in another, it's that simple.
• 8:06
  SPEAKER_01: You're just doing it with bank accounts, and the mechanics of it are a little bit annoying to set up, I guess, because what I find is that we usually keep the account businesses already have is their operating expense account because they've got a number of automatic payments that come out of there.
• 8:25
  SPEAKER_01: And it's easier to change just your merchant service to move over to your income account so that you have some income, you set up a couple of savings accounts and then move it over to your operating expense.
• 8:35
  SPEAKER_01: But when you're doing that, you can hear, as I say it, it comes into income and then you're transferring it out to several others, you're already not going to be giving 100% to operating expense accounts.
• 8:45
  SPEAKER_01: So you're building in profit from that moment of getting income.
• 8:49
  SPEAKER_01: So you're not waiting to see what's left over after you spend it.
• 8:53
  SPEAKER_01: And in the book, he talks about that if you if you have the ability to bring in a dollar and run the business and use that dollar, you probably have the ability to bring in that dollar, only spend 95 cents, save the five cents somewhere else, and you'll be fine.
• 9:07
  SPEAKER_01: And I think that's fair.
• 9:08
  SPEAKER_01: What happens in in Profit First when you're running really well is you're you're really running it on about 70 of what you bring in, not 95%.
• 9:18
  SPEAKER_01: So there's a lot of things that go into when we're coaching, uh, bringing down the expenses while challenging up the revenue.
• 9:27
  SPEAKER_01: So it's getting really good at collections, it's getting priced properly, it's figuring out how you can negotiate your banking.
• 9:33
  SPEAKER_01: It's it's just a lot of things to bring up your revenue and then you do some expense analysis, which is easy.
• 9:40
  SPEAKER_01: It's not, you know, this is not rocket science, but it's important.
• 9:43
  SPEAKER_01: It's it's important to making a profit.
• 9:45
  SPEAKER_01: And if you focus only on running the operation of your business, you'll forget to pay attention to how your money is coming in and how it's spending.
• 9:53
  SPEAKER_00: So it sounds like there's a behavior change that has to happen.
• 9:57
  SPEAKER_00: What is the mindset shift that you notice when people are for first starting out in profit first?
• 10:04
  SPEAKER_00: What is the change that they have to wrap their minds around?
• 10:07
  SPEAKER_01: The thing we have to talk the most about, I think, is just I think understanding the owner comp account and how it works, who pays the taxes of it, how does that work?
• 10:16
  SPEAKER_01: I think understanding how profit, when you take distributions, how do you get rid of debt?
• 10:20
  SPEAKER_01: There's a lot of it I'm saying it depends again.
• 10:24
  SPEAKER_01: Each episode, it seems I'm gonna say it depends about something.
• 10:26
  SPEAKER_01: So I think different people have different hangups about what is hard to get your brain around.
• 10:31
  SPEAKER_01: But we we always stick with the theme that that business is your biggest asset and it is also how you make your living.
• 10:37
  SPEAKER_01: And so I think it's really important that the business is built for the benefit of the owner.
• 10:42
  SPEAKER_01: So you shouldn't have to scramble for every dollar.
• 10:44
  SPEAKER_01: The the employees, we should all be aligned in bringing in revenue.
• 10:48
  SPEAKER_01: We should all be priced properly.
• 10:49
  SPEAKER_01: It should be simple so your customers understand what they're paying for and the value they get.
• 10:54
  SPEAKER_01: And then the money flows in.
• 10:56
  SPEAKER_01: So there's there's a number of things we might have to address, but it's really just about aligning those things so it's not on the owner's job to scramble for each dollar.
• 11:04
  SPEAKER_00: I know this might change, but what are some of the banks that you recommend people maybe consider because of the sheer number of accounts that you typically would have if you're running profit first?
• 11:14
  SPEAKER_01: Well, it's sort of easy.
• 11:16
  SPEAKER_01: If you're open to an online bank, Relay Bank is fantastic.
• 11:19
  SPEAKER_01: It's it's all self-serve on the internet and you can open more accounts, you can close them, you can set up auto transfers so that your profit first allocations happen automatically.
• 11:28
  SPEAKER_01: It's a really easy UX to use.
• 11:32
  SPEAKER_01: It's I've I do not I'll I'll be honest, I do not use Relay Bank.
• 11:36
  SPEAKER_01: I use a local bank, and I have taken the UX into my banker and said, I want you to see this.
• 11:41
  SPEAKER_01: And if you ever aren't a fabulous banker, which my banker's fabulous, I'm gonna leave you and go to them.
• 11:46
  SPEAKER_01: And they were like, we need to show this to our web developer because this is pretty awesome.
• 11:50
  SPEAKER_01: So it's it's pretty great.
• 11:52
  SPEAKER_01: If a lot of if you have a cash need in your business, like you're a restaurant and you need money out to pay cash things, relay doesn't offer that.
• 11:59
  SPEAKER_01: So it's trickier.
• 12:00
  SPEAKER_01: And the those more specific needs about your bank are important.
• 12:04
  SPEAKER_01: We use a bank in Oregon called Summit.
• 12:06
  SPEAKER_01: I'm super, super happy with them.
• 12:07
  SPEAKER_01: I re I've referred them to many people and those people all are still there, like it's a great bank.
• 12:12
  SPEAKER_01: But it doesn't have that same UX.
• 12:14
  SPEAKER_01: It will not do your profit first transfers automatically, but you'll have a wonderful banker.
• 12:18
  SPEAKER_01: They're great.
• 12:19
  SPEAKER_01: So I think it it depends a little bit on how you use your bank.
• 12:22
  SPEAKER_01: But in any case, I think you should feel like you have a relationship with your bank.
• 12:27
  SPEAKER_01: And if you don't have a relationship with your bank, which happens a lot when people are at Bank of America and Chase, there's not really a relationship to be had.
• 12:33
  SPEAKER_01: I think it's uh something to consider.
• 12:35
  SPEAKER_01: Like there are advisors that, you know, they they keep your deposits and you deserve a little bit of consulting for that.
• 12:42
  SPEAKER_01: Like my banker meets with me a couple times a year and can help CFO me.
• 12:47
  SPEAKER_01: And, you know, of course I do CFOing.
• 12:49
  SPEAKER_01: So it's just sometimes nice to have fresh eyes on things.
• 12:51
  SPEAKER_01: And then they can see how my business is doing.
• 12:54
  SPEAKER_01: They can give me some general advice about products that are out there.
• 12:57
  SPEAKER_01: They're of course pitching me because they want me to refer to clients, but it's it's a nice relationship and they work for you.
• 13:02
  SPEAKER_01: Like, you know, they'll take you to lunch.
• 13:04
  SPEAKER_01: It's wonderful.
• 13:04
  SPEAKER_00: I think from an operations manager perspective, too, the thing to be cautious of is any sort of overdraft fees.
• 13:11
  SPEAKER_00: Because, like you were talking about, we run so lean on the operations and the opex account that there are times when there is an overdraft.
• 13:19
  SPEAKER_00: And I think if you're to your point, if we were at a bank, if you were at a Bank of America or your Chase, you know, you're not gonna get the ping that says, hey, you need to you need to move stuff around.
• 13:28
  SPEAKER_00: Um they're just gonna hit you with a$40 overdraft every time.
• 13:31
  SPEAKER_00: So right.
• 13:32
  SPEAKER_01: So both of the banks I mentioned don't do that.
• 13:34
  SPEAKER_01: They both communicate.
• 13:35
  SPEAKER_01: I I forgot, I we haven't had one in so long.
• 13:37
  SPEAKER_01: I I forget about them.
• 13:39
  SPEAKER_01: So I yeah, if you are in a situation running profit first where you're running lean and you have an overdraft, it's I think it's imperative that you have a banker because when you have maybe$100,000 sitting between all your bank accounts, but the one where your checks come out how to bounce, it's it's fine.
• 13:55
  SPEAKER_01: You we get a note that'll say you need to transfer money and we just say, done, like that's it.
• 14:00
  SPEAKER_01: So yeah, that excellent point.
• 14:01
  SPEAKER_01: Thank you for that.
• 14:02
  SPEAKER_00: Maybe the workaround is if you're able to identify an alternative account for overdraft, then you avoid those potential overdraft fees.
• 14:09
  SPEAKER_00: So, you know, not ideal, but if your overdraft account refers back to the income, you're there's typically some money sitting in there that hasn't been understood.
• 14:18
  SPEAKER_01: Again, though, that's about having the relationship with your bank.
• 14:20
  SPEAKER_01: So and relay, it's it's all automated.
• 14:23
  SPEAKER_01: You're gonna get that in an automated way, but it's still set up because they can see your full cash position compared to the one account that got drawn upon.
• 14:31
  SPEAKER_01: Yeah, I think that's a really I I haven't had a bounce check in so long, I forget.
• 14:35
  SPEAKER_01: I forget that that exists.
• 14:36
  SPEAKER_01: So sorry.
• 14:37
  SPEAKER_00: So it's good.
• 14:38
  SPEAKER_00: I think that as people are starting out, that's the consideration because some of those bigger banks aren't gonna take that.
• 14:43
  SPEAKER_00: They're not gonna look at the big picture of the total of all the accounts.
• 14:47
  SPEAKER_00: They're only gonna look at the one that bounced and be concerned and hit you with a fee on that one.
• 14:52
  SPEAKER_00: So you talked a little bit about some cash businesses where this might not be ideal.
• 14:56
  SPEAKER_00: Can you talk a little bit about who this might not be for?
• 14:59
  SPEAKER_00: Like what are some other carve-outs for not ideal candidates for profit first?
• 15:03
  SPEAKER_01: I think profit first is a pretty great system.
• 15:06
  SPEAKER_01: So I think if you have a business that is, for lack of being able to say this in a better way, but if your business is running on the straight and narrow in the US economy, it can run well with profit first.
• 15:16
  SPEAKER_01: If you are tucking money away in ways you don't want the government to see, or if you are, you know, playing a little loose and fast with how cash moves in your business, profit first will become a mess.
• 15:28
  SPEAKER_01: But if you are bringing money into your bank account because you're invoicing clients and these things are all visible, and you are spending money from your bank account or from credit cards, it's a great system.
• 15:37
  SPEAKER_01: It's because it's the envelope system used with banks, it's a great system that way.
• 15:41
  SPEAKER_01: And it really, I know in our business, you know, when I got big enough to hire you, it when we create accounts that you have control over or I have control over about how spending happens, it's it's also just a really nice management system for that sort of thing, also.
• 15:56
  SPEAKER_01: So that if we're gonna go do these trainings or do this employee retreat or anything like that, it's helpful to know if our accounts are sitting in a healthy place.
• 16:05
  SPEAKER_01: And that's been a really welcome thing.
• 16:08
  SPEAKER_01: But yeah, I think if you if you do everything by cash and it's hard to know which customer paid you that cash and, you know, just sort of one of those businesses in the gray area.
• 16:16
  SPEAKER_01: I think that's not a good fit.
• 16:18
  SPEAKER_01: I think the way they use it is the first step is to set up accounts.
• 16:21
  SPEAKER_01: That's the first step, setting up bank accounts.
• 16:23
  SPEAKER_01: And then the second step is to start figuring out how money is going to go into income.
• 16:28
  SPEAKER_01: So you might have to change how your merchant services, when you get checks from clients, you might be putting it into that income account.
• 16:34
  SPEAKER_01: So we need income to be gathering the income.
• 16:36
  SPEAKER_01: And right after that happens is when we can do our first set of allocations.
• 16:40
  SPEAKER_01: So it's that's really sort of the order of how it starts, which might be what your question was getting at.
• 16:45
  SPEAKER_00: I think the other thing too, we talked about in a different episode is looking at your history.
• 16:50
  SPEAKER_00: So trying to group and figure out what your buckets are gonna be or your envelopes, you know, in your account space and and figuring out historically how much as a percentage of income has gone to those different types of buckets and start thinking about how you can group those together.
• 17:08
  SPEAKER_00: That seems like another real way to apply it to c to clients on a day-to-day basis.
• 17:14
  SPEAKER_01: Yeah, I think it's um, I mean, that's part of what we talk about in coaching is the goals and how so I can look at the financials they have, and also we talk about the goals about how do you wish things worked here, and then we build the accounts from there.
• 17:27
  SPEAKER_01: So keeping an eye that the the most important thing I have to do when I'm setting somebody up, the most important thing I have to do is make sure owner comp stays fine because everything else can shift around.
• 17:38
  SPEAKER_01: If owners aren't paid what they're paid, then like it's not doing any benefit to anybody.
• 17:43
  SPEAKER_01: So um yeah, it's it's it's important to get the owners paid and it's important to make sure OpEx can run properly, right?
• 17:51
  SPEAKER_01: Nobody wants to be bouncing checks when this is all new.
• 17:54
  SPEAKER_01: They're already going to be freaking out about the balances being lower than they've been.
• 17:57
  SPEAKER_01: And then we just communicate around it.
• 17:59
  SPEAKER_01: I think that's one of the nice things about having a profit first professional in your corner is being able to have somebody you can talk to about the money, whether it's celebration, therapy, whatever it needs to be.
• 18:10
  SPEAKER_01: You know, I don't know everything about the the operation of what it is my clients do, but I understand very quickly how the money moves to make sure that we can move that lever.
• 18:20
  SPEAKER_00: So there's a difference between what historically has happened in the books.
• 18:25
  SPEAKER_00: So looking at actuals and then also looking at aspirational.
• 18:29
  SPEAKER_00: So where is it that we want to be and kind of bridging those?
• 18:31
  SPEAKER_00: I hear you saying that we have to bridge those too, because you can't always jump right into aspirational.
• 18:37
  SPEAKER_00: You kind of have to work there gradually.
• 18:39
  SPEAKER_00: So your allocations might be incremental, right?
• 18:42
  SPEAKER_00: Right.
• 18:43
  SPEAKER_01: So a lot of right, so a lot of times uh when people start, where I start from is actually building out a two-year plan.
• 18:49
  SPEAKER_01: So it happens to be that the last couple of clients I've gotten have been wildly profitable and had a pile of money that they didn't know how much of it they could have, which we've talked about.
• 18:58
  SPEAKER_01: But what generally happens is we start small work tall.
• 19:02
  SPEAKER_01: So we build out an eight-quarter plan.
• 19:04
  SPEAKER_01: So you leave things alone for a quarter and then we adjust the allocations each quarter.
• 19:08
  SPEAKER_01: So it could be like if there's debt, debt to pay off, or it could be if you are an owner who just doesn't pay yourself enough, we're gonna ratchet that up over a period of a couple of years.
• 19:17
  SPEAKER_00: If someone thinks this isn't for me, what is one tiny first step they could take?
• 19:22
  SPEAKER_00: If someone thinks this isn't for me, why do you think they would think it's not for them?
• 19:25
  SPEAKER_00: Well, maybe it just seems too intimidating.
• 19:27
  SPEAKER_00: So maybe it's uh I'm curious, but I'm not quite sold yet.
• 19:32
  SPEAKER_00: Where would you tell them to start?
• 19:35
  SPEAKER_00: What's the first tiny step they could dip their toe in to see if they feel like they can be convinced?
• 19:41
  SPEAKER_01: I I think the first dip is really setting up a business savings account and seeing if you can put, can you put$100 a week over there?
• 19:48
  SPEAKER_01: Can you do something with regular behavior, right?
• 19:50
  SPEAKER_01: Not just like it's summer in construction and now we're, you know, making a ton of money and I need to save money for winter and I'm putting money aside.
• 19:58
  SPEAKER_01: This is can you do it at every time you make money?
• 20:01
  SPEAKER_01: And it's not to say that one thing you don't do is overcome a slow season.
• 20:04
  SPEAKER_01: Slow seasons happen in a lot of businesses, but if you can do it every pay period and then, you know, the other thing you can do is just reach out to a profit first professional and have a conversation about it because our my my whole job is to make it approachable.
• 20:17
  SPEAKER_01: Like that's that's my job.
• 20:18
  SPEAKER_01: So is to help people get into it.
• 20:20
  SPEAKER_00: Can people reach out to you for that assessment?
• 20:22
  SPEAKER_01: So our assessments are on our website, so fisherbookkeeping.com, and we set a time.
• 20:29
  SPEAKER_01: So we'll talk for probably 30 to 45 minutes about what's going on with you.
• 20:34
  SPEAKER_01: If there was some part of this podcast that was resonating and you want to talk more about and your situation, let's do it.
• 20:40
  SPEAKER_01: I'm happy to have that conversation.
• 20:41
  SPEAKER_01: And then we'll uh we'll get honest about figuring out if this system is fit for you in general and now.
• 20:49
  SPEAKER_01: Like, you know, why why now?
• 20:51
  SPEAKER_01: If not, right.
• 20:52
  SPEAKER_01: It's it's it's it's not just about do you like it?
• 20:55
  SPEAKER_01: It's also about can could you have the bandwidth to to put any change into your business right now?
• 20:59
  SPEAKER_01: There's a couple things that have to come together.
• 21:01
  SPEAKER_00: Is this for businesses that are already profitable or is this for businesses that are struggling?
• 21:07
  SPEAKER_00: What what changes the approach if they're one extreme or the other?
• 21:12
  SPEAKER_01: I mean, I think Profit First is a bit like carrying an umbrella, right?
• 21:15
  SPEAKER_01: So if you're already profitable, perfect.
• 21:17
  SPEAKER_01: We want to keep you profitable.
• 21:18
  SPEAKER_01: And what Profit First helps you do is bring the guardrails in so that even when you're when you're operating profitably, it helps you get feedback about when you do small things, like you lose a big client.
• 21:29
  SPEAKER_01: Are you still profitable?
• 21:30
  SPEAKER_01: Like you're gonna feel it a lot.
• 21:32
  SPEAKER_01: I mean, I've definitely lost big clients and been like, ugh, things need to change.
• 21:36
  SPEAKER_01: And it's because it changes your feedback system because you don't have all that money sitting in your main account.
• 21:41
  SPEAKER_01: So, yes, when you're profitable, it'll keep you profitable and it'll help if big changes happen for you to notice them quicker.
• 21:47
  SPEAKER_01: So in restaurants, this could be like if if meat becomes more expensive or you know, minimum wage goes up, or there's things that can happen that really let you know if you need to change your prices or change your offerings.
• 21:59
  SPEAKER_01: And then, of course, if you're not profitable, yes, like let's get on a path to profitability.
• 22:04
  SPEAKER_01: Good grief.
• 22:04
  SPEAKER_01: Like that seems obvious to me, but if you're not running, if you're running in a gathering debt situation, that's a priority to turn around because that's not sustainable.
• 22:14
  SPEAKER_00: All right.
• 22:14
  SPEAKER_00: Thanks for talking about profit first today.
• 22:16
  SPEAKER_01: Yay, that was fun.
• 22:17
  SPEAKER_01: I love talking about profit first.
• 22:19
  SPEAKER_01: Thanks for the time.
• 22:20
  SPEAKER_00: All right.