Manage Your Money for Maximum Profit

Lesson 10 of 23

Instant Assesments

 

Manage Your Money for Maximum Profit

Lesson 10 of 23

Instant Assesments

 

Lesson Info

Instant Assesments

The instant assessment is the cold bucket of water it is the kind of the ice bucket challenge um what we're gonna do and we're going to try to make hot seats as we can because I think where you going experience this is by going through yourself and seeing many people go through it will help you our business is I've studied about thousand cos of all different size from fifty million dollars in revenue which I consider big companies statistically are technically against her they're big small companies down to the smallest company's brand new startups that make you a thousand dollars a year and found different ranges of revenue that determined now that I've determined in these different ranges of revenue different degrees of health healthy businesses run certain percentages and so forth so that's where we'll be digging into this thiss period but I want to do first if you're up for jace is for you to come up come up right now join me in the hot seat here when we're talking about profit fir...

st we're talking about having prophet says side for an emergency right and when you wake talk about that today wait about segment and when we were uh when you start implement this was about a year ago I believe after we did pumpkin plan here you sorted out the official title of that course but when we're talking about pumpkin plan I implemented just my profit account okay, I didn't bring on all the extra accounts we talked about okay but I did start with profit so that was about august september last year and that's one touch on something first with this yes the big thing about profit first about improving the prophet in your company like we said that when the early slides is not doing it right it's about doing it and just getting it started and all the stuff I'm teaching you you can come back you can watch the video over over again and you could do it over time but if you do nothing else just start off with a profit account just to start learning how this process works and watch your own behavior so he could I love the share we experience was implementing it and if you're if you're up for like to hear what you've been the challenges you've been facing, how it's helped you navigate and sure sure hopefully if I get long winded let me uh so implementing it last year I came in with a completely abstract I didn't do the assessment that I should have uh I came in I said I'm gonna put five percent into it which honestly I didn't feel but I also didn't have those other accounts set up so where did you pick five percent? Probably from a poster it might have even been in the course we talked about five percent being the starting pull starting point okay uh not having done it and I just went with five percent it didn't hurt me I didn't notice it in any way um and what kind of if I may ask what revenue does a deejay make? I mean I mean that's a loaded question maybe share your numbers if you feel it's appropriate if it's better even shared kind of industry norma's if that's that's still a loaded question let let's let's just say fifty for now fifty thousand a year no fifty five zero we'll say five zero fifty was that mean fifty? Fifty thousand fifty thousand a year okay would be its a good round number it's probably in the middle of where everybody in the city okay, so fifty thousands is the middle d j and you were setting aside five percent yes, which means twenty, five hundred a year is going to profit account pretty much okay, okay keep going so uh that was going in I wasn't doing a quarterly distribution I was actually touching it monthly so I would get the money and I would send it over. I wasn't in a rhythm yet so I wasn't doing a ten twenty five or anything and every time money would come in I would just push it over to the account which was at a separate bank okay, so I didn't see this money that temptation was removed, okay but once a month I would go in on the first and I would pull half I would take my half distribution and what were you using that money for not the business I had learned not to use it for what it would be something for me it's just it was a fairly small amount of money it was growing but it's still a few hundred bucks you know, maybe a nice dinner or okay um I guess this kind of does go back in the business but if I'm off at a conference I might use it for a dinner out of a conference with other colleagues things like okay so you were using for dinner, huh and how did you feel when you were using it for those purposes when okay okay I don't know if you felt positive their business was taken care of you your business was serving you some degree or yeah yeah, it wasn't a negative feeling if that's kind of where you're going with it but uh so then over time you were I knew you were putting this book together and I had talked to you a little bit behind the scenes and then prior to the book coming out I was able to read it as a manuscript and that's when I started bringing in the other accounts so I actually kicked it down to two and a half percent because it made more sense with all my other allocation okay, so you set up that profits two and a half percent and you said about what and that would have been around april or may and you seven owners pay account I set of owners pay uh which was sixty okay and then tax account of seven and a half okay, so you remember which was based on my tax history so I I had already well with instead of sex and figures seven is twenty percent for operating expenses, right? Uh sixty I'm sorry. Thirty thirty yes, thirty percent thirty percent should be thirty not my math is wrong. Okay? And then what happened? Uh then I found out that my wife's job was gonna be moved to a new city which meant my deejay business that I had been working for five and a half years. I was going to be uprooted and moved to a city that's two and a half hours away from where I've been working which forced me to reevaluate a couple things, but it also forced me to restart a lot of things. My vendors were pretty much non existent, so I didn't have those referrals coming in on a regular basis uh certainly I still had things like if I could use this word to hear but yell pond those online reviews were still sending me things but it was a different type of lead it wasn't the word of mouth from vendors from my prior clients those people no longer existed to me and I didn't think it would be an impact on my business but it was a huge impact and after about a month and a half two months I I had a zero for income for a month and uh and then you say you moved to a new place uh get the d j business assume you build your reputation online a little but the local vendors the local people know it's with it's with what you d'oh I mean people see you work that's that's pretty much it goes zero income went to zero uh which pretty much you curl up in a corner and cry for a little bit and then, uh I tapped into my profit account which had about two months worth of of operating expensive it and that's what has kept me going and unfortunately this month, you know, twenty five I I actually ran those numbers and and I was able to move money around again because I actually had some income but you said you tapping your operating count you mean say that already happened your profit accounts okay, so you're you had some rain you see, when you were taking profit distribution I I purposely was letting it build I wanted to build it to three months worth of of expenses yeah, but I only got it about a month and a half two months okay, but it got me through last month when I pretty much had nothing okay? And uh and I know we were talking last night was a scary time for you uh play some scary there's there's money coming in it's not what it should be yet uh and I'm I'm still having to re evaluate everything from marketing to pricing too what do you feel that by taking this profit first that it's has affected you in a positive way to handle this situation? Are you in a better position because absolutely absolutely mean if I didn't have the account I would have spent less than nothing. Yeah, which like kind of dio ii would be even further down than I wass in uh I probably wouldn't be here today to be honest and do you feel as business comes around again and I believe every business everyone's life cycle was a cycle, right? Yeah, questions how when you get to the top it's like how long can you stay up there and slow things? But do you feel that you're going to stick with this or it was proper first? Oh, absolutely absolutely e I see no reason not to uh one thing that I kind of left out of that I guess is in the four months that I've been doing it I also had the tax account in there so I was able to pay taxes in july which is something I I've never really had to because when we've had some offsets that have pretty much started out most of my taxes but um it was the last year was the first year I really had a uh you gotta pay write a check and I was like I don't know where I'm coming up with nine hundred dollars taxes this year yeah so now that money's been going into the account I was actually able to make a quarterly payment without sweating it because it was there it was in that hidden account off to the side and it was july here's a check good yeah ok so so that was nice in july as well where I did have a temptation to pull it back and run the business I still sent that great well thanks brother I wanted for you are the prophet account see well this is just the reality I want to talk about like way here are these businesses ever everything's perfect you look at the cover of magazines every his businesses crank along and the reality is what you've experienced experiencing I've experienced it I fear that I'll be there again I fear that all of our businesses that sometime we'll have dark periods it's just the nature of business but what was reassuring when you were telling me a little about this offline is the fact that there's a little bit the coffers because you've been assigning aside that you've still paid taxes you didn't you want the worry about that run april fifteenth and you've got a lot of stuff going on but a few of the worries have been peeled away it's a little bit less on your plates absolutely I appreciate you sharing a bro code all right anything you want hug it out good um is roderigo ready good so I want to introduce you to uh rodrigo uh this is me romano they madre de frente a um when it started how do you my friend good I'm doing well I like the beard that's I've never seen you with a beard before you turn you look let's go are you in in monterey right now yeah I am andre here in mexico very very excited for being here to share this with you and when all the people there that in the aliens and connected by the world so rod rio and I met three or four years ago and just a wonderful man a wonderful man he's a business coach in mexico works throughout the all of mexico and in the us and I've had two experiences with rodrigo one was in mexico city we went out for breakfast and one of my favorite breakfast is was on this kind of side street in mexico city like going like you're in the french riviera was like a beautiful area and where is having a deep conversation about business? And he was talking about his own business is a business coach and and what has been going through his experiences in growing it and so forth? This second experience when I learned about his business is we met again up in colorado he myself a couple of the people we rented a house to spend a few days together helping each other in our business and we end up being roommates or showing a bathroom and the funny thing is you want you could tell our rooms just from the distance mind was like an explosion of s h I t everywhere then in the back and rodrigo and I split half my side there's towels, toilet paper there was a dead person on rodrigo's side was like, meticulous and perfect, you know, not a single thing. Avalon alignment his bed was made perfectly and so we said, you know, when it comes to systems and organization, we're gonna rely on rodrigo to do that stuff, but rodrigo, one thing we did together was with your own business we didn't instant assessment remember that yeah, of course I remember very well I wanted to share because one thing is important I just brought jason up and we talked about him doing the instant assessment and kind of position his business but you have an international business you're you're in mexico it's a different economy a different culture I want you to share your experience of what the instant assessment was like for your business what your experience was well basically as I think three really happened when you shop first time the profit first concept on the ideas I say was have have bean I thought that there's some things that that you know and there is something that you know that you don't know and some things that you don't know that you don't know on this is one of the kind you know I know that that I don't no about nothing about brain surgery you know I cannot do that and not a doctor but when when when I first give with this country something that I'm having an idea because we have all these concept off the dribble our accountant systems you here forever you know keep maybe on is the way it is when to turn around with proper tears it's really something completely new so when we run this assessment is what's obviously that I have too much expect is on my business I mean is is what's clear and yeah you had so we say arizona napkin we had a beer a couple beers were sitting down we start talking about your business we're running this down and there was ah ha moment about your employees and there was a tough conversations can you share kind what that experience was like yeah basically when we make the salesman it was clear that you have too much space and the expenses were a somewhat off my employees because since we have ah coaching firm you know basically we don't have too much assets or any assets at all so all we have is expenses on those expenses are eyes payroll so we start to look into the peril we say you know is there is no way that you know the school we working with that kind of expensive we have kind of peril you have it was clearly that we have to have tow tow a make those fences it's more even if you you know all the time you look for a nice upstanding thing yeah, I know I have maybe too expensive but I can make sure I just have to increase sales that is maybe one of them is his ways to to cheat yourself you know that you have increased more self but doing these other over and over on wei have all these roller coster on each month you know, we're not many making when they make it with apparel and we're not gonna make it with my peril on okay these moments will save were this man we're not way have all the situation I want a response so when we were on the assessment well basically it's just like crystal clear I mean I cannot hide any more in any place that was reality yes sound like I mean remember you're almost kind of playing a game with yourself that you said well I got you a three or four employees and we you know you were justified that you need them and like you said you just needed more sales I just got to sell more and more and more once we do the assessment you took some action but what is it like to cut back expenses what was it like to have a lay off some people I dare say what was that like? Well e thinking is like every every business in the world I don't think that it doesn't matter if it's small b when you have to let people go it's pink it's a painful situation for everyone right nobody starts bees and saying you know I love getting people off the vote everybody wants look being into some a place that they can sure world on give opportunities to place and everything but I mean but it was something that it has to be done a certain point you have I have to really get reports say if only five of these none of the beans may may survive you know we already went to the you know to the states is where I put money my parents good money we have along divine way went off true all those faces on basically is we'll work that way cannot go no more with asking this kind of situation so it was very painful but at the end you know I was too that I had to do it I saw what happened when you imagine when you were going to do it it is when you're doing it in the real stuff unless it is less than four than what you thought you know when you really actually do it so it was not easy but since then I have no have any problem with my cultural in more than a year so basically when I start to do that andi you had you had business you still have business partners you know these air silent partners it's funny I pulled up kirsten from our audience here she's live and you said that your parents got involved in my house looks familiar mom and she had the same situation and you had silent partners that invest a lot of money did they ever get a profit distribution before this? No, never never, never. And then once you implemented it, just tell me if this is right your sales didn't necessarily change too much by your profitability increased I believe and what what was the experience of your silent partners when you gave him a profit distribution well, what? I told them that we need to do this, you know, to get lean. I mean, they were very supportive. You know where you have to do, but we don't went for more money. That's that's enough! We have the most money so on we already got wee have along in the bank. So where did you do? It's ok, we're not putting more money, so they were fine on that. Andi, wait started a little by little, you know, with small percentage. And we have a plan to increase it to the to the actually ten percent of the profits first approach according to the tour or revenue or generally revenue, but became the first quarter. And I see no sandy anemia and say, you know, guys there's no much, but we have some money on the profit on profits account and we wanted to distribute for for the first time so we have to figure out how we're gonna do it because we lived and did before, but they were thrilled, you know, to say, you know, even if it's small, I really it was like, like, honey, you know, honey for a bee a year without having any honey, so they were, you know, they were very, very, very exciting, even if it was a small amount they were excited ok this you know, this is something to celebrate this is you know it will finally may see the light at the end of time yeah, I found that that uh a small one or big win is a win no matter what and if you have investors in your business or you are the investor in your own business even when the first profit isn't like a huge amount of money it's still a profit and it's amazing these I met some of your partners when we were touring around mexico together these air sophisticated guys these are professional investors this is what they do for a living right? I mean, these were these guys and it was a small amount of money and it wass that you shouldn't but they were just excited as anyone else would be and it changes our relationship to our business so don't worry about the size of the prophet the size of your reward just worry about rewarding yourself if you take home a dollar once a quarter in profit you're taking a profit in your mindset starts changing tell me about this because this is one part I'll always struggle in is when people struggling is when we cut back expenses you had a layoff employees you had to cut back a lot of things did your business did you compromise your business to sales sales must've dropped? I mean what was it now? Basically, what happened is that I fear that I have to start doing different things more things that I did before, but somehow you know, you do, you get, you get to it, you get organized and reorganized a on dh, basically, the business didn't suffer basically at all on, even if we don't have way don't have increasing sales way continue with the same amount of cells, but no, we don't have enough to worry about each day each month paying the peril and everything. Obviously I have also to take care of my off the you know, off off my peril, nor too to accomplish that amount on the positives that should be done for the owner's peril. But I feel out too, to get a money in our ways and at the end are really didn't really didn't change in my personal fanatical, I start to get my more personal clients because I have my coach, is that a general oftimes? But since I love to do these, I start getting a personal kind for me. So in the presence of fine inside and in the business side, basically nothing saying change, the only thing that changed adi n is that we're no suffering month by month of a in pain or expensive pair or obligations hey, you know, some tomorrow you know we got to have a nice dinner with our wives or whatever you know thiss way I mean we will be different and you can invite your quite there to come down to the video so one last story one share is my last night in mexico city with rodrigo michael garber came to visit michael garber is the author of the book in the three of us a couple of her friends too we're having dinner together and I love michael gerber I love his book if you've not read the myth uh it's one of the mandatory reads I don't know if you agree or not but it's one of the mandatory of course right for it for every business there's one thing I challenge michael on and I will not repeat the words he said when you challenge michael garber on something because he loves the f bomb s so I said I got to disagree with one thing in your book michael gerber in his book says that we need to convert from working in our business toe on our business you know well, most of us work in our business, which means we're just the employees working on it we're overseeing it managing said the one challenge I have is the way he presents the book is that this transition is an immediate transition but when it's an immediate transition we have to realize that our business can't transition that fast to so if we go from working in the business and all of sudden we're working on it, the business needs people to fill those roles and we end up over hiring, I said, michael, I don't think it's a switch, I think too slow transition you first work in your business one hundred percent it's time when you're starting it up as your business starts growing and have one of two employees you're still working at seventy five percent of the time in managing a little bit as you get bigger, you've nine, ten employees now maybe you're working on it in a fifty percent time and on a fifty percent of time. But even jeff bezos a five billion dollar company amazon, he still works in the company he's their best sales guy when they're doing a big deal, jeff bezos is there, so I said, michael, I think we transition from into on but there's always some kind of ratio and he said, f you I think I had a but I'm buying dinner too, so right, but that's the way he is he's funny. Yeah, maybe that means he agreed with you. Yeah, so so rodrigo, I just want to share a story it's always a pleasure seeing you and thank you, my thanks for sharing your experience thank thanks to you. And I hope you can reach more people changing thiss cheats of parenting. And it really have to be done on all the work on small business entrepreneur, because these things could be, ah, big, change everything. If it's working in mexico, we're going to work in here, in the states and throughout the world. Grass is swooning, brazo bye.

Class Description

Ready to take full control of your business’s financial health? Join Mike Michalowicz, author of The Pumpkin Plan, The Toilet Paper Entrepreneur and his newest book Profit First, for an immersion into understanding the shockingly simple principles behind financial management and leveraging it to grow your business.

In this course, you’ll learn the core four principles of financial health and how to use them to create a profitable "rhythm" for your company. You’ll also learn about the psychology of managing your debt, whether you’re struggling with credit card debt, loans, or personal guarantees. Mike will also cover ways to bring new money into your business through cost-cutting, renegotiating, finding lost revenue opportunities, and much more.

By the end of this course, you will have escaped the panic-driven cycle of operating check-to-check and you’ll have a foolproof way of ensuring that your business becomes permanently profitable... from the very first day that you watch this course.

Reviews

Ella Heath Photography
 

Wonderful class!! Not only is the content very impactful and life-changing but Mike's funny character made the class very entertaining - the marker on the forehead story made my husband and me laugh to tears!! We are implementing Profit First right away. Thank you CL for hosting such an amazing class.