00;00;05;19 - 00;00;25;29

Unknown

You're listening to the Profit First for Real Estate Investors podcast. This show is all about helping real estate investors and entrepreneurs bring clarity and structure to the financial side of their business. In these sole episodes, we focus on practical financial strategies that real estate investors and business owners can actually implement, whether it's profit, cash flow forecasting or mindset.

00;00;26;00 - 00;00;46;25

Unknown

The goal is simple to help you run your business with more confidence and less financial stress. Enjoy the episode. If revenue is growing but profit isn't. Your business is not scaling, it's sinking. And lots of people think that I just have to grow, grow, grow at all costs. And I'm here to tell you that is not a winning strategy.

00;00;47;02 - 00;01;10;02

Unknown

From personal experience, I've was part of a company in my early 20s where we I joined that company. They were doing about five deals a month in the wholesale real estate space, and we scale that over the next five years into 25 deals a month, which is crazy. That's like seeing something on HGTV. And we're doing 25 of those a month, 300 deals a year.

00;01;10;04 - 00;01;26;23

Unknown

I'll never forget we did 100 deals in 100 days once, and we were super proud of that. But at the end of the day, we were spending about 26 worth of deals a month out the door. So it's like even though we were doing lots of deals and scaling, our bottom line was not catching up to our top line.

00;01;27;00 - 00;01;48;22

Unknown

And not only that, there was no bottom line. And this is where revenue, yes, has to take first position. You have to make sure that you get deals and you get sales in the door, that you make sure that the number one function of your business is to produce the sales. This is where you have a product, you have a service, you have this thing that you want to sell.

00;01;48;24 - 00;02;07;26

Unknown

That has to be the first position. Like you can't manage money if there's no money to manage. But and here's a big butt that even though you make the money, you have to have the other side of the equation and keep it too. So it's not just about revenue, it's about the profit. And so a lot of people say they want to scale.

00;02;07;26 - 00;02;28;04

Unknown

They want to grow to that next level. When I hear that, I really just hear I want more freedom from my business. I don't want to be the only one running around doing the deals, making the sales, doing the admin, doing the bookkeeping, doing all the stuff. You know, what are the core foundations of a business? You've got marketing, sales, finance and operations.

00;02;28;04 - 00;02;56;11

Unknown

It's like and that's where if you're a small business owner, you're doing all the functions of all those different departments by yourself. But you want to scale and you want to grow and you want to hire people for those different positions. But if you hire someone that's usually going to take your net profit way down, right? Like if you're just scaling and growing and you have a business and you've started to make some sales, those hires are going to be one of the first ones where you're like, okay, if I hire this person, will I have anything at the end of the day?

00;02;56;16 - 00;03;17;23

Unknown

That's why some people start the virtual assistant route. Some people start with just an executive assistant that's either on their team, whether it's in person or virtual. This is where a lot of people just start with, what do I need off my plate first? If you're going to step from solopreneur into business owner, one of the first hires usually for most people is a good admin so they can take off.

00;03;17;24 - 00;03;35;25

Unknown

Some of that work that you're doing that are ten, 20, $30 an hour tasks so you can keep the focus on the higher dollar per hour tasks like marketing and sales and getting the deals in the door. But here's where it gets sticky. It's as you grow in scale. Let's say you go from making 100,000 a year to 500,000.

00;03;36;00 - 00;03;58;07

Unknown

Your business will look different at 500,000, then at 100,000, you might be you might have more people on staff. You might have different marketing channels. You might be adding more systems processes. You might be adding more of the actual like softwares and things like that. But just because you scale and have more revenue does not mean that that bottom line profit is there.

00;03;58;10 - 00;04;23;01

Unknown

What will help you maintain a bottom line? Do you know what it is? It's real simple. What you focus on expands. You need either someone focused on it, or you need a system that focuses on the profitability for you. This is why I'm a really big fan of the profit first system. Because profit first, make sure as a business owner that you put profit first in a for profit business.

00;04;23;01 - 00;04;44;25

Unknown

That does not mean you don't take care of your staff. That doesn't mean that you just are profitability at all costs. It means that we think about profit, not just per deal, but as a business as a whole, and that we are building our business around the idea and around the concrete thought of we are going to be profitable and we are going to build profitability into everything that we do.

00;04;44;27 - 00;04;58;19

Unknown

This is a lot different than this scale at all costs method, where it's just like, hey, as long as there's money in the bank account, as long as I don't have to worry about that, as long as I'm getting deals, as long as that there's sales, as long as there's all that. I don't really care about the net profit.

00;04;58;19 - 00;05;17;10

Unknown

I just care that there's money in the in the bank account. That is a losing recipe for scaling profitably. There's so like I said, there's a couple of ways you can either have someone focused on you can have a system focused on it like profit first. When I talk about you can have someone focused on it. People think automatically when it comes to the financial department.

00;05;17;16 - 00;05;38;05

Unknown

That means a bookkeeper or a CPA or someone like that to help us make sure that we're keeping the money. But a bookkeeper, a CPA, is not really going to help you get to the finish line of an actual profitable business. They're just going to tell you what has happened or how potentially on the tax side, if you're paying for tax strategy, how can you keep more without paying more in taxes, which is a big benefit.

00;05;38;08 - 00;05;54;07

Unknown

But if you want the day to day taking care of, like how do you make sure that you are a profitable business, having someone that's more of a financial leader or a financial coach? A lot of people call them like fractional CFOs out there, someone that's more of a financial leader helping you to make sure you're maintaining profitability.

00;05;54;10 - 00;06;10;26

Unknown

But how do you really know that if you use profit first, that's a system that's built in for your business to make sure you are profitable off of every transaction, because it's all about keeping the money that you make and it's a system. And if I have to just put it on the bottom shelf, it's the envelope method.

00;06;10;26 - 00;06;28;17

Unknown

But for business. So it's on steroids. So instead of envelopes and you divvy out your money in your personal life for the different things like gas, utility, mortgage, rent, whatever it might be on the business side, you set up business checking accounts. That's the practical side of the profit first system. So as money comes in you up, you put them in different bank accounts.

00;06;28;17 - 00;06;43;15

Unknown

You put that cash. So some might go to a profit account. Some might go to an owner's compensation or an owner's pay account to pay yourself. So that way you can actually pay yourself first, then a tax account so that way a tax time you don't have to be like, oh shoot, where am I going to get the money to pay my taxes?

00;06;43;15 - 00;07;06;05

Unknown

It's having clear cut destinations for your cash will help you build your profitability on the way up, because there's also a concept in the profit first system called target allocation percentages, which is a fancy way of saying these are the target transfer percentages when a deal comes in. And if we sell a deal, how much and how much buy percentage of that money that comes in.

00;07;06;05 - 00;07;32;26

Unknown

Am I going to put in the profit or how am I going to put towards paying myself? Or how am I going to put towards, you know, the operational expenses of the business? Then you have an actual plan in your business to be profitable and you have a system. Then if you want to make sure that it becomes a system and it becomes repeatable and something that you do on a consistent basis, that's when you add that fractional CFO piece in to make sure that you have someone holding you accountable to scaling profitably.

00;07;33;02 - 00;07;54;07

Unknown

At the end of the day, you want more cash in your bank account. That's all you really care about is keeping more. So that way you can buy your financial freedom. By the time freedom back, buy what you really want to weather that is going out and scaling and having more people on the team, but scaling profitably, or if it's taking the trips, taking the vacations, whatever it is that you really want, you want that.

00;07;54;11 - 00;08;13;00

Unknown

And you don't get that by scaling at all costs and just putting more money into marketing and hoping and praying that one day it all work out and that you'll have more money in your account then what's going out? That did not work for us. We were really, really good at bringing the dollars in the door, but we were not good at scaling profitably.

00;08;13;00 - 00;08;30;28

Unknown

We were good at scaling, but not scaling with the bottom line. That's where a system like Profit First would have helped us. Having a fractional CFO would have helped us, probably would have saved us. I probably wouldn't be on this video talking to you right now. If we would have had a fractional CFO back then, because we have been doing 25 deals and keeping lots of the money that we brought in.

00;08;31;05 - 00;08;51;23

Unknown

But this is where I want to help you. I want you to be saved before that point. I want you to know that there's steps that you can take in your business. It doesn't have to be random. It doesn't have to be, gosh, I hope I'm successful with this. It's there's certain systems you can put in place and there's people that you can put on your team that will help you scale and grow profitably as a business owner.

00;08;51;23 - 00;09;09;11

Unknown

Because like I said, at the end of the day, you care about what you're keeping, not just everything you're making. Because what's that cliched statement out there? Revenue is vanity. Profit is sanity. Cash is king. I want that not to just be a mantra. I want that to be something where you can see it reflected in your bank accounts.

00;09;09;18 - 00;09;24;19

Unknown

I want you to have cash grow, but I want it to be profit that you could use for whatever the heck you want it for, or start paying yourself from an owner's comp account. This is where you're going to have very clear cut goals and then a system to back up those goals in order for you to scale.

00;09;24;19 - 00;09;49;00

Unknown

Because if you want to scale, when I go back to the target allocation percentages, those are the percentages of how much you put into the different bank accounts. If you want to scale up, there's different percentages depending on the bigger the size of your company. So the bigger you get, the percentages change. But they still always pad the profit account and the owner's comp account, making sure you have percentages for profitability and actual cash profitability.

00;09;49;07 - 00;10;05;28

Unknown

So that's where it becomes a system to keep more of the money that you're making. If you if you don't if you're not intentional with the dollars, the dollars will control you and you will not have the profitability that you really want. Then you'll say, man, I'm doing more than I've ever done. But where did it all go?

00;10;05;28 - 00;10;33;00

Unknown

I feel like I'm broke or I don't know where my money's going, or I'm making all this money, but I feel like I've lost more than I've made. This is where I want you to have systems that help you protect the money that you are working hard and fighting for to get in the door. These systems can help you scale and grow, whether it be a system like Profit First, whether it be a fractional CFO that's holding you accountable, that also guiding you on that journey because I want you, at the end of the day, to have that money and use it for what you want.

00;10;33;02 - 00;10;51;16

Unknown

Thanks for spending time with me today. If this episode gave you clarity or a new perspective, be sure to like, subscribe, and comment below if you're ready to apply. What we talked about today with real guidance and accountability, visit profit Recom to schedule a free discovery, call with us to create your path to financial clarity and freedom.