00;00;00;08 - 00;00;25;14

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 solo episodes, we focus on practical financial strategies that real estate investors and business owners can actually implement, whether it's profit, cashflow forecasting or mindset. The goal is simple to help you run your business with more confidence and less financial stress.

00;00;25;16 - 00;00;48;29

Unknown

Enjoy the episode. If everything from your business goes back into your business, you'll never have personal freedom. I hear this all the time. I want to reinvest back into my business. To me, that's just code for I have no idea what's going on, and I really just am spending every dollar that I'm making, and I hope that I'm going to one day be profitable.

00;00;48;29 - 00;01;06;26

Unknown

So a lot of business owners wonder why that's not a great recipe for success, or why they make money, but feel broke. I don't want you to live there. I want you to be a business owner who knows where every dollar is going. Who knows what they can keep? Who knows what they can spend on the business as well too.

00;01;06;27 - 00;01;27;24

Unknown

So I want to give you a very clear roadmap for how you can know what to reinvest into the business and what to pay yourself. I am a huge profit first fan, and I wrote Profit first for real estate investing. Going back to that framework, I want to make sure that if you incorporate profit first, which is all about keeping more of what you make.

00;01;27;25 - 00;01;46;22

Unknown

One of the big tenants of Profit First is running your business by percentages. What does that mean? That you know, the percentage of okay, this is how much I'm making. This is how much I'm spending. This is how much I'm keeping. So if you're making the make one is real easy. How much are you making this last year, did you make $1 million?

00;01;46;22 - 00;02;09;08

Unknown

Let's just do a round number for the example sake. You made $1 million. Do you know much? How much of that million that you spent? Let's start there. Do you know if it was 500,000? Was it 750? Was it 900? Was it 1.1? So you spent more than what you made. I need you to have a very clear picture of what did I make and what did I spend?

00;02;09;09 - 00;02;27;19

Unknown

Then what did you actually keep? Meaning? What did you take home? Now, a lot of people, when they first start this process, they're like, I want to incorporate profit first. I want to run my business by the percentages. I know that my percentages right now aren't healthy. Where do I start? Well, I tell people, start where you can.

00;02;27;21 - 00;02;54;04

Unknown

What can you do right now? Can you do 50% to the operational expenses and 50% to pay yourself and to all the making sure you're the pay yourself first accounts? Or does it have to be a little bit different? Is it 70% pain, you know, out the door or 30% to yourself? Start with what you can do. Because at first, if it's if you were upside down, let's just say you've been in business for a while and you know you've spent more than what you're making.

00;02;54;04 - 00;03;15;22

Unknown

That's why you're always feeling broke. That's why there's no money in the account. You just know that I'm spending it faster than it's coming in. If and it's honestly very, very easy to do that in the real estate space because you can get private lenders that send you the money for properties, then you end up using the money for the properties on your actual business and not to finish the projects.

00;03;15;25 - 00;03;43;12

Unknown

So unfortunately, it's very common. But I don't want you to live there. I want you to know what you can invest in your business. So how would you use. You're sitting there saying, David, this sounds great. Brad first sounds great. Run my business. Five percentage is great. What if I'm upside down? What if I have no profit? Now is the time to start incorporating a system then, because you cannot keep going down the unprofitable road and expect to end up in the profitability land.

00;03;43;13 - 00;04;05;09

Unknown

Like I want you to now say, okay, you were spending 110% before, can you just spend 99% and 1% goes to paying yourself like something as simple as that, knowing that you as a business owner, okay, I'm spending 110 and I could cut it down to 99% to live right within my means, but 1% can go towards me.

00;04;05;10 - 00;04;22;26

Unknown

You might have to start there if you're upside down, but you need to start somewhere. I'm more interested in you creating the habits of a wealthy business owner. Then for you, just going out there and saying, okay, I'm going to do as much deals as possible, or I'm going to get as much revenue in just to make sure that the business is still afloat.

00;04;22;26 - 00;04;43;03

Unknown

I want you to know, what can I spend, what can I also keep? And the biggest clue I could give you there is to be able to know what are those percentages that work for you right now. That's where you have to be very honest with yourself. If you are upside down, you might have to bring it down to 99% spending on the business and 1% to you.

00;04;43;03 - 00;05;00;22

Unknown

But then the next quarter shouldn't look that way. It should look like 95% to the business and 5% to you. And the next quarter should be 90% of business and 10% to you. I'm giving hypothetical scenarios right now of what you could be doing and what you could be cutting. But I want you to have a very clear goal.

00;05;00;22 - 00;05;17;20

Unknown

This is where I am percentage wise right now in my business. This is where I need to go. I need to be able to pay myself first. I need to be able to have wealth. True wealth building. What I want you to focus on is how do I just get a little bit better each and every month until it's in a very healthy position?

00;05;17;20 - 00;05;38;13

Unknown

If you go from 110, then over the next few months or quarters, you go from that to 70% pained into the business and 30% that you get to keep. Well then guess what? That is a huge, huge leap for you. Then we might be able to even get it better than that. Maybe over the next couple of months you go to 65, 60% going into the business, 40% paying you.

00;05;38;15 - 00;05;58;20

Unknown

I want you to be very clear where you are and then have a roadmap for that journey. But you have to know sometimes the hardest point is knowing where you are right now. So really taking a hard look at your numbers to say, what am I making? What am I spending, what am I keeping, and how do I actually keep more of what I'm making?

00;05;58;20 - 00;06;18;21

Unknown

How do I stop spending so much? You can look at different things like expense analysis, and making sure you're cutting the things that you don't really need. You can look at doing a little bit more deals. I'm not against you doing more deals. As long as there's intentionality of if I do another deal, then I know that I can allocate more towards paying myself.

00;06;18;21 - 00;06;40;07

Unknown

That's a much better line of thought than I need to just do more deals, because all my money's run ran out and I need to just cover this. I want you to be able to get to where you need to go. Run the business by percentages, know what you make spending, keep by percentage, and then start working every single month and every single quarter getting those percentages to be healthier.

00;06;40;07 - 00;06;56;25

Unknown

So that way you can have a business that works for you to help you keep more of every dollar that you make. 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.

00;06;56;27 - 00;07;04;22

Unknown

Visit profitrei.com to schedule a free discovery. Call with us to create your path to financial clarity and freedom.