Profit First With Rocky Lalvani

Thomas Green here with Ethical Marketing Service. On the podcast today, we have Rocky Lalvani. Rocky, welcome.

Thank you so much for having me on, Thomas. Excited to be here with you.

Glad to have you. Would you like to take a moment and tell the audience a little bit about yourself and what you do?

Sure. So I’m in the United States and my family immigrated here when I was a little kid and so we started off pretty much you know on the wrong side of the tracks with very little but they very quickly were able to improve their financial situation. And what was different about the way that I grew up is my parents would get together with some of their friends who had also immigrated to the US. And they would talk about life in America and how do you survive and thrive? How do you create the American dream? And a lot of those conversations were around money and so I grew up learning how people were handling money, how they were spending money, how they were making money. And I didn’t realise until much later in life that people are generally not taught about money and then I had a much bigger ah ha where I came to this realisation that business owners didn’t understand the business of business and that kind of really floored me.

I’m like how do you run a business and not look at your P. And l how do you know whether you’re doing well? And so that kind of created my last pivot, which is kind of where I’m at today, which is to help business owners ensure that they are always profitable, that they are making good decisions and their decisions are based on the numbers and that they can create that financial rewards for themselves. If you’re going to take the risk of going into business and you’re going to work hard then at the end of the day you should get rewarded for that. You’re doing a lot to help the economy and grow your country and offer jobs to other people. But you two deserve to be rewarded and just seeing how many business owners can’t reward themselves because of the financial decisions they’re making. It’s like this isn’t the way it should be and so little by little we’re just trying to fix that. Make it better for people. I think the topic of conversation that you’re bringing to the table was a very important one, which is what I said to you before we started surface level questions, any relation to Tej at all?

Yeah. So he is my cousin. His grandfather and my grandfather. I think they’re brothers. I think that’s where the relationship is. Yeah, because I’m in the UK I’m a Dragons Den watcher. So immediately I saw your surname and thought, yep. Yeah. Can you tell any Dragons Den stories at all? I don’t because I don’t know that we can watch it here. All right on our TV? But yes, so yeah, they did really well. His dad and his dad’s brother, very successful business people. I think his dad’s brother had been a tone. I don’t know if it’s still in existence or what that’s an electronics company on your side. And then they did the whole business in the vitamin side and that’s just phenomenally successful. So yeah, they worked really hard to do that and it took time but highly, highly successful kids in some of your profile or perhaps your website, I read that how you’ve done well is and it also what’s inspired your business philosophy, philosophy if you like, is to pay yourself first principle if you can call it that any richest man in Babylon inspiration there.

So I read richest man in Babylon much later I think I was just taught. So when I was a kid I had this goal I wanted to be a millionaire and I would read the Wall Street Journal and I just assumed the way to do that was the stock market, which was totally misguided. but basically what I did when I got out of college and I got my first job is I immediately started saving. So I had them take money out of my paycheck to go into the 401K. Which is our retirement program. I had them take money out of my paycheck to buy company stock for the company that I worked for, they had a credit union, which is basically kind of like a savings bank and I had them take money out and put it there. And then once I got my paycheck, my dad handed me a brokerage account that had just a small amount of money in it. But they would also take automated payments out of my paycheck and they would put it aside. So before I even started to enjoy the money, I was making all of these automated systems were created to suck money out and start investing.

And then I just sat down with a calculator, I said, okay, you know if I create this excel sheet and I put this much money away and this is the return I get how many years until I become a millionaire and I just tracked it and did it. So I don’t know where those principles per se came from or who I was listening to. But that that decision at that age was what created my wealth and looking back now I realise it was luck. You know, I don’t know where I’ll be honest. Like at that point, I just I don’t know, I just had this desire to save money and let it build. It’s like lucky. What did you think of the book? I love the book. I think the book doesn’t so I think the book is about more than money. Everyone talks about richest man in Babylon. They talk about saving 10%. I’m gonna tell you something, saving 10% is going to get you know where I mean? It’s nice but you’re gonna take 40, 50 years of saving 10%.

So I think the rate is way too low. You’ve got to either hike up that rate considerably or hike up the top line considerably if you’re only doing 10%. But it was also a book of how do you provide value to people and to think in those terms and I don’t think people realise they don’t talk about that part of the book as much. But that’s literally what it comes down to is a business owner. The more value you provide, the more revenue you’re going to get, wow. Well you mentioned in your sight and also perhaps you touched on it in your introduction how business owners are potentially or some business owners are intimidated by their financials. What do you, would you mind just talking about that for a moment? Oh yeah I so I think a couple of things, you know, going through school. What are you told? Math is hard. So if that’s what’s going through your mind that math is hard, it becomes a struggle. The other thing I find is that there are certain kind of business owners who love what they do in their business but the business of business is just not their thing.

So you look at someone who’s maybe a plumber or electrician or something. You know in a trade, they love doing their trade sending out invoices doing collections, looking at P and Ls. is so far out of that that they don’t want to do it. Same thing. You know you’ve got people who are in a creative business. So creative agencies, digital agencies all of that whole space. I always say creatives and money or like oil and water like they love the creative part but when it comes to the math part like they get a headache just thinking about it. And then some other surprising professions that also struggle if you look at attorneys, you know, one of the jokes amongst attorneys is there’s no math class in law school. Nobody ever is talking about the business of running a law practice. Same thing for physicians never in their medical school or they taught the business of running a medical practice and I have an MBA.

I have an undergrad degree in economics. Neither of them taught us how to – they showed you what A P and L. Was and how to read it. But nobody taught how do you make the levers change to actually bring about more profits and how do you make these types of choices? So I think it’s an area that lot of people struggle with and school is not there to teach you how to do this, which is absurd because we spend all this time in school for the sole purpose of making money and they don’t really teach you how to pay me? So I think it’s just a struggle. What do you say to someone? Would you help someone who was like saying, I really don’t understand the financials or how to change them? What would you say to that person? So number one, I’d say if you’re going to run a business and even as a person, because these principles are the same, whether you’re an employee or a business owner, whether it’s your household finances or your business finances, somebody has to sit in that seat, somebody has to look at your financials.

If it’s not you, that’s fine, put somebody in the seat but make sure the person you put in the seat knows what they’re doing, and number two, you still have to oversee that seat and how that person is behaving and making sure that they’re doing it right, because if they’re not, I mean, you’ve probably heard 100 stories, how often does a business owner get fleeced by one of his employees. So you’ve got to make sure that it’s done right. The other thing is if you can create a system for your money, it will and you can implement it. That’s the other way to solve this problem. So a lot of what we do is we actually help people by creating a system and then helping them implement the system and you give just a brief outline of what your system is. Yes. So are you familiar with the book Profit First by Mike Michalowicz only from the preparation that I did for this call?

Okay, so Mike is a serial entrepreneur. He sold a couple of his companies, one of them was actually the company that did the financial investigation of Enron. He walked away with seven figures and over the next two years he thought he was the smartest business man in the world and he literally lost all of his money to the point that they were coming to repossess the cars and take his house. And he said, how did I screw up so badly? How did I get this wrong and how are we as business owners getting this wrong? And what he realised first off is that he was given the wrong equation for profit. So coming back to almost like the richest man in Babylon, Mike didn’t invent all of this stuff. He kind of repackaged it, which is, we’re told by our accountants that sales minus expenses equals profit. The problem here is that profit is now left over. It’s, it’s what’s left at the end of the day.

And Mike said, no wonder we’re all struggling when you created your business, you had a business plan, Your business plan said you were going to be profitable, but nobody takes the profit. And so he said, let’s change the equation to sales minus profit equals expenses. So as soon as the money comes in, we do what richest man in Babylon, didn’t you set aside your profit. And if it’s 10%, that’s great, that’s a good profit margin for a business. And then you learn to constrain your expenses and to spend what’s left. And this works because of a couple underlying principles. So the first one is one that I don’t think a lot of people are familiar with, which is Parkinson’s law, in Parkinson’s law just states that we will use up all of the resources that we are given. So basically, if someone comes to you and you say, well, I’ve got a project to do. The two questions are, what’s your budget and what’s your timeline And whatever you tell them the budget and the timeline are, that’s what you’re going to get. So if you say $100,000 in a six-month timeline, it’s going to be $100,000 in six months.

But if you come to someone say, well, I only have a $20,000 budget and I’ve got a month, We’ll figure out a way to get it done for 20,000 And in a month. And people say, well, wait a minute, how is it that you can go from 100,000 to 20,000 and get this project done. And this comes down to the principle that we all know which is the Pareto principle. The 80/20 rule, right? Of what we do produces 80% of the results, which means 40% of what we do produces 96% of the results, which means the average person is wasting 60% of their time To get 4% of the result. And so the key there is to figure out where is the wastage in your business? Where is that 60% that’s providing little to no value. And I was I was reading another book which is called islands of profit and it’s Jonathan Burns. He’s a MIT Professor. He looked at large corporations so he’s looking at like Fortune 500 companies. And he started investigating. And he said in these big companies, 20% of their sales produce the vast majority of their profits.

He goes another 20-30% of their sales actually lose the money And the last 20 to 30%, is breaking. The problem is nobody knows which is which and there are so many reasons that nobody wants to know from the top all the way down because if I’m the owner of or if I’m the CEO of this Fortune 500 company, I go to Wall Street and go, Hey, guess what? Next year we’re going to cut sales by 80 and I’m gonna triple profits, Wall Street’s gonna fire him, right? And it’s weird, even though he’s bringing in all of this money. It’s because everyone is so tied to top line, which is a vanity number and we have a saying which is top line is vanity, bottom line insanity and cash flow is reality. And the problem is figuring out all those pieces and there’s so many different people who don’t want you to figure those, those numbers out and there’s a lot of societal pressure for it.

But the people who do take the time to do that and play with those levers, they do have tremendous success. So if you’re a business owner and you are, I mean if it’s the case that the majority of businesses are doing this, which is some of their activity is actually losing the money and some of its break even what the first few steps in your view to counter that. So I think the first thing that I try and have a lot of my clients do is actually to walk through your different offerings. So most business owners, businesses may have a couple of different offerings, take an offering and look at all the inputs and resources that go into that offering and figure out what it’s actually costing you to deliver that product. So you look at your time of your employees and you look at whatever resources and cost of goods that go into that a lot of business owners think, well I I bought this item for a you know $100 and I sold it for 200 I’m profitable.

No, not necessarily because it may cost you more than $100 to deliver that product in into that customer’s hands. And so you’re actually losing money, especially with online sales, this is really big because if you’re selling on some of these platforms, your fees for selling on the platform on top of your shipping and handling, make it very hard to make a profit at the end of the day. And that’s why you see a lot of am amazon retailers and these other type of online sellers, they’re all talking about how they got seven figures and sales, but behind closed doors, they don’t know where any of it went there, like barely breaking even many of them are actually losing money. And so it’s understanding that and taking the time to figure it out. And even for a plumber, you know if you’re a plumber and you’re doing a certain kind of work, how much time and effort are you putting into that particular job And what does it actually cost you to, to deliver those services and figuring it out.

So a big part of that is just is taking the time to go through and look at all your services because if you can figure out which 20% is giving you all the profit then you stop doing the services that aren’t and you start advertising the ones that do bring you the most profit and you start shifting your business towards that, that space. So like I’ve got one guy, he, he has to businesses, one part of his business is in window washing and another part of his business is doing Christmas lights. Well the Christmas lights business is super, super profitable to the point that if he wanted to take the whole year off and just do Christmas lights, he’d actually make more money and so it’s learning to see where that profits coming and making those shifts. But it’s true in every single business, you just have to look and find it out and it’s taking the time. So we talk about working on your business instead of in your business too often we’re just stuck in the daily grind.

We don’t take the moment to step back and look at the bigger picture and create that space and then you’ll start to realise, hey, I’m on this, this hamster wheel, let me get off of it and let me shift to where I have the best opportunities. Have you got any case studies or examples where businesses have been, have used the first formula, which is expenses first and then they changed to the Prophet second and expenses last and you know, things have changed for them basically. Yeah. So everyone who has done this and who’s opened the accounts and separated their money up front and constrain themselves. We’ll usually find within 3-6 months they are becoming much more profitable Now. A lot of that requires you starting to evaluate what’s going on and making changes. So I’ve got some people who are in the retail space and what they’re realising is I can’t buy something for a dollar and sell it for two.

I need to buy something for a dollar and sell it for three. And so there’s a couple of ways to do that. Sometimes you have pricing power, But if you don’t have pricing power then you have to figure out well how do I cut the middle man out when I’m buying my products? So instead of buying it for a dollar I can find it for $0.50 or maybe I’m going to bring in a totally different line of products that I can sell to my current customers at a lower price point and finding that opportunity to be able to do that. It’s really thinking about how you, how you’re running your business or it might be increasing prices and sometimes I think we’re afraid to increase prices, but in a lot of times the market will bear price increases unless you’re in a commodity business, in which case you’ve got to add something different to that, whether it’s speed of delivery or sizing or something else to bring more value to your clients.

Um But every single one of my clients whose implemented the system, like literally we track it every month and we watch their profit accounts and they go up by a considerable amount of money. And part of it is just a mindset shift, they stop thinking about, oh I’ve got money, I have to spend it my business. They realise just because I have money in my business doesn’t mean that I need to spend it on something and then I need to be thoughtful about how I’m going to invest in my business. Too Often they get distracted by shiny, you know, shiny object syndrome, They see something, well I have money, so let me just buy it, they don’t think through, do I really need it, Does it fit in with my business principles And so having that constraint is a big, big part of it. A big part of what I do is literally offer accountability. And I see it a lot in the real estate business, my real estate guys, every time they have money, they want to go buy something else.

And the problem is that go buy something, which is great, but then they have horrible cash flow and then they get stuck and then they have to make decisions that aren’t profitable anymore. So I think it’s, it’s learning to say it’s okay that we’ve got money sitting here because if we started to look at our business, we realise that oh, we’re going to go through a slow period in three months. Well I need the cash to take me through that slow period. So it’s building up those larger vault accounts to be able to do that. And here’s the bottom line in business, you are always gonna get punched. Like that’s just life. Whether it’s covid, whether it’s, you know, a competitor who comes out with something different, a supplier who doesn’t deliver you to be prepared for all of these things, we all think that everything is going to be perfect. Life is not perfect. And if you can build up those reserves, it’s going to help you through those storms that we’re all going to face. And so that’s a big part of it is constraining your spending and in asking for discounts.

I think a lot of times if you think about it, especially in today’s world, we sign up for all these software services and then we stop using them and then we forget that we even have them and they keep hitting our credit card or a bank account. And if nobody’s going through these things on a line item saying, do we still use this service? Is it worth it? Can we negotiate a lower rate? Um, we’re on Zoom today we had a call with one guy who was hilarious. We’re talking, he’s like, What do you mean soon? $15 a month. I’m paying 50 a month. I’m like, what are you paying 50 a month? They don’t even have a $50 a month plan. He was on some legacy plan. They lowered their rates and you never bothered to call. And that’s the kind of stuff that you have to do consistently. Like sort of reminds me of coasting a little bit or maybe even can be described as apathy. So like you said, there’s money in the account. I don’t have to worry. Whereas when you set your, it’s almost like a goal, it reminds me of being target driven.

And if you have a purpose, if you have an outcome, then you’re working towards it. Whereas when you don’t have that outcome or that target it is what it is and we’ll just operate normally. We set targets for our clients and we evaluate every month, how are we to target? How are we to sales targets, which everyone does, which is real easy. But then the harder part is how are we to profit targets? Are we actually profitable? Is their excess cash? And are we taking the excess cash and putting it aside for the benefit of the owner? And are we paying ourselves first? So most business owners pay themselves last. The reality is you’re the one who put the time and the risk in. Why are you paying yourself first? Because if you don’t have a good foundation under you, if your home life is not good because you’re struggling at work and you can’t bring home the money to pay, you know, support your, your spouse and your kids. It’s going to come across in your business too.

And I think all business owners have that financial uncertainty and they stress over it. What we try and do, especially with profit first is as soon as the money comes in, we put money aside for profit, we put money aside for owners pay right? So that you get paid, we put money aside for the tax man because taxes are going to come do, it’s not your money, it’s the government’s money and you need to turn it over to them at some point. And then after we put all our money aside, whatever is left is what we can truly spend. And so it constrains us even more. How is the profit first system? How does that relate to sort of a monthly versus a yearly way of looking at things? Because I think most business owners will consider profitability in relationship to whatever the tax return says. I know you’ve pretty much described it, but practically speaking, what would you do with the numbers on a monthly basis?

So here’s the reality for a lot of the people who use profit first. They don’t even look at the numbers, right? Because it’s not their thing, especially if you’re a smaller business and you know, you can’t afford to put somebody in that seat? What happens is, is every month on a set routine and every business is different. Some people do this once a week, some people do it twice a month, I have some clients to do it once a month, all of the money that comes in from sales, they look at it and they say okay I’ve got x amount of money in my bank account right now and based on the percentages and in the book there’s actually target percentages or you could use your current percentages. They move money into their profit account, they move money into their pay account, they move money into their tax account and then they move money into a spending account and all they work off as far as business spending is that spending account. So if you think about this, going back to the principles, back in the old days, you know when your grandparents got their check were there pay they would put it in envelopes, right an envelope for rent, an envelope for groceries and the envelope for utilities and then they would spend out of that envelope and when they ran out of money they stop spending, well it’s the same exact principle for your business.

Except we’re not using envelopes for using bank accounts and you’re moving the money to these particular places and then you spend out of what the intended dollar is supposed to be. So again, you come back to your business plan, your business plan said this is what you’re gonna do and then everyone forgets to do that, they just, you see a big pile of money, you’re going to spend it. It’s just like it’s like a bowl of candy, you’ve got a bowl of candy in front of you. You’re gonna eat it. All right bag of chips. I’m gonna sit down and eat the bag of chips. But if I get a smaller bag of chips or if I just take a handful of candy and put the rest away, I’m constraining myself and I don’t miss it. And it’s these this is about psychology more than it is about math. So what do you think about cash flow issues? Let’s say I do my four accounts and I’ve got my expense account, which is where all the bills come out of and amount of money where does the money come from in order to let’s say service that need or do you not get to do that?

Do you not get to take money from the let’s say the owner’s account. Well, if you want to steal from yourself, you can. But what that’s telling you right then and there is your business has a problem. So why is there no money in that account? First question is, did you have enough sales? Right. If you didn’t, then maybe you need to go out and sell more if you had enough sales, but you can’t cover your bills. Well, that means you’re spending too much money and you need to start really constraining yourselves who out there in business is telling you to spend less money, nobody, because nobody gets paid when you don’t spend money, everyone’s telling you spend money, spend money, spend money. But the reality is in and we talk about this. So let’s just say you have a 10% profit margin in your business for every additional dollar you spend in your business, you need $10 in revenue. And I think most business owners have a disconnect with that. They think, oh, a dollar came in, I can go spend a dollar.

No, no, no, no, no. If a dollar came in and you’ve only got a 10 profit margin, you only have 10 cents that’s truly spendable. So I think for a lot of people, we get a lot of fixed costs and a lot of overhead and we get ahead of ourselves. And so it’s taking the time to really think about how do you cut overhead and how do you cut your fixed costs? You made an interesting distinction as well when you were explaining it, and that was owners pay and owners profit. Now, I think I’m guilty of this. And I think that many people would be also, they’re one in the same for most people you like to take a moment on that owners pay is how much you’re getting paid for your work in the company, right? So you’re essentially doing a job for the company and you’re getting paid for that, that’s your owners pay your profit is more. If you think about, if I were to go into the stock market and I buy a company right?

I buy a share in a company, I get a dividend right every quarter. Well you invested in your business, Why isn’t your business giving you a dividend or a profit for that investment into that business? And that’s truly what profit is, It’s your business is profitable and it rewards the owner of the business with a profit distribution Check. All of my, my people who use this system, what they do is every quarter they look at their profit account and they take half of their profit account out and they go out and they enjoy life because running a business is hard and you should be rewarded for that. So they use that profit. Some of them will use it to build another business to invest in real estate, Some of them will use it to build wealth outside of their business. Some of them will splurge a little with it and go buy something fun as well because you deserve to be rewarded for your hard work.

But that is the profit for the business which is different than your pay. So what would you say to someone who does that first thing, they just, they just take it as wages and they pay themselves as much as they can basically. Well, I think you need to make sure they are you paying yourself fairly and are you getting a reasonable wage, which I don’t think most business owners are right, they under pay themselves. You need to figure out how your business can pay you an appropriate wage because if you’re underpaid and there’s no profits, why are you doing this business? Like at the end of the day, does it make sense? It may be better for you to go be an employee somewhere at that point? huh. You know, it’s the purpose of business is to make a profit and you should be rewarded. I don’t know why more business owners don’t think that way. This is the sanity thing. Right? Yeah. Well I’m I think this is an extremely valuable conversation and very important information.

What I can see happening is people agreeing. So yeah, totally agree. This would be the right way to go about running my business and then not making the change. So what would you say to someone who wants to make the change? But maybe he doesn’t know how Well, so there are two things not knowing how and not making the change. So I can tell you mike, he goes out and he does talks all the time. He’s got this whole big fan club of people who you know go listen to his lectures have read the book and he’ll meet them at a conference somewhere and they’re like, we love profit first, this is great. I love what you’re telling me, just like you’re telling me today. The first question Mike says to them is did you implement it? And the invariable answer is no, they don’t take the action. So the number one thing I’m going to tell you is take action and I’m going to give you a baby step for action because I think everyone needs to at least try this and see what happens.

I just want you to open one bank account. I want you to label the account profit In every month. Just take 1% of your sales. You will not Miss $11 out of 100. And I want you to put it in the profit account, that’s it. And do that for a few months and after a few months, look at that profit account and see how much money is there and that’s money that you would have just wasted. Right? And then ask yourself, well maybe it, can I make it 2% now or maybe well now maybe I should go read this profit first book. Maybe there’s something here. It’s so simple to implement and you just have to, you have to put the system into place and not only that, it makes you more bankable. So it makes you more land double and if you can show a potential buyer of your business in the future, Hey, look, this is my profit account. Hey, look, here’s my pay account. It makes your business more valuable because you’re showing people, hey, there’s real money here and I can show it to you and you can see the money flow into different bank accounts.

You can see how I’m removing money from this business, your value, your business skyrockets because of that. So I think it’s just, I’ll tell people read the book, listen to my podcast and just to implement, it’s not that difficult. You know, you don’t need somebody necessarily to help you do this. If, if you’re not gonna do it, then pay somebody to do it for you. That’s fine. You actually, I’m not sure if you meant to, but you, I think almost created a new word there. You said, you almost said simply mints implementation. It’s like simple, simple imputed. It is simple. It goes back to how I built wealth. Right? I told you I started all these different accounts and I started siphoning money off and hiding it for myself. And that’s essentially what you’re doing. You’re siphoning money off of you from your business and hiding it from yourself. So you don’t spend it. We all spend too much. That’s literally what the problem is.

So that would, that would be monthly, presumably. So you look at your monthly revenue in your bank account, Take 1% initially and put it in the other profit camp. Yes. And then you would, I mean ideally you want to be doing more than 1% like you say, but presumably there’s a, how often would you withdraw that amount? Would that be yearly? You could withdraw it yearly. You could switch right in six months, You know it, you should take the time to think about what do I want to do with this money and how am I going to use it? Some people, if they’re in a ton of debt, they will use that money to get themselves out of debt up front. So there are a ton of things that you can do with that money. But be intentional, think about what do I want to do with this and how is it going to provide value for me? Instead we spend without thinking too often. Any misconceptions about the prophet first system. Yes, so a lot of people think, well, this is so simple of a system, can I do this without opening the bank accounts?

Can I just do this in my accounting software? And the answer to that is no. It’s behavioural based. And number one, no one’s if you’re not looking at your accounting software to begin with, so thinking, you’re going to do it that way, it’s not gonna happen. Most business owners look at their bank balance and if they have money they spend it and so you really have to do the bank accounts and you really have to separate your money and some of you were really bad. So Mike is horrible with this mix two accounts. His tax accountants profit account are actually in a separate bank and he doesn’t have full signature authority over them every time he wants to spend out of his tax or his profit account, he has to get his business partner to co-sign the check because he can’t be trusted, he’ll spend it. And some of you are like that, you know have your spouse be your co-signer.

Your spouse is very good about not letting you spend money if if they need to. So I think that’s a big part of it. You do have to implement the system. You do have to open the bank accounts and you do have to put the money there. It’s not very hard to do, but you just have to quickly set up your discipline and just do it. Just do it good message, good Rocky. What your goals? My goal. So I pivoted it. I started this business almost two years ago And I had a goal of 20 clients. That was the number that I worked out ahead of time that I was going to work with. And so we’re almost full on that client goal. I got a handful of starts left in. So for me, once I hit that, I think it’s just helping those people grow and next year we’re gonna folk, I have a course out which is effortless cash flow.

It’s designed for the smaller business owner who meets help and needs a little bit more direction. So next year we’re going to focus on promoting that a lot more. so that’s a goal there and I think that at some point in the future I’d like to create kind of a business mastermind group, which is more of a group where every month we do a couple of high level lectures on business. So it might be on prompt that it might be a marketing, it might be on something else within your business, but also create a group for business owners where they can communicate with each other without all the noise, without everyone trying to sell everybody’s stuff where you have that, that group that you can get answers to your questions that is unbiased, that’s real and raw and most business owners are alone and they don’t have that, that kind of ah camaraderie.

So I think at some point I’d like to build something like that to help business owners have a place to go to get authentic real information about running their business, not some silly pitch fest of everyone saying by my stuff, sounds like you’ve been exposed to that before, just a clarification, your existing clients, you help them implement profit first, I help them implement profit first, but a big part of what I do is I actually dig into their financials and I help them figure out The different levers in their business and what’s going well. So we may help them pivot their product lines to ones that are more profitable. I’m looking for that 20% in their business that’s producing most of their revenue. Like I’ve got one client who is a digital agency and we’re looking at her services and I’m like, you know, when I look at your service is this part of your business while it’s bringing in a lot of revenue is not very profitable, This part of your business is highly profitable.

Can you get more of these types of clients and offer more of this service? Because this is really putting money in the bank account and that’s what I do for all my clients is help them figure out where they’re making money, are they appropriately priced to market and how are they extracting their profits and holding them accountable to do it, Are they putting money in the profit account? Are they putting money in the profit account? And then we’re tracking how, how much is the profit account growing every month? And that’s what we look at. And you know, the other day, I was sitting down with a client and I think in the midst of covid in spite of having to deal with severe restrictions and sales going down, they’ve been able to put almost a half a million dollars aside. And so that’s impressive. But that’s through being focused in making wise decisions and pivoting in whatever is going on around you and being able to do that.

And then the other thing is putting money aside for tax is the biggest, the biggest a ha are, the biggest thing that people come back to me and say is when tax time comes, it used to be very scary because their accountant would tell them a number and they’re like, how am I supposed to pay that tax bill? And they’d freak out now. They’re like, hey, I know I’ve got money for taxes and as much as I hate paying taxes, I know I can cover it. So that’s been one of the other big, aha, is that business owners come back with, makes me think that it surprises me that there’s not a better tech solution to this problem because it would seem like it’s simple to me anyway, that is simple enough and yet nothing exists, presumably. Yeah, nothing does really exist. and I think it’s because banks have not created an easy way to do this where as I told you before, the way I was saving money was all automated. I didn’t think about it when, when pay came it automatically got sucked out to different places and put into different buckets.

I have not found a bank that’s willing to say, okay, whenever money comes into your business account, we’re gonna automatically allocated for you and put it into all these places. If the bank would do that, it would be easy what I do for my clients as I build them a spreadsheet. And so all they do is when they sit down and it’s time to do it, they just put the money that the number in the spreadsheet and it tells them how much they need to put everywhere and then they take the time and it takes about five minutes and then they just move their money and they go back to life. So it’s not difficult but you just have to do it and that’s the problem. People don’t always do this. Simple. So do you think that I’ve given a few months or something, All of your podcast appearances, people are going to start coming back to you saying implemented it now. I’ve got like thousands of extra pounds or dollars thanks to you. I hope they do. I really hope they do. you know, I give this away for free.

I’ve already built my wealth so if you can go do that, go do that. I I think that would be awesome. I’d love to hear those stories, but I know human nature, people don’t take action well if there is any category within society that I would think is more likely to, then I would say business owners, my perception is that it’s a higher probability that they would, but I somewhat agree with what you’re saying because it shouldn’t be that way anyway. You shouldn’t get to the your tax return and have nothing there to pay it. I can’t tell you how many times I’ve heard that story, you know, in Europe, it’s a little better because you’re forced to have an accountant do your monthly, but keeping for you in the United States, there is no requirement. And so tax time comes around and you know, the, the accountants, you should like congratulations, you were profitable last year.

And here’s how much you owe in taxes. And the invariable question is, where is that money? And be counted? Looks at them and laughs and says he spent it right? And then the next question is, how am I supposed to pay the tax bill? And they freak out. It’s, it’s classic. And so here, just think about this, your accountant does not want to have that conversation with you saying you owe a bunch of taxes, so what are they gonna tell you to do? How do you lower your tax bill? You spend money? So the accountants like very, even telling business owners, go spend money, so you have a tax deduction, so you don’t have to pay a lot in taxes because that’s how they’re rewarded if you, if your accountant calls you and says you owe taxes, you scream at them and you blame them instead of blaming the government. And so literally there are all of these, these societal norms lined up to make you unprofitable. Well, there’s one, I don’t know if you’re allowed to do this in the US or not, but the one thing that I use is a basically I send the government money every month whether they asked for it or not.

So at the end of the tax year I normally get it pretty accurate. But the end of the tax year, I actually don’t know anything because they already have my money instead of waiting until the tax return time. And that is the best way to do that in the United States. We make quarterly payments. The problem is you have to have good communication with your accountant because if your business income is rising and you’re not keeping up with that, you’re underpaying and that’s what happens a lot of times. Okay, well again, I think very valuable conversation and I appreciate the time and also that you’re preaching the message because I think it’s a needed one among business owners. So thank you. You’re welcome. I’m glad I could help. Where’s the best place for people to find you? Rocky. So my website is profit comes And on the website you can find links to my podcast, which is profit. Answer man, where I’m constantly teaching all of the principles of profit first.

Everything you need to know to implement. If you’d like to check out the book. I do have to free chapters of the book. plus some tools available, you just sign up and it’ll all get email to you along with some helpful tips on how to implement. Again, that’s all free. I we try to give away as much as we can to help business owners survive and thrive in these times, share some of the principles in all those books behind you as well. And we now have to mention that a lot of books I love to read and so yeah, and that is a real book tastes like I can reach over and touch a book. Too many people using Zoom backgrounds these days, but you know, books are one of the cheapest ways to learn. You can either make mistakes yourself or you can learn from other people’s mistakes and as business owners, you’ve constantly got to be improving yourself. And I think a good book is a great way to do that.

Great point. Thank you very much for your time today, Rocky.

Thank you for having me, Thomas.