The Erik Cabral Show

E105: Flipping Businesses Through the Profit First Principle with Rocky Lalvani

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Rocky Lalvani is the owner of Profit Comes First. He is the host of two podcasts: Richer Soul and The Profit Answer Man Podcast

Rocky has found that most business owners rarely look at their financial statements. He has also observed a pattern where if they don't have a dedicated finance person focusing on the health of your company, they usually end up with financial struggles.

Rocky is a certified Profit First advisor. He helps business owners focus on profit first, using a system created by Mike Michalowicz that has helped thousands of companies realize their maximum profit potential.

Here are some power takeaways from today’s conversation:

  • Rocky’s sales and business journey with a mindset that the enemy of great is good
  • The power of finding a partner who’s the yin to your yang
  • The only market that doesn’t inflate and how the value of pay has decreased over the years
  • The difference between a businessman and an entrepreneur
  • The concept of flipping businesses
  • Where profit first comes in
  • Flipping the sales equation
  • How long does it take for you to become profitable?
  • Understanding the ever-changing cycles of disruption in business (i.e. real estate, education)

    • Episode Highlights:

    The Concept of Flipping Businesses

    Instead of building a company from scratch, buy a poorly run business and start to inject systems, processes, and teams. With good marketing, you can grow the revenue in two years by 50% and the business is no longer selling at a one-time mark. If the business could sell at a three-time multiple, you've essentially 50% plus tripled the business. Sell the business and move on.

    The Profit First Principle

    When you implement profit first in a business:

    • Focus on cutting expenses, which automatically increases your multiple.
    • Viscerally show the buyer how the money is flowing into the owner's compensation account.
    • Pull up information where you can realize profits or add things you can implement to be successful.

      • The standard formula in business is Sales - Expenses = Profit. Profit comes last. It’s a leftover. Now, the Profit First formula flips that equation to Sales - Profit = Expenses. So you’re actually taking profit first!

      It’s more of having this mindset shift. You see, if you have X amount budgeted, you'll spend it. Now, if you have a smaller amount budgeted, you become resourceful and you're now forced to spend less. You figure out ways to do that and you'd be shocked at how much money is wasted in business because you didn't spend time thinking of a better, faster, cheaper way to do it.

      Resources Mentioned:

      Know more about Rocky on RicherSoul.com

      Richer Soul Podcast

      The Profit Answer Man Podcast

      War Room Mastermind

      ...more
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      The Erik Cabral ShowBy Erik Cabral
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