Just about a year ago, fellow course creators Tim Geiss and Nate Dodson were on the podcast with me talking about a book I just finished: Profit First by Mike Michalowicz. It sparked a great discussion about handling some very important aspects of having your own business, and since I’ve now been using the profit first system for a year, I wanted to revisit this topic with you.
"Sales are a vanity metric. They don’t mean anything unless you put them into context."
As evidenced by my continued implementation of what I learned from Profit First, I am a big fan of this way of accounting. It works, and it’s relatively simple to begin using. I hope you enjoy this blast-from-the-past episode – and maybe even consider changing your accounting system as a result. Let’s jump in!
In This Episode, We Talked About:
(1:48) The accounting system I use(2:54) The underlying concept behind putting profit first and what that means on a practical level for my business(4:16) A recap from my conversation last year with Nate and Tom about Profit First(5:10) Tom’s reasons for implementing this accounting method and how he feels it benefits his business(7:39) How long it took for me to start implementing profit first and how often I initially was revisiting my system(10:28) The business credit card that all three of us have found useful(11:46) Why you can still use this system without rigidly following every single guideline(12:55) Nate’s question about how Profit First actually benefits businesses and my early takeaways(17:59) The minimum percentage of profit that this system has you start putting aside each month for emergencies(19:44) How putting profit first helped Tom feel less uptight about spending money on growing his business(21:36) The way this process allow for a steady personal income and regular bonuses despite monthly profit fluctuations(25:38) Tax implications for different types of business structures(26:44) The difference between being an employee and an investor(29:42) How using the profit first system affects operating expenses(31:17) A mistake I probably wouldn’t have made if I was using this system earlier(32:03) The role of a business emergency fund in Profit First context(35:21) “The Vault” - an advanced profit first technique(36:12) Why this system keeps profit and tax accounts separate(38:10) How putting profit first could benefit one of Nate’s other business(42:23) Moving from the owner-operator role to being an owner working on the business rather than in it(43:18) A quick look at FICA accounting(47:14) How the profit first concept works as you initially implement it(48:36) The percentage of revenue to set aside for taxes and other categories(52:33) The main point of Profit First(53:18) A tip from Tom on operating expense decisions(56:08) The best type of bank accounts for profit first accounting(57:56) How the profit first concept could work for businesses beside online coursesWe discussed all that and much more, so don’t forget to leave a comment and let me know what you enjoyed about today’s flashback episode!
Links
Bonjoro Free TrialProfit FirstPiano in 21 DaysThe Online Course Guy