Episode Transcript
[00:00:00] Excuses here I am. So.
[00:00:06] Welcome to the Profit first podcast. I am Steven Edwards, the founder of Grow Profit First Accountants. I'm a charter certified accountant, also a certified Profit first professionals, award winning in the uk. And on this podcast we share business strategy, insight, insights and ways to effectively grow your business, make more money and pay less tax.
[00:00:32] So that might sound too good to be true, but if we talk about profit first specifically for a second, because ultimately that is the foundation of how we help people in our accountancy practice. And you might be familiar with the book by Mike Michalowicz, Profit first in our view, in our experience, experience working with dozens of business owners is the foundation for a business turning over typically less than a million pounds. But certainly it can apply to larger businesses as well. But definitely if you are turning over less than a million pounds because you've got a different size of team structure, different challenges, different setup, different resources, we believe in our experience, you should be putting your profit first. And even if you are turning over 5 million, you should still be putting your profit first. Because we've seen businesses turning over several million pounds, but they keep on reinvesting, reinvesting, reinvesting. Ultimately, they never turn a real profit. So when you put your profit first at the very beginning, it, it just kind of aligns all of the decisions, all of the strategy, all of the resources, because you're all moving in the right direction.
[00:01:43] So this week I want to talk about, because I wanted to give you that kind of intro around how Profit first informs your strategy at the beginning because I want to talk about optimization, optimization versus designing or being an architect effectively. So are you optimizing the wrong thing in your business?
[00:02:08] Because there are some instances. So if you've read the book, for example, you know, I've worked with quite a few people in this situation, actually, they've read the book, they're all on board emotionally, Emotionally, they're like, I deserve to pay myself more. I've been in business for five years, 10 years. I should not be scraping by every month. I should have some extra cash set aside. I don't, you know, it's not about being greedy. It's about giving you and your family the life you deserve for the effort you put in. And you just feel like you're kind of spinning your wheels. And, and then, you know, sometimes people come across profit first and they're all, they're all in, in terms of the idea behind it, but it, it's not always guaranteed to work. And in our experience, the reason it's not always guaranteed to work is two things.
[00:02:53] One thing is that the person doing it is not disciplined. So they're, they're kind of, you know, they, they want to do it, but they're not really putting the effort in. So if you think of going to the gym, doing a workout, you can have the workout plan, we can give you the workout plan, we can give you your profit first plan. But if you're not going to show up and do the reps, eat the right food, you know, it's that classic where someone's, they've got a set diet from a personal trainer, they're doing the workouts, they should be losing weight, but they're not losing weight because they're sneak eating. So, so there's a bit of that with profit first. Are you actually putting the work in?
[00:03:28] And that's where we come in. We do give people, we give them the right strategy and we give them the, you know, quite frankly, the accountability to make sure they always stay on track.
[00:03:39] Not just short term, but long term. However, and I've probably talked about this on the podcast before, there's another big reason, another big reason why people fail, particularly trying to do profit first.
[00:03:53] And it's because, I hate to say it, but the business model is broken and you're trying to optimize something that shouldn't be optimized.
[00:04:04] You know, you're trying to, let's give you, let me try to give you an example. I'm quite famous for giving metaphors and analogies, but sometimes they land, sometimes they don't. But let's think of a car, let's think of a car you've had for several years and you know better. The devil you know. You spent a lot of money on it. You keep on throwing money into it that could be, you know, it's a bit like your business.
[00:04:25] You're investing money in your older car, you keep on putting money in. But not just your business, your business model, we're thinking here to put money into it. You know, your, the clutches go in and the, you know, the brake discs and the exhaust system, you're kind of thinking, what else can go wrong? Surely I fixed everything and there's nothing else to fix. And then structurally, you know, there's rust underneath the car. You pull it for an MOT and they tell you there's something else to worry about.
[00:04:53] So you keep on throwing money at something that could be not worth the investment.
[00:04:59] When we look at your business, I'm not saying give up on your business, but are you throwing money? Are you throwing time and effort on the wrong model? Are you, are you being blindsided by your business model? What if you started your business next week? What would you do differently?
[00:05:16] And you know, I'm a big, I wouldn't necessarily say fan, but I'm a big follower of AI because that's the world we're living in at the moment. And we all need to kind of be a bit clued up with what's going on, whether we like it or not, ultimately.
[00:05:31] And the truth is things are going to change. Things are going to change in the world, not just directly through computers, but the impact that's going to have everywhere throughout the world in terms of our economies. So it's thinking about your business. What worked 10 years ago, 20 years ago, might not work this year.
[00:05:50] It's, there's a good chance it might not work in three years time, in five years time. They say we're in two businesses. We're in the business we're in today and we're in the business we're in in the future. But if, if you're too focused on the business of today, the business of the future will creep up on you and you've been left behind. So I'm not trying to scare people. I'm not trying to say your business is broken, but I just trying to challenge your thinking and trying to provoke critical thinking. I'm trying to get you to think differently. And so if you are one of those people where you do feel like you're spinning your plates, does your strategy need reviewing? And that's where sometimes having conversations with other people not inside your business a lot of the time, not even in your industry. I'm a big believer in having mentors in your industry. I've had that in my. I coach and mentor over accountants. I've had every accountants mentor and coach me.
[00:06:43] But sometimes you, I, I take most of my inspiration from people from different industries because they think differently. They're like, well, why don't you do this? Or why are you doing it that way? And they see through all the noise, they see through all the blind spots and they help challenge our thinking because we, a lot of the time, this is human beings in general, but also business.
[00:07:05] It's kind of like a record going around in your head and it's playing the same so song. We're thinking along the same lines, that we're on the same track. We need to scramble the record, we need to take it out, scramble it, scratch it, break the pattern. So if you're not quite getting where you are to in your business.
[00:07:22] I want you to ask yourself, I'm a big believer in thinking time, pen and paper. Give yourself 30 minutes, peace and quiet. You know, coffee in the morning when no one can disturb you, or you're in a coffee shop. And just ask yourself a question.
[00:07:36] Am I optimizing for the right thing in my business or what am I optimizing for? Often the question is not the question. It might lead you to think about a different question, but it's just thinking about this. And you might have heard, you know, the, the story of someone's climbing the ladder of success and they get right to the top and right at the top of the ladder and they turn around and they realize they climbed the wrong ladder. And I just want you to take stock of your business. If it's, if you, if you're smashing it, you doing, you know, you're really successful, you're making all the money you want, then this is still relevant. But it's probably not as fundamental on your list right now. But if you're not having the breakthroughs you want, I think this could be a really worthy exercise for you. And if you want to expand your thinking, your, your learning, and on this topic, you want to study a bit further, then there's a great book. You know, you can get the AI summary if you want, but you know, you could read the book, listen to the audiobook. It's called Blue Ocean Strategy, and it's about thinking differently rather than competing with all of the same people. In your industry, they call that a red ocean because all the sharks are all your competitors. Think of all the coffee shops that are open nowadays on the high street. They're everywhere. And if you just open another coffee shop, you're in a red ocean. Everyone's trying to compete for the same kind of prey, so to speak. And it's a red ocean because all the sharks are after the same thing. What you need to do is find a blue ocean, uncontested, clear waters, clear sky, nobody's competing. And I know that sounds too good to be true, and we don't necessarily need to take it literally because I know that might sound too conceptual for some people, too idealistic, but can you take a little bit of that to say, how can we position ourselves?
[00:09:22] How can we change our model? So actually we are so different, it's really difficult to compare us to the competitors at the road.
[00:09:29] So this is all about business model. So it's, are you optimizing the right thing in your business. Because if you're been doing the same thing for 10 years and you keep on trying to make it a little bit better, you can probably only make it 5% better, 1% better, 10% better.
[00:09:46] But that might just keep you on track. You might not be growing, but if you re architect and redesign, re engineer your model and you're thinking and you know, the way you do business, you could triple your success, you could triple your profit potentially. What new revenue, revenue streams? What new models, what new partnerships? I've not actually read the book, but Alex Hormozi, quite successful, famous entrepreneur based in the US we're following on YouTube. I follow him because he shares deeper content. He's got a book, he's got a few books, 100 million leads, 100 million offers. But he's got a new one called 100 Million Models. Your business model can sometimes make or break your business and it help you understand if you're optimizing the right thing. Hopefully that's useful. Give me a shout if you've got any questions and have a great weekend and week. See you guys.
[00:10:39] Excuses.
[00:10:41] So.
