Episode Transcript
[00:00:00] Excuses.
[00:00:02] So.
[00:00:06] Hi guys and welcome to this week's Profit first podcast. I'm Steven Edwards. I'm the founder of Grow Profit First Accountants. And in this podcast we talk about all things Profit first, but also all things that are going to grow your business. And on that topic, I'm kind of fresh off the plane. Just literally got back from Budapest yesterday on a Sunday morning. I know we've got listeners in the US and the UK actually, so, you know, it's quite easy for us to travel to Europe and we're very fortunate living in the uk. We could pretty much just jump on a plane and go anywhere with, you know, to Europe within, within a few hours. I had a fantastic break, a full night break with my wife and her mother in law and husband. And why am I sharing this? I, I'm sharing this because I speak to a lot of business owners who are not taking this time out for themselves.
[00:01:03] And I just want you to. Yes, you're listening. You might be in consumption mode. You might not necessarily be looking to think or write down or, you know, put some work in, but I just want you to ask the question, whether you're driving, walking in the gym, whatever you're doing, when was the last time you took some time out for yourself to have a weekend away or a holiday with your loved ones? And I know this is very cliche, but it's super, super important because so many people I speak to say I need to find more time for myself. I need to find more time for my, for my wife.
[00:01:38] And what I will say, first and foremost, it starts with small pockets of time in the week. First, you need to be a little bit selfish because actually you're not really being selfish if you can find that time for yourself in the week. So for me, I made Monday mornings sacred. I've talked about this a lot. Monday, well, pretty much the whole of Monday, many ways, is a sacred day for me. It's a planning day, it's a thinking day, it's a strategic day. There's room and space to breathe, to think, to make some important decisions and to plan properly for the week or so ahead.
[00:02:17] So where, where you find in these little pockets of time for me, you know, I'll go to the sauna, I will go to the gym, I might go for a walk. Because it allows your, your subconscious to kind of work on the challenges, the obstacles and the opportunities in the background.
[00:02:32] And really this is where the magic happens when you've got a space. So what are you doing for yourself?
[00:02:37] You know, if, if at the moment, and I do speak to business owners doing this, if at the moment you're working seven days a week or you're working six days a week and you're actually using the weekends to do your admin, maybe to do some learning, to do some courses, maybe you're listening to this on the weekend, I would urge you to start on freeing up your weekends, free up your weekend so they are no longer a little bit of work and a little bit of time off. That would be number one.
[00:03:04] You know, and don't kid yourself. If you're picking up your emails, if you're just doing some research, quote unquote, if you're, you know, you're looking for these courses, you're doing extra stuff, I get it. But milestone number one is to free up your weekends, give yourself permission to do that stuff in the week. And I know that's difficult because you will be a learner like me. You have a growth, abundant mindset. Like me. You just love learning, you love consuming. But the problem is there's no limits. We could literally do that and we could waste all of our free time. So number one is to create some boundaries around what your free time really is and to make that sacred.
[00:03:41] Number two is to carve out time in the week to do the strategic stuff, to do the learning, to do the growth, even things like listening to the podcast. You know, unless you're traveling. If you're, if you're kind of traveling, I get it.
[00:03:54] Particularly work traveling. Listen to a podcast, listen to an audiobook. But if you're traveling for, you know, when I travel for bit of pest, I wasn't listening to work stuff because I was listening to self development, things that make me be a better person. I was list listen to spiritual stuff. I was listening to the new kind of full production Harry Potter audiobooks. They've got, where they've got actually cast members in the audio books. Because if we listen to the work stuff when we're meant to be having time off, it just consumes us and our mind will wander.
[00:04:25] So again, why am I talking about all of this? Because we're talking about milestones. I want you to get to the point where you're taking regular time away from your business.
[00:04:34] And let's link it back to profit first. Why is all of this important and what's profit first got to do with it? Well, profit first is a mechanism. It's a philosophy, it's a system, it's a way. It's a north star to help you focus on whether you are, you've got the funds and it's giving you the strategy to take this time off and to give yourself permission.
[00:04:58] Because the money I often use for these kind of little breaks away is from our profit pot. So if you have read Profit first, you will know one of the parts is your profit pot. It's your profit distribution pot. And yes, if you've got debt, some of it should go towards debt. And we coach people, we give people the exact strategies around, around that.
[00:05:20] You know, the book will say maybe pay off 99% of your debt first, but actually in our experience and speaking to other people, it can vary. You might want to pay 50% of your debt offers and then 50% to reward yourself. And there's, there's also, you know, a little bit more nuance to it because you might want to build up a nice buffer pot of money for a rainy day.
[00:05:40] Before you start really rewarding yourselves, however, get on the bandwagon of rewarding yourselves. Building a pot of money, a little bonus pot. You know, if you had shares in a plc, it doesn't affect your wages, your wages are your wages. But then you get this little dividend, this bonus every six months or so or every quarter, a quarterly or a six monthly distribution. This is what we're talking about with the profit part in Profit First. And this is what I've done with Budapest. I use my profit pot money to have a full night week, a four night break in Budapest, guilt free, because I've set that money aside and it depends on the numbers in your business. Not all businesses, you know, are doing the same sort of numbers. Absolutely. We do want to get to the point where you can afford holidays and, you know, all those sort of things, but each to their own. It might be some, you know, a gadget, it might be the new Nintendo Switch too.
[00:06:39] It might be the latest, remarkable, the latest iPad. Or if you're starting for the first time, think modestly, it might just be a night away. It might be a really nice meal out in that restaurant that you've not been to, but you really want to go to.
[00:06:53] It's really personal. And actually what I would probably suggest you do is, is do some journaling and write down what would you do with your profit distribution, what would you do with that money?
[00:07:04] And, and, and don't limit yourself, but you can maybe organize it later and almost have a, you know, a shopping list of how many credit tokens are you using.
[00:07:14] If you've ever watched War for Wall Street, Leonardo DiCaprio's character refers to money as fun tokens. So what you're going to do with your thun tokens and profit first is a way to build up your fund tokens, so to speak. So this might be overwhelming for some people because you're thinking, God, Steve, that's all great, but it doesn't work with my business. You don't know my business. I've got bills to pay. I was speaking to a coffee shop owner recently and their business is doing okay. They're kind of surviving, but they're not paying themselves enough. And I told them they are not paying themselves enough. Not a lot of people like to hear that from an accountant. And actually it's quite unusual for your accountant to tell you stuff like that because your accountant normally just tells you you've got some tax to pay, this is what you earned. It's a matter of fact, they're not giving you any coaching advice, not giving you any guidance, any strategy, any, any tactics, any insights. But in this particular case with this coffee shop, I knew they were underpaying themselves because we've got a similar sized client in the same industry that hit in far higher benchmarks. So we know it's possible.
[00:08:23] We tell ourselves this narrative, this story. It's not possible in my industry, you know, and people don't get it that my industry is different. Trust me, business is business.
[00:08:35] At the end of the day, you're either working in your business or you're working on your business. And when you're working in your business, you're stuck in the weeds and you can't really see further afield. So we want to zoom out, think strategically, think bigger picture and start thinking about momentum, start thinking about progress. So if this is difficult for you, just start with 1%. Set 1% of your revenue. So this is the action for you if you're not doing this. And I'll give you another action if you're at a higher level in terms of you're further along with, with profit first and you're already setting money aside. I'll talk about that in a second. But if you're not, set money Aside, start with 1%. Either 1% of your weekly real revenue.
[00:09:16] Reach out to us if you don't know what real revenue is. But essentially, if you're buying goods, the goods come off first. Or you've got ad hoc subcontract, subcontractor costs, materials that comes off first. So in the coffee shop example, you know, let's say it's a 10,000 pound week, but a third of it was for the coffee and the milk and all that sort of stuff. You'd be left with, with about £6,660 left. And that's your real revenue. So that's what we're talking about with real revenue. You take your real revenue after the, the cost and everything. Not the overheads, not necessarily the wages, just the cost of goods sold. If you're buying and selling stuff and, and, and then 1% of that figure. So you know, that would be 60 quid, 66 quid in my example, I just gave a week. So you know, 66 quid, set that aside and pull it into a separate pot, ideally one that you don't log into every week, you don't log into every day outside out of mind somewhere where, you know, maybe a little spare account you don't use, just transfer it and forget about it and then in three months time come back to it and see what you've got left. Because those 60 quid or whatever the numbers are for you will add up and I want you to enjoy that money. There are more advanced strategies. If you've got debt and everything, these are the conversations we have with clients and we help people pay that off strategically while still rewarding yourself. But start small. If you can run your business on 100%, you can run it on 99%. That's what Profit first is all about. If you're already doing all this, when was the last time you reviewed these numbers? When did you challenge yourself to increase it? Because we get a bit comfortable, we get used to our business, we get a bit stuck, static. And you know, there's this expression I shared on LinkedIn recently. You're either growing or you, or you're dying, which is kind of not really true actually. But when you look at your numbers, you can easily stay stagnant. And if you're staying stagnant constantly, you know, business is, can be seasonal, not, not in terms of the type of business you're in. But we go through growth stages. We go, you know, the startup, the maturity for some businesses will go through decline. What stage are you in in your business? Challenge yourself to push the boundaries, to earn a little bit more. So if you've got a profit part, challenge yourself to say, how can I increase it? How can I double my profit part in the next three years? And one of the things we do is we do a profit assessment, a profit review, and we create a custom profit plan for our new profit first clients and we actually Give them a tailored purpose, personalized roadmap for the next 12 to 18 months. And we say, okay, let's put your business on the scales. Let's see how much fat we need to trim or how much muscle we need to build.
[00:12:04] And it's not just about cutting expenses. Building muscle is actually about innovation. Using this metaphor with profit first, how can we be a leaner, meaner, stronger machine and also reduce the waste? If we can combine into all those things together and grow our revenue, believe it or not, we can hit some, you know, some really interesting numbers in a 12 month period. Typically if you're turning over about 250k in revenue, you should be looking at a 10 to 20k increase in your overall overall accounting profit, which does translate to mostly cash in the bank in a 12 to 18 month period. It can be a lot more, it can be a lot less for people, but we help people create that custom plan and we benchmark it. As I said, you know, I, I used the example of a business in the coffee industry, but we've got clients in all different industries and we benchmark your business. We don't want to be average, we want to be best in class. So we give you challenging benchmarks long term, but we also give you something that's very achievable and is sustainable in the short term. It's all about progress. It's all about momentum. I'd love you to look back to January, beginning of February 2025.
[00:13:17] Have you progressed since then?
[00:13:20] If you've not progressed, you need to do something different. Because if we keep on doing the same thing, we're going to get the same results. But ultimately the topic of this week is how can we build our business to give us those profit parts, that little bit of extra chunk of money to reward ourselves and to do the things we love. This, you know, this month, you know, based off the last quarter, we went to Budapest, took some time out from the business. What does that look like for you? Maybe you can put a list down and speak to your partner and get excited about the things you could do with that money. Any questions, guys, as always, please reach out to me. More than happy to see how I can help. Cheers and have a great week. Excuses. Here I am so.
