Episode Transcript
[00:00:00] Excuses. Here I am. So hi guys and welcome to the Grow Academy and more specifically the Profit first blueprint. So I just want to walk through what is Profit First? How is this program program going to work? Who's it suitable for? And just give you a little bit of an insight what to expect from the program.
[00:00:24] So okay, so what is profit? Profit First. It's probably a good place to start. What is Profit First? So Profit first is in simple terms it's a book. So I imagine if you're watching this, this is not the first time you've ever heard about what Profit first is because you probably wouldn't be watching this video. But to give you to assume you've got no knowledge to go back to the beginning, it was created by Mike Michalowicz and it's a famous book. It's probably the most famous book for small businesses on finance in the world. The most popular book on finance is probably Rich Dad Poor D from a personal perspective. And the most famous book from a money perspective is maybe the Richest man in Babylon 2. Amazing books if you're interested in topic. But from a business owner's perspective there's nothing else quite like Profit First. And the reason being it hits us emotionally. And when I say us, I'm yes, I'm a Profit first accountant. I'm a chartered certified accountant. I've been running my own accountant practice for over 20 years. Sorry, I've been in the profession for over 20 years running my own business for, for over 10 years, around 12 years now. I'm also a business owner like you. And that's why we're so passionate about Profit first is it makes a big impact on owners lives. And when we say owners lives that affects everybody, that affects your team, that affects probably more importantly your family and your, and your loved ones. So in terms of how Profit Work first works, we will come into the detail a little bit later. But just to give you an overview, it's behavior based, it's a cash and profit based system. We're not looking at complicated bookkeeping systems like Xero, QuickBooks and trying to understand profit and loss accounts, balance sheets, cash flow forecasting. We are doing none of that stuff. We don't need to look at management accounts. We're going to look in at your numbers in a really simple way that's going to resonate with you. And essentially we are built as business owners to look at our bank balance. We're just, it's a habit to look at your bank account. You probably look at your bank account on a fairly regular basis.
[00:02:27] And what I can certainly say, he's probably looking a little more than you look at your bookkeeping system. So we all. We've all got a good idea what's going on in our bank accounts. So we want to tap into that behavior. We want to use that to our advantage. And that's what profit. Profit first is about.
[00:02:42] Okay, so why does the book exist? If you haven't read the book, why was it written by Mike Michalowicz? What problem was he trying to solve? So Mike had a really successful business, sold it for multiple of millions of pounds, millions of dollars because he's American.
[00:02:57] And he invested in other businesses, around 10 businesses. And he thought he had what it takes to be successful. He had the Midas touch, in his own words, and everything he touched turned to gold. But actually, out of those 10 businesses, I think virtually all of them failed. I think one might have been okay, but most of them, certainly around nine failed. And he started questioning his own knowledge about business. Was it lucky? Have I got the right answers? And. And a lot of the problem was around money. And there was, you know, a story in the book, I won't spoil it, about how it impacted his family and his. His child and his relationship with it, with his wife. And he is kind of questioning what went wrong. And what he realized was a lot of our. The way we react with money and treat money is a human behavioral thing and specifically to do with Parkinson's law. And that's the more of something we have, the more. The more we will consume. So at Christmas, I don't know about you, I eat more, I drink more, We've got more available, so we consume more. And the same happens with money. The more money we think we've got, the more we spend. It's why most people that get pay rises. Most business owners, when their revenue goes up, they don't have actually have more money to pay themselves or they haven't got more money left at the end of the week or the end of the month. And he realized that we can actually use this to our advantage. We can trick the mind to think we've got less learning to work with, which means we get more creative, we get more resourceful, and magic happens. And I can promise you we've worked with dozens and dozens of businesses and including the results we've got in our own business, and it works. It's not a magic wand. As part of this program, I'm going to ask some really hard questions and we'll talk about that, when we look at the nine steps, there's nine steps. As part of this program, we're going to look at some of the questions you need to ask yourself to say, are you ready to do this properly? Which we'll get to in, in, in a minute. But the truth is around 80% of businesses are surviving on some level, month to month, paycheck to paycheck, paying the team, paying the vats, or just about paying the tax. And there's not really a pot of money, there's not a rainy day fund, there's not a bonus to reward yourself. There's never enough buffer to give you that to relieve the stress, relieve the, the financial burden that a lot of business owners are kind of dealing with. So that's what profit first is about. And we will get into the nitty gritty as we go through the program. So one of the biggest, most fundamental shifts, what comes first matters. You never say to yourself, I'm gonna put my family last. You, you, you put your family first. But for some reason we put profit last. And we're, we're the accounting system.
[00:05:40] The generally accepted accounting principles teach us that sales minus expenses equals profit. Profit, profit comes last. So it's not going to be the most important thing. We're trained to believe that sales, revenue, turnover, or pretty much one of the same word is the same is the most important thing. And our revenue goes up. So we think we've got more money to spend on expenses. And there's an element of, yes, you do need to invest to grow in. For certain businesses, you might to invest in team members, machinery, technology, professionals, all that sort of stuff. But the problem is not, it shouldn't be to the detriment of rewarding yourself as a business owner. So with Profit first, we flip it on its head. Sales minus profit. In the program, we talk about how much should that be, how much profit should you be taken out? And I also explain what do I mean by profit later on because we can break that down into different things. Sales minus profit equals what you can afford to run your business. So we are shifting the priority and the first step of the program is going to be asking some real hard questions. Are you really ready for change?
[00:06:46] Because if, if your business is underperforming or you're not really paying yourself what you deserve, I might be asking some hard questions of you. If you're ready to go through this journey, however, it's probably worth talking about. Not everyone needs to rip their business apart, make massive changes. For some of you it might just be something that makes life easier. It might be creating a separate pot or account to always pay your VAT bill on time, always pay a tax bill on time, maybe have a little small pot to reward yourself as a bonus. But for some of you, you are going to be watching, listening to this and you're probably gonna have to ask yourself some real hard questions. Do I need to make big changes to finally get the profit I deserve in my business and my life? So just a little bit about my credibility. Who am I? So most of you probably know who I am. So I'm Stephen Edwards. I run Grow Profit First Accountants. You're more than likely a client if you're watching this, but we are a charter certified firm of accountants. We've been going for nearly 15 years and collectively we've got decades and decades of experience. We work with ambit entrepreneurial business owners that most of the time are looking to grow their business. And when I say growth, growth is we all think of turnover. But I'm more interested in your personal income and the quality of your life. So that's the sort of growth we're looking to achieve with people. We're one of only so many in the UK that certified as profit first. We're award winning. We've been acknowledged in the past as the top profit first accountancy practice in the uk.
[00:08:15] We've worked with dozens of businesses across different industries. But some absolutely incredible results. I've seen people triple their profit. I've seen people remove themselves from the day to day, increase their turnover by 50% and increase their profit by 50%. I've seen someone reduce their cost by 200k. I've seen someone make their first profit ever in their business in seven years.
[00:08:36] But equally for some people it's not always huge things. It might be paying your VAT on time, it might be finally feeling in control of your finances and, and your business.
[00:08:48] Yeah. So that 20% profit margin I've, I've, I've. Spoiler alert. I sometimes use AI to help create my slides and that doesn't actually really mean anything. The props you can ignore our business 20% profit margin. However, what we will do on the journey is we will show you what numbers you should be aiming for. What are the benchmarks for, for your size business? Okay, yeah. So again I've talked about all of this already are so really when we're talking about profit first, it fits into a bigger ecosystem. It's not just simply about the profit first system, it's about what we're trying to achieve overall and ultimately we're trying to build a better business. We're trying to reward you as the owner with more money in your back pocket so it will fit into other areas of your business. You know, the analytics is really the benchmarking I'm going to talk to you about in terms of understanding your numbers, but it's going to help you in other parts of your business, you know, your operations, building the right team. This is all connected. But it all starts with making more money. If you can make more money, you can invest it in your operations and ultimately you can grow from a strong background. So finally, I think I've done enough talking and you're probably ready to get into the, the meat of things properly. So here's the nine steps we will be going through in the program. So the number one I told you we're going to start quite hard with, number one is you need to make the decision. And I want you to watch that video and that training because I'm going to ask some questions of is this the right thing for you right now? Or I'm going to ask you to maybe manage your expectations of what you're looking to get out of the profit first system and program. For some of you, as I said, it might be minor, it might be you've already got a good business, but you want a little bit more cash, you want a little bonus pot, you want to feel more in control, and that's fine. For some of you, it might be big changes you need to make in your business. So I'm going to talk about. So please don't skip that because I want you to be fully invested and know what's at stake when we're talking about profit first. Number two is we're going to talk about your numbers. We need you to be starting from a point where we've got real numbers that are reliable, accurate to make the decisions we need to make. If your books are a mess and you're two years behind, that's not going to be possible. So hopefully if you're a client of ours, that is not going to be the case. If we do your bookkeeping, that is not going to be the case. But if you've got a different accountant or you do your own bookkeeping, we can talk about that in step two. For those of you where we do do bookkeeping, it will thankfully be probably quite an easy step for you and we can move on from that fairly quickly once we're happy with the quality of the numbers or you're happy with the quality of the numbers because you will be going through this journey. I'm going to walk you through how to do a profit assessment. This is key. This is where you are now, where you want to be. And often there is thousands and thousands of pounds on the table at stake. It's quite emotional when you do the profit assessment because you look at what's possible in your business. Okay, doesn't mean it's easy. It might be simple what you need to do, but it doesn't mean it's easy. But we will give you a roadmap and we let you know how far the gap is, the profit gap for what's possible in your business. Based off best in class businesses, based off businesses that are performing well. The top 20%, we don't want to be the bottom 80%, we want to be part of the top 20%.
[00:12:08] And then once we've done that, we can create, help you create because you'll be doing the work going through this program unless you're enrolled with the one to one program with us and you meet Richard or myself and then we'll be doing a lot of this for you. So I guess that's worth noting that if you get overwhelmed at any point and you do want that one to one support, just contact someone in the team and we can talk about that, how it works. But we will create, help you create a profit plan, a rollout plan, a roadmap, and instead of saying here's point A and B, how are you going to get there? How are you going to close the gap? What's the plan for the next three months? What's the plan for the next six months? We're going to help you break it down. We'll talk about setting up your bank accounts. Because it's quite common questions we get asked. Which bank should I go with? Should I use my current bank? Can I do this for income, this for expenses? What about my direct debits? What about my wages? I'll cover all of that because it's quite a, a common area that people get a little bit confused about. We will talk about setting up your allocations, how to create a spreadsheet and a system you can stick to and that makes that you know exactly what to put into each pot or each bank account, what to set aside for owners, pay profit tax, operating expenses and so on. Number seven, we will talk about how to do your allocations. What do you physically need to do? What does it mean? What's the time in what could get in your way. Because I do see a lot of people get stuck at number seven. They get a lot of progress and they actually get stuck at number seven. That's when number eight comes in. Is accountability. Even if we're not working with you, one to one. And I'll talk about some of the other things we've got going on in terms of group support calls, where you can be in a community of people doing the same thing and you can hold each other accountable. But accountability is important. Whether it's one to one, whether it's a group, whether it's you, your business partner, your wife, whoever it is, whether it's putting something in your diary, accountability is important. You need to make sure you follow through. Because discipline is one of the most important traits. When we're talking about putting muscle on at the gym. And we can compare that to building profit in your business. It comes down to putting the work in. It comes down to the discipline showing up finally. So this is some advanced stuff in number nine is watching out for smoke alarms. And this is so powerful. This could literally transform your business. This could transform some strategic decisions you make in your business. By looking at number nine, I have saved thousands and thousands of pounds in my business. And I will talk about how do I do that, what are the smoke alarms?
[00:14:35] And we'll go into that in more detail and I'll also give you a little bit of a sneak preview of some of the advanced strategies. I won't go to too much detail because we can't possibly cover everything in the online program, but some of the things we talk about and we discuss and we focus on when we work with people on a one to one basis. So hopefully you're excited, you're ready to get stuck in and I'll see you in the next video. Cheers, guys. Excuses. Here I am. Sorry.
