[00:00:00] Excuses. Here I am. So profit first doesn't work. So in this week's Profit First Club podcast, I want to talk about the biggest reservation, some of the roadblocks, some of the challenges, some of the reasons we hear people saying profit first doesn't work. So first things first. I'm Stephen Edwards. I'm the director of Grow Profit First Accountants. [00:00:27] We are a certified profit first accountancy practice, but we also provide an outsourced finance function. So we look after your whole finance function in your business, which is your bookkeeping, your payroll, your management accounts, your end of year filings. But profit first is a big part of what we do. It's not something that's going to solve every single problem in your business. It's not a magic wand. I. I often compare profit first to go into the gym. [00:00:58] So when we help people, we're essentially a personal trainer helping you with profit first. So reading the book is a bit like going to the gym, having access to the gym. [00:01:08] If you have a personal trainer, they're going to use their experience, they're going to give you a nutrition plan, they're going to give you a workout plan, and probably most important, they're going to hold you accountable. [00:01:19] So if someone's going to the gym and they've got a personal trainer, but they're not following the nutrition plan, they're not doing the workouts, they're not persistent, it's not necessarily the workout the problem. It's not exactly that the personal trainer is the problem. [00:01:37] It's often the consistency, the discipline. And I'm really briefly going to share with you my 4D success model that I've created myself. [00:01:48] And I think it just helps give you a lens on how to be successful at anything, let alone profit first. But if you use this lens, then you can use it as a filter to say, am I doing everything I should or could be doing to make this thing successful? So the four Ds to be successful at anything, but specifically in this example, profit first, the first one is you need to have the desire. [00:02:14] You need the desire for something. So what are you trying to achieve? What's the goal? What's the outcome? What's the reason? [00:02:22] So, you know, let's say getting fit at the gym, as another example. I want to get fit at the gym. I want to be in good shape, I want to be a gym person, I want to lose three stone. There's the desire. [00:02:36] However, the desire itself is not enough. It needs to be a level above which is a determination. It and I would say you've made the decision to make it a must. You are determined to make that thing work. [00:02:50] So I'd like to be fit at the gym. So I am going to join the gym. I am going to lose three stone. It's just a completely different mindset. A lot of people don't take it to that level. And then thirdly, the next thing is, what am I going to do? How am I going to get in shape? I haven't got a clue what I'm doing. So you need a design. And a design is a blueprint, a roadmap, a proven framework of. And that's essentially having a nutrition plan, having a workout plan, possibly having a personal trainer to guide you and show you what you need to do. [00:03:24] It's not essential you have a design. [00:03:27] It's a bit like business coaching in general or getting advice from anyone. You can do it alone. You can learn on your own. You can make it your own design. However, making it your own design might take you several years. It might be the wrong design. You might make mistakes, it might get you there eventually if you, if you persist. But the final D is, and it can fail on this, if you don't do everything is discipline. You could do all of the things I said. If you have not got the discipline, you are not going to follow through and take action. So if we apply that back to profit first, the desire is, I want a profitable business that pays me first, a wage I deserve and I enjoy going to work something along those lines. [00:04:09] So the next stage is, I'm determined. I'm going to make this a must. [00:04:15] It truly my body. This is the business I'm going to build for myself. It must happen. I'm not here to play around. It must happen. [00:04:24] Thirdly, this is where profit first comes in. It's a design. [00:04:29] If we use the gym analogy, it's not guaranteed to get you results. Every time you need to put the hard work in, you also need to put the discipline in. But profit first is a design, is a roadmap that's worked for thousands and thousands of people. In our experience, it works 80% of the time with the clients. We see 10% of those clients probably drop off but come back to it later on. They've kind of, kind of gave up or life, you know, got in the way and other things have got in the way. The other 10% is just not, not for them. And I'm not saying it's for every single business, but in my experience, it's for most Businesses, the businesses is not for the businesses that have got a bad model in the first place. If you're not profitable enough in the first place. I had a chat with a million pound revenue, E Commerce, Amazon shop seller. He's a million pound business. He's going to work with us with Profit first. But when I run through the margins, basically the gross profit was £80,000. So rather than looking at his business as a million pound business, we looked at it as an 80,000 pound business, which completely changes the picture. That's before overheads. When you take away all the overheads. He was on less than minimum wage in that business. Profit first is not going to save your business in that situation. [00:05:52] The advice I gave that person was you need a different model, this business model. Unless you get to a stupid amount of scale which just wouldn't be worth it, we're talking millions and millions and millions, it's not worth it. How about you come up with a different model that's more profitable, more sustainable and actually probably less hard work as well. So it's definitely not for everyone, but for some people that quit it early on, they quit Profit first early on. They do it for a few months and they say this isn't working. But the truth is they've got lots of other problems in their business, particularly people that are new to business and you've only been going a few years. We kind of don't know what we don't know and we're looking for the shiny new thing that can solve all our problems. But actually, if you're new to business, there's four functions in your business. There's a finance function, there's the marketing function, there's the operations function and there's the HR function. They're the four main functions functions in your business. Are you optimizing all those areas? Do you have a hiring and recruitment strategy? Do you have core values in your business? Do you have a 10 year vision, 5 year vision, a 3 year vision? Do you know what you're doing for the next 12 months, the next 90 days, what your focus is? Do you have a scored card that tracks all the key metrics in your business? [00:07:06] Do you have an automated marketing machine? Do you have a performance improvement system for your team members? [00:07:14] Do you have strategic partnerships all? Do you have an ideal customer avatar and position? And do you know who your ideal avatar is? [00:07:23] All of these things are just some examples of other areas of business. So Profit first in itself is not a silver bullet that's going to solve all of Your problems. However, it's gonna in most cases make you more money, give you more cash in the bank if you follow through and stick with it. And it's why I wanted to share the 4D success formula is I want you to apply that kind of filter to nearly anything you do in your life, in your business. Is, yes, I might have the desire for something. [00:07:53] Am I determined? Is it a must? Am I that, Do I feel that strongly about it? It has to happen. [00:07:59] Do I have a design? [00:08:02] And this is where a lot of people fall short. Do I have a roadmap, a process, a system, a, a framework that something that's proven and someone's already done it. [00:08:11] The best designs are from people that have already done the thing you want to do. Now, I could do a whole video on this topic. If you're in the, you know, you're in, let's say, the coffee industry and you've got a 200k revenue business and someone's got a 2 million pound revenue business and they're super, super profitable and they've got a dream business, they have got a design that works. You could do a lot worse than have a conversation with that person, figure out what's worked for, for them. And that's where a kind of design comes in. So if you feel profit first doesn't work in your business, I want you to run it through my 4D success formula and say, am I doing those four things? But you know, you could do the first three, but you still fail if you don't have the discipline that you know, the discipline to make sure you're doing it week in, week out. And I've done a podcast recently in the Profit First Club podcast, and I said that it's okay to fall off the bandwagon now and again. That's fine. It's a bit like going to the gym. If you've missed the gym for two weeks, it doesn't mean you need to quit the gym altogether because it should become part of your identity. And the truth is, profit first changes your thinking. It's more than the system. It's the ethos of why am I in business? What do I want out my business personally, what sort of income do I need for, for me and my family to live our dream life? And that's why I'm so passionate about Profit first is, you know, it doesn't take away from all the other super important things in your business. And there's lots of finance activities you should be doing. You should be doing cash flow forecasting we should be looking at management accounts and understanding our numbers. We should be having regular reviews of our KPIs and our margins. All of this is super important. [00:09:56] But why I'm so passionate about Profit first is what it stands stands for. Yes, it's a system. Yes, it works. Yes, it's probably hard work for people because it's a change, and humans don't like change, but it's it. The mission with Profit first is to give you the life that you. You deserve. And that's why we're so passionate about it. But if it's not working for you, I just. I'm asking you just to revisit it through that lens of my 4D success formula. Thanks, guys, and have a great week. Cheers. Excuses. Here I am so.