A hearty welcome to “Grandma’s Wealth Wisdom” with your neighborly hosts, Brandon and Amanda Neely. This is the only podcast that helps you take charge of your cash flow and leverage your assets, simply and sustainably, the way Grandma used to.
Amanda: Welcome to the Grandma's Wealth Wisdom podcast, episode number 61, where we've got a very special guest for you today. Her name is Danielle Mulvey and she's the host of Profit First Nation along with I'm a former guest of Grandma's Wealth Wisdom podcast, Mike Michalowicz.
A little bit about Danielle, her official bio. She has been an entrepreneur for over 20 years and she is now sharing her real-life experiences, including real time across her multiple businesses that she runs with her husband -
Danielle: Yeah, quite a few.
Amanda: - yeah, with annual gross revenues over $30 million. She has been there, she has done that, and she continues to do it day in and day out. We're really looking forward to what she has to share with us today. [01:11.0]
Before we jump in, Brandon, anything you want to say?
Brandon: I'm just excited to have her next to Mike Michalowicz. That's kind of like a one-two punch when it comes to Profit First because Mike Michalowicz wrote Profit first, and then Danielle does the Profit First Nation podcast where she's the main host, and it's really fun to have them. As we are now certified financial Profit First advisors, to be able to have them sharing with you guys is just an honor.
Amanda: Okay. Let's welcome, Danielle. So, welcome Danielle. So glad for you to be here. Thanks.
Danielle: Thanks, Amanda and Brandon. I'm excited to be with you all. You guys are some of my most favorite Profit First professionals, so thank you.
Amanda: Thank you, and vice versa, for sure. It's nice to talk with a fellow PFP as we call ourselves. [02:04.5]
Danielle: Yeah.
Brandon: And PFPP, which is a Profit First Professional Podcaster.
Danielle: Okay, that’s true. We're in a smaller niche group of that.
Amanda: Yeah. So, we're going to start getting to know you a little bit, and then we'll ask for your wisdom to be shared with our audience, but first take us back. What was money like for you growing up?
Danielle: My father was an entrepreneur. He's been an entrepreneur and has had the same construction company for over 40 years now, and so I always grew up in an entrepreneurial environment and knowing there's ups, there's downs, there's risks, and so I think that was interesting. One thing that my dad always talked about when we were little is that $10 makes $100, so while you might spend $10 here, $10 there, 10 times, that's $100, so it was always on a little bit more of the bigger picture and not fretting away your money on small things. [03:06.4]
But if you did want to buy something nice, he would tell my mom, buy a nice purse because that'll last you forever instead of buying less expensive purses that you have to go through more. So, that's what I think I take most from part of my childhood.
Amanda: Yeah, I love that $10 makes $100. I wrote that one down. I imagine as you went into young adulthood, starting out on your own, having to start creating your own story with money, there might have been some of remembering what he said, some rebelling against what he said. What was that like for you?
Danielle: A couple of things. I've never only had one job. When I was in college, I always had multiple jobs. I was an aerobics instructor. I was an RA and I was a waitress. So, even during the summers, I would have multiple jobs, and so when I got my first kind of real job after graduating, I still kind of had that path and had even more jobs, so it was a little bit crazy balancing it all. I'm just a person that likes to stay busy, so that was one aspect. [04:11.0]
Then, I was a year, a little over a year into my first professional job after graduation and I had an opportunity brought to me to start my own company, and I'd have an automatic client. I was going to do it with a partner and my dad, who actually had a partner for 35 of the 40-plus years he's owned his business, said don't, “Don't have a partner. Do it on your own,” and that was great advice. And so, I started my first company when I was 25, and within a little over a year, we were doing a million dollars in revenue.
Amanda: Wow.
Brandon: How many businesses or companies? You said you’ve always had multiple. How many companies do you have now? Because on your podcast, I feel you have more than two. [04:55.4]
Danielle: Yeah, so my husband and I have two businesses that we sort of run together and such and they are on track to do over $40 million this year, and I spend personally about 10 hours a week overseeing those operations—and a little bit of spoiler because I recorded the episode today where I talk about this—but we hire A players. I've been focused and practicing top-grading and only hiring A players for over 20 years now. And so, because we've hired A players, it gives me a lot of margin to work on the business and then do other things. So, I spend 10 hours on those businesses.
One is a construction material supply business. The other one adjudicates long-term care claims for the state of California and we have an office in Indiana with 15 employees who do that. Then, with my margin or my free time, what I really love doing is guiding and working with other entrepreneurs, so I do consult with preschools—it's kind of random. I was helping someone out with that and just kind of ended up with that business—and I have a coaching practice as well. [06:05.7]
Amanda: Going from leaving a job and having a huge business grow—a million dollars in the first year was really big—to now having multiple, multiple million dollar companies, there must have been some pivotal moments within there that you learned some really key lessons about money. Can you just tell us one of those stories?
Danielle: I would say, the first one was that my first client that I started my business with filed for bankruptcy within two and a half months of me starting my business, so that was real scary, real fast. I thought I had time to add more clients—I was really focused on my first client so much—and so what I learned from that is you cannot have all your eggs in one basket because we had invoiced them a lot, and when a company goes through bankruptcy, I mean, you are maybe going to get paid, maybe not going to get paid for the work and services that you rendered. [07:07.5]
So, it was tenuous and it was a good wakeup call because right away I was hustling to bring on other clients, probably faster than I had originally envisioned.
Amanda: As you’ve had this success on the business side, what has that meant for you personally to make sure…? Obviously you're part of Profit First Nation, right? You’ve profited from these businesses you’ve continued. How do you make sure that you're managing your money well on your personal side? Any key lessons there?
Danielle: I mean, I guess it's the same kind of principle. You can do Profit First like you do for your business, for your personal life, so we allocate money. Our children both play water polo and that is not a cheap endeavor, and so that's an example of where we're allocating money every paycheck to a budget for them for water polo, so that we don't overspend and put them in too many camps, too many clinics, too many this, too many that. [08:06.6]
I would say, that's how we have leveraged it in our life, and they're aware of it and they help decide the decisions about how the budget that we've set aside for them get s spent in terms of how they want to further their water polo development.
Amanda: I love that. So, you're involving them in the process, so they learn a lot along the way, too.
Brandon: How do you then do the same in your personal life balance, knowing you have four businesses? Even though, being an entrepreneur, there is no balance I feel sometimes, but how do you juggle four businesses, family, your husband, because that is a part of things? Time management, how do you do that?
Danielle: Again, not to sound like a broken record, but I think it comes down to the people that we hire in our businesses. [09:00.0]
We usually take a six-week vacation. Unfortunately, this year that's obviously kind of gone by the wayside and such, but when we take that vacation, it starts with the two weeks of Junior Olympics for water polo, and then we go away for four weeks with the kids.
We can live this extraordinary life and our business runs itself because we have A players. I mean, when we've traveled like that, I mean, there's nothing that I was involved in on our last six-week vacation last year where I had to handle something for the office. So, I really think it comes down to not settling for B or C players and really focusing on A players, which I go by the top grading definition, which is the top 10% of available talent at the given salary.
Amanda: Yeah. One final question personally and then we'll switch over. I have no idea if you've had any relationship with your grandma, but whatever she is to you, what do you think in your life she'd be most proud of right now? [10:09.1]
Danielle: Gosh, she was always so supportive. She has passed, but I actually talk about this in my keynote speech. She hoarded coins. She collected bicentennial quarters and I have to say that the turning point for me in being an entrepreneur was almost over 17 years ago, and that's when I had to pay a chunk of change to the IRS because I didn't have money set aside to pay taxes on the quarter of a million dollars of personal income I was reporting on my taxes when I was, I don't know, 28 years old or so. So, I was literally living off the coins that I had learned to hoard like she did. I was buying dollar bacon cheeseburgers at Wendy's because I could pay for it with coins. [11:01.4]
So, I think that she would be proud of me and the fact that I was able to get by with sharing her coin hoarding, but that was also my wakeup call because I didn't understand my financials. I owned a business, but I didn't own my financials, and so that was my wakeup call of like, Whoa, there's more to owning a business. You can't just hire a bookkeeper and an accounting firm and think that they take care of it for you and are going to tell you if something is wrong. You're ultimately responsible.
Brandon: What would you tell a client, a business owner, if they said that they don't like numbers or I don't want to deal with numbers? What's your coaching to them?
Danielle: I'm kind of picky about who I work with. I don't work with everyone and, I mean, I would say that that might be a deal breaker. I definitely think that if you don't like numbers, then your mindset is not in the right place. So, that's one thing about hosting the podcast and Profit First Nation. [12:01.5]
A lot of people aren't in the right mindset, and so I hope by talking about Profit First every week, we start to break down those barriers and help remove those obstacles that are in people's heads, because money and finance is 90% emotional and 10% logical, so I really am trying to address that emotional side and give people the confidence that… They hate numbers because they're intimidated by it, so let's figure out how to make it easy, and Profit First is a great first step for business owners because you don't have to read a balance sheet out of the gate. You can start to see and manage the cash in your business very easily with Profit First, and so I think that's a great first step for entrepreneurs in starting to own the financials of the company that they own.
Grandma always said, “Eat your vegetables. Look both ways before crossing the road. And never risk your financial future on elements of the market you can’t control.” That Grandma, always good for some tried-and-true advice. And although some of her wisdom seems to have skipped a generation, you don't have to be left behind.
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Amanda: In your podcast, you talk about becoming a 17 percenter? What does that mean?
Danielle: According to U.S. Bank’s small business report from 2017, 83% of small businesses operate check to check, so that means as soon as money comes in, they're paying bills and that money is gone in a flash. The 17 percenters on the other side, I like to say, have put profit first because they have cash in the bank to correlate to their profitability. When money comes in, some of it stays in the business and not a hundred percent of it goes out, so it's not operating check to check. [14:06.3]
Amanda: Yeah, that whole 80-20 Pareto principle in action there.
Danielle: It does kind of follow that, yes.
Amanda: Take us back. When did you first hear about Profit First? How did you come across it and what did you initially think about it?
Danielle: We were spending three weeks in Alaska and that is my time to just read and I just devour books when I'm on vacation, and so I read Simple Numbers and then I read Profit First and just was like, Oh my gosh, this is great, because at this point in our business, my husband and I had different ideas about how to manage the cash in our business.
And so, I always say to Mike, and he knows Ken pretty well, but I always say to him, “You saved our marriage,” because it was getting rough, and when we both read Profit First, we said, “Okay, this is fair. This is objective. It's not my opinion versus his opinion. Mike Michalowicz has set the rules and we agree to follow them.” [15:14.1]
So, it has given us a great sort of boundaries and formula and principles to follow that has just been great for our marriage, to be honest.
Amanda: And now as you're sharing Profit First with other people, what do you see as their biggest obstacle to getting started?
Danielle: There are two things. Number one, people think that they need to be profitable before they start Profit First, so my question to you is, how's that working for you? If you're waiting to be profitable and you haven't been profitable, then what's going to change?
Profit First can be implemented in any business at any time, and do it now. Get your butt to the bank. Open up your primary accounts and start allocating 1% of every deposit to your profit account, and that's how you get started with Profit First. [16:05.9]
The other thing is that a lot of people I find are scared to jump off into Profit First because they're scared of doing it wrong and there is no wrong about Profit First. I mean, if you're doing Profit Firstish, yeah, that's wrong. You have to have the bank accounts. You need to follow the behavioral patterns and expectations.
But what I love with the podcast is the questions that I get in. People almost answer the question themselves when they send a question into the podcast and, I mean, so far everyone has been right in terms of what they think the answer is to their question, so it's just you've got to trust your gut.
I'm going to add a third thing. Profit First will evolve with your business, so as you grow you might need to add additional accounts. Start with the five basic accounts, but how we implemented Profit First three years ago is not how we're doing Profit First now. We've implemented more advanced strategies. We've implemented other types of accounts. And so, you just start with it and then it grows with you, and you evolve with it. [17:20.7]
Brandon: I think that’s beautiful, again, just thinking about how a business does evolve in general, and so, of course, your systems are going to evolve with it.
Danielle: Yeah, you're exactly right. Never thought of it from that perspective.
Brandon: Yeah.
Amanda: Yeah. I also imagine you've seen a lot of companies have lots of success with Profit First. What's some of the biggest results that people get when they choose to adopt the Profit First system and they've been implementing it for some time?
Danielle: I think the thing that is probably the biggest success is how quickly they're able to eradicate debt. A lot of businesses, I would say, kind of maybe going back to that 80-20 Pareto principle, of about 80% of the businesses that I've worked with have had debt on their balance sheet, and it's not any kind of new debt. It's just been there and it's been serviced, but they haven't attacked it. [18:19.4]
And so, I think the biggest thing is, again, how has that been working for you? Not so good. But when they implement Profit First and they are with their first quarterly distribution of profit, taking 99% of what's in that profit hold account and throwing it at their debt, I mean, that's how they attack their debt. When they pay off the debt in their business, I mean, huge sense of excitement and relief, and it almost kind of flips a switch, too, because then they become even more conservative about never accruing any sort of debt again.
Brandon: I was thinking about this with 80-20, too, with getting rid of debt and combining that with Profit First, if you understand that idea of 20% of what you do actually provides those big results, right? [19:15.1]
Amanda: Yeah.
Brandon: And if you're doing the 30% in OpEx or whatever that number is, you're going to be more keen to know and put more into that thing, and then you're going to cut expenses on things that don't matter, so your business should pretty much blow up in a positive way because of doing that, combining those two principles.
Danielle: Yeah. I mean, you're definitely starting off slow, but you are gaining momentous momentum the longer that you do Profit First and seeing the results that you're getting out of it, so exactly right, Brandon.
Amanda: Awesome. We've just hit the tip of the iceberg here. There's so much more that I know that you are sharing with your audience and that you could share. If people want to get to know you more and hear more of your wisdom that you're sharing, how should they do that? [20:07.5]
Danielle: Please join us on Profit First Nation. Our episodes drop on Thursdays and you can download and subscribe to us on your favorite podcast platform. We did just roll out a new feature that allows you to get our resource that's associated with the episode each week automatically texted to you, so you have it right there on your device when you're listening to the podcast. Don’t forget to opt in for that as well on our website, ProfitFirstNation.com.
Brandon: Teach us how to do that. We can do that.
Danielle: One final teaser for the podcast. What is your main goal for what the audience is going to get from listening?
Danielle: The whole reason that this podcast came to be is I've traveled with Mike across the country. He does his keynote speech and then I do the workshop after his keynote, and people come up to him so excited [saying], I've read your book three times, listened to it on audio twice, and he's like, Great. Have you implemented it? And they're like, No, it's not the right time. [21:14.0]
So, the purpose of the podcast is to get people's mindset. Remember we talked about the 90%, it's in their head—I'm not ready. I'm not a numbers person. This isn't for me—so it's really helping to work on that mindset and breaking down Profit First, so it's not intimidating. You get excited about it, so you want to implement it, and then you want it to evolve and grow with your business.
Amanda: Yeah, sounds very similar to what we do with Grandma's Wealth Wisdom, where you get people excited and motivated to actually do the stuff, rather than just keep thinking about doing the stuff.
Danielle: Yes, and you guys are a super duo of motivation.
Amanda: Thank you.
Brandon: I was just talking to one of our clients just today and she was saying, What's really great is the simplicity of this, and I feel that with Profit First, it seems some people are like, It's too complicated, too many banks or whatever, but I'm like, No, it's actually simple and that's what makes it easy over time. [22:16.7]
But, I mean, it goes to going on and getting your butts at the bank, but once you do that and you start implementing, it becomes easy and you can just look and say, Hey, that's where we're at. Right now, I could look and say where we're at as a business.
Amanda: You're exactly right. Thanks so much for sharing with us, Danielle. We'll look forward to welcoming you back on the podcast in the future, too.
Danielle: I'd love it. Thanks so much, guys.
Amanda: Thank you.
…
Danielle had some really awesome things to say. We'd love to hear from you what your biggest takeaways are. I, for sure, am going to remember that $10 makes $100. That's a nice little quip to pass on to future generations and other people who are keen for financial wisdom. [23:00.6]
I'm also really excited to be part of that 17% of businesses that are actually profitable, especially knowing things like, I don't know, pandemics can happen and I'd rather be part of that 17% that have some profit that has been set aside and is ready to help me get through a pandemic like that. We've learned the hard way. If you've been listening to this podcast, you've heard some of those stories of the hard experiences that taught us we’d better have some cash set aside, right?
Then, I also loved that she shared about how our businesses are always evolving and as such we need systems that can evolve with us, and that's what I like about Profit First. It's not do A, do B, do C, five steps kind of thing, but it's a system, a formula that you plug in the variables, but as your life, as your business changes, your variables are changing. It changes the equation, but the equation still works. The system still works and that's what I like about Profit First. [24:04.6]
It's also what I like about some of the systems we use on the personal side that they're percentage-based and formula-based, not where everybody has to do the same thing. And maybe that's very millennial of me, but I also think it's very you want a system. If we're going to be growing and have that growth mindset, we want something that can grow with us. We don't have to just put it to the side and go find another system that works at this level of business or whatever. I love that idea of evolving and that having a system that can evolve with us.
Brandon: Yeah. I really liked the idea or what she said about hiring A players and being able to take that time off. Again, I remember us not hiring A players and how that almost killed me literally, and knowing that when you hire the right people that it's going to level up your business and you're going to be able to take some long vacations to be able to go and recalibrate. [25:02.4]
I really was like, Hey, how am I going to continue to hire A players and get them around what we're doing here, so we can go on vacation, which is going to be great, but to serve and help more entrepreneurs and business owners?
Amanda: Yeah. So, if you haven't yet, please subscribe to the Grandma's Wealth Wisdom podcast, and while you're in your podcast app, go to the search, look for Profit First Nation and subscribe to their episodes. They're a baby podcasts. They just started, so you could go back to the beginning and listen to every single episode that they've done so far and you're going to hear a lot of really good stuff in there. It's really nice, a little arc that they've created, especially from the beginning episodes. So, we encourage that highly.
Brandon: Yeah, and also if you're watching this on YouTube, be sure to subscribe and write a comment on what you've learned from this episode, or if you are implementing Profit First, just put that in the comments and we’d love a dialogue with you guys. [26:05.0]
Until next time, keep building your wealth simply and sustainably, so you can break through to a smart, stable, financial future in your personal life and in your business.
Amanda: Live long and profit.
The topics presented in this podcast are for general information only and not for the purposes of providing legal, accounting or investment advice. On such matters, please consult a professional who knows your specific situation.
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