(00:05): But those looking to build wealth, the biggest objection we hear is that the Profit First system actually slows down the process of increasing wealth. Their reasoning goes is if they pour every penny back into the business instead of taking their profit, then it'll of course grow faster and their wealth will increase because the business will be worth more in their line of thinking. Taking a profit slows the growth of the business and reduces their overall wealth. Today we wanna show you a tweak to the Profit First system that boosts wealth building and gives more not less money to invest in your wealth journey. Hey, I'm Brandon and welcome to Wealth Wisdom Financial podcast, episode one 19. Can Profit First Help Build Wealth?
(01:03): Hey, I'm Amanda. Now let, lemme take you back. I first heard about Profit First when I heard the author and creator Mike Macall, it's being interviewed on a podcast. I heard his story and the idea of flipping sales minus profit, or sorry, sales minus expenses equals profit into sales, minus profit equals expenses. You can tell how much it's been ingrained in me Sales minus profit equals expenses, not the opposite of way around. And I thought when I first heard that, let's try it without reading his book or anything else, All I heard was his podcast. We just started paying ourselves at the beginning of the month rather than at the end of the month. I mean, to make sure we paid ourself enough to, you know, pay rent, buy groceries, save a little bit for our future and so forth. And then we just ran the business accordingly. It was good and it actually helped us sell their business. The buyer knew that we were profitable enough to pay a manager what we had been paying ourselves. So it was a no brainer for that mean, you know, person to buy the business. And almost a year after starting our second business, the current one, Brandon got the Profit First book for free, um, by listening to one of Mike's. There You go. This is the copy of it. , I
(02:16): Think. Yeah. Um, listening to one of Mike's podcasts, I think, and you wrote a review and you got the book for free and wrapped it up, put it under our Christmas tree for me for to open Christmas morning. I devoured the book be I had it done before New Year's Eve and we started implementing Profit First, uh, in January 1st, 2019. Then in 2020, um, after about a year and a half of being an on, you know, using Profit First who became Profit First Professionals knowing how much small businesses needed extra boost, uh, extra encouragement during the pandemic. Now there are a lot of layers to profit first, but here's one thing that we haven't heard anyone else say, at least not publicly on a podcast. No one does Profit First, the exact same as everyone else. Everyone adds their own unique twist to it. And today we want to reveal how we add a twist to profit first.
(03:17): The LE allows us to build more wealth rather than feel like our wealth's journey is stifled by the Profit First system. It's actually hidden right in the pages of profit first for those with the eyes to see it and the ears to hear it. If you're listening to the audible version, love the audible version of Mike's books . But if you've never heard of Profit First, let alone read the book or listen to the book, Stick with Us because the big idea of today's episode might just change your financial destiny. Now for you Die Hard Profit First fans, we hope this reading of Profit first gives you an insight and how to maybe level up your use of the system to help with your own wealth building journey as well.
(04:00): Yeah, so I used to sick tired of hearing the same old conventional financial advice, you know, that whole way of, of even sales minus expenses equal profit. I think that is an old way of thinking. I mean, we feel we're fed up with the same old truisms that fall flat when you get into the unique opportunities and challenges of our specific situations. I mean, seriously that, uh, never, they never had to test that during a Covid pandemic. So this show is all about bringing you historic wisdom around building wealth with practical insights on how to apply it for your journey, your unique journey when conventional financial thinking doesn't get you to where you wanna go, you need wealth wisdom. So let's master wealth building together.
(04:50): So just for fun, I looked up the dictionary definition of profit as a noun. Profit is a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something right there in that dictionary. Definition of profit is income minus expenses equals profit. Listen to it again, the difference between the amount earned and the amount spent in buying, operating, or producing something. That's what profit is. Mike Mcit is quite literally redefining profit to be what you take from the amount earned before you spend the rest. No, that's, that's uh, totally different. He's going against the dictionary. Yeah, Okay. Webster himself, But take a closer look. Yeah, he goes against Webster. But take a closer look at what happens next. For most that implement profit first they end up spending most of their profit too. Mike teaches that you take your profit and distribute 50% each quarter to the owners and the owners are supposed to either use the majority of it to pay off debt if they have debt, but the main purpose is to use it as a reward system to do something fun with it. Buy an ice cream or take a vacation depending on the size of the distribution. I'd rather do the vacation than the ice cream. Personally, that means them more profitable,
(06:23): Apparently. Yeah. Well, whether you're using 5% of your profit distribution or a hundred percent of it as your reward system, we have a few questions for you to ponder today. Is an ice cream or a trip to Disney a financial gain? Are those really profit? There is a part of me that feels like it's much too narrow a definition of profit. It's almost as if Mike is throwing shade at the word. What if I think of reward very differently than an ice cream or a Disney? So let's go back to the book Profit First and the words on page 109 say this, When you take your profit distribution, the money is to be used for only one purpose, for your personal benefit. Profit is intended to be your reward for having the guts to invest in your business. These are, use it for whatever brings you personal joy and then might give some examples. Maybe you go out to nice dinner with your family, Maybe you feel joy in building up a fortress of your money and your retirement fund. Maybe you get that awesome new couch you have your eye on. Maybe you go on a dream vacation.
(07:35): No, Mike isn't defining profit in such narrow terms as more spending. He's giving us permission to define profit for ourselves. I mean, do you get joy out of turning your profit distribution into a new source of passive income by investing in real estate? I mean, that's something we're thinking about. Do you get joy out of stacking up those benjamins in a cash value life insurance policy? That's definitely something that we do with our profit. Uh, and there's so many other things that we do as well and that are different than just an ice cream cone Or a vacation. Here's the bottom line. Do not let anyone else define profit for you. Yes, I'm talking to you. Listen to me right now. Do not let anyone else define profit for you. Your profits do not have to do anything. There's no have to with profits. If it brings you joy to take your profits out of the bank and hide them in a shoebox under your bed, then do it. If it brings you joy to take your profits to a casino and below them all on one spin of the roulette wheel, do it. No one on this podcast is gonna judge you for it. Do not let anyone else define profit for you, including your kids who really wanna go to Disney.
(08:58): However, I do probably won't go to the casino with you to do that. Yeah. Um, I might say go for it. Uh, but I'm not gonna be an enabler either. Right? With that being said, we do want to extend an invitation to you. We invite you to reflect and question your current definition of profit and really get in touch with how you define wealth and joy. Like that's really what's important. Like what, how do you define wealth and how do you define joy and all this stuff for your business? Yeah. So in true wealth, wisdom, fashion, we've got a lot of questions for you to ponder, journal about, reflect on, discuss with your loved ones or your financial professional, et cetera. First, let's pretend for a second that you're deeply in love with your business. What does your business do for you that makes you fall deeper and deeper in love with it?
(09:55): Or think about it this way, what areas of wealth do you want your business to feed? Going back to uh, I think a couple episodes back, one in 16 where we talk about wealth being way more than money and I strongly recommend going back and listening to that episode. I mean, do you want your business to give you more of any of these more meaning and purpose in life? The ability to express your full unique version of being human experience, the knowledge, better physical health, the capacity to be kind to our planet in a special way. Could you use your profit for that piece that you never have to worry about being in need, influence in leadership within your team, your family, your community or your industry? Could that be used there? Perhaps the wealth you want to use your profit that avail is relational wealth, spiritual wealth, emotional or mental wealth and or monetary wealth. Of course, you know, monetary is important, but there's so many other ways of defining wealth. Maybe you're starting to feel like it's multiple of the above and it's overwhelming to just choose one. And that's, uh, definitely I can feel you there too.
(11:11): So if you take a step back for a minute, what if we thought of profit as the wealth we get to keep and expenses as the wealth we allow others to take from us? Profit can give you those memories of a vacation with loved ones that can't be taken away from you. You get those memories for the rest of your life. Profit can also give you the space to invest in your physical health that you might not have had previously. That investment in your physical health sticks with you for the rest of your life. What do you want all for yourself if no one else knew about it, if it didn't change anyone else's life, what would you do? Just because you knew it would improve your time on this planet? And if you answered that question, maybe it would impact somebody else. Maybe it would change things for somebody else. It would come, but it would come from the overflow of your own joy. Yeah, the main thing is this. If you're feeling any pressure to use your profit distribution for something that causes friction for you, you're using your profit wrong. Use your profit for something that feels good, smooth, joyful, and just because you want to, there's no supposed to or should when it comes to profit.
(12:29): Now let's go back to that major objection we shared at the top of the episode. Does Profit First stifle wealth building because it slows down the amount you're able to reinvest in your business and thereby your business does not grow as quickly as you want to. You wanna grow first profit later. Let's go back to that. So we're gonna go to pages 180 1 and 180 2 of Profit First and remind you of how Mike addresses this idea of Grow First and then profit later. If you have a copy of the book, it's worth going and reading his full words, we launch onto this one sentence. So we're gonna boil it down into what he says right here. When profit comes first, your business will automatically show you the path to growth. That's a powerful statement right there. When profit comes first, yeah, your business will automatically show you the path to growth.
(13:25): Yeah, that is so powerful that our business will grow differently and will see it that growth differently When we're taking profit First consider these two options. Option one, spend three years building a Twitter like Unicorn and then get into a war with an Elon Musk like investor so that you can finally claim your profit and exit your business. Would it be that much of a war with Musk or whoever it is if your business was actually profitable, Which Twitter isn't by the way, nor are so many businesses that we applaud as success stories. Uber is a classic example of
(14:06): This. Yeah. So do you wanna have that applause or option two, would you rather have the profit from your business as you go and see how it impacts your wealth and your joy levels isn't more joy and more wealth? Why you wanted to start your business and why you also want your business to grow? What if there wasn't an invisible line that you cross when the business has grown enough to build wealth and increased joy? What if you got to experience joy all along the way as you grow your business and increase your wealth? Now we're gonna turn from some questions here and Brandon's gonna tell you something very important that we learn from our own personal experience using Profit First for almost four years now. If you've drifted off, come back to us and listen to what Brandon's about to share next. This is super duper important.
(14:59): So one thing we've experienced in the last almost four years of full implementation of the Profit First System is that we've learned a lot about what really truly brings us joy by starting with small quarterly profit distributions and watching them grow to be able to do different things with them and test to see what really brings us joy and makes us feel like we're getting wealthier and wealthier. If we got the same amount, but say in a big lump sum when we're 65 and exiting the business, I don't think we use the profit as wisely to bring us true lasting joy. And on top of that, my son would be an adult by then close to and or I think so, and he wouldn't have been able to experience the profit either. So anyway,
(15:55): Yeah, which so little sneak peek behind the scenes. What you did not hear before we hit record is that Brandon and I still fight about what we wanna use our profit to do. He's a different definition of joy than I do. So we actually take our profit, some of it we're, you know, 50-50 owners of our business. We've decided we're gonna keep, you know, use some of that profit individually rather than as a family. Um, but we still fight about like how much profit should we take, what, you know, we're following this the Profit first system, but we still think about and still have that temptation to reinvest it into the business because Mike allows for that. And, but this idea of we have to consider it, we get the opportunity to change our definition of what is gonna bring us real joy from our profit.
(16:42): What's gonna really help us build wealth and why are we building wealth and how is that wealth contributing to our joy rather than causing more stress, you know, more money, more problems kind of thing. And it's that kind of like iron sharpens iron type of thing that has really helped us with Profit First. And we, this is actually a big mistake that a lot of people make when they're spending their profit distributions on things that don't bring true lasting joy. It's actually mistake number one in chapter 11 of Profit First mistaken number one Mike says is we go it alone. If you do profit first all alone, not only are you more likely to spend your profit distribution on something easy that's not gonna bring to joy, you know, lasting joy, you're also more likely to steal from your profit or tax account when inflation kicks in, or to adjust your allocation percentages too quickly or too slowly, or even just to frankly give up. So many people just give up on profit first because they're doing it all alone.
(17:41): And I feel like that's a lot of business owners, we feel like we're doing it alone. That's why we created a community space because, I know even though I had, you know, we were doing it by ourselves and I talked to lots and lots of business owners who feel like they're just by themselves, they don't have an Amanda or they don't have a brand. And, and, and I'm like, well, you could just join the community here, uh, and you'll have that. But, um, oftentimes we feel alone or we might have our family, but we're still like a weird tribe trying to start a business in a world that, uh, is very different. So if you're picking up what we're laying down today, if you've been agreeing with us the whole time, you are a special type of human, right? I mean, again, we are people that are creating things, not just consuming things.
(18:36): You're the type of person who, like Mike talks about in the Prophet First book, is okay with going against the grain and looking foolish to others. I mean, like, seriously, I've felt like that many times and, and I know some of my clients and, and people feel that way, but that I look and reverse engineer and say, Hmm, who's gonna be the foolish one? So in addition to inviting you to define Profit First for yourself, we also want to of course invite you into a community of people doing Profit First together, like we are building in that community. We want to see businesses succeed in this cuz a majority of businesses don't make it right. And we want to see the success rates increase. And for the month of November, you also get complimentary access to implement Profit First in 12 easy steps. It's our step-by-step guide to setting up profit first in a way where we'll be too burdensome or overwhelming to keep going with it for years and years to come. We've got cheat sheets and checklists along with community support. You can find all the firstname.lastname@example.org slash profit. We'll put the link in the show notes
(19:56): Too. So if you get nothing else out of today's episode, we want you to remember this use profit for whatever brings you true joy and put profit and thereby true joy first in your business. Don't let anyone else dictate what you believe will bring joy, including your past decisions on how you used your profit in past quarters. Now that's gonna take some confidence to boldly claim your unique joy and use your profit however you want to be sure you hit subscribe so that you don't miss the next episode where we're gonna share a specific way to use Profit First to increase your financial confidence so that you can go and do whatever you want with your profit without anybody telling you what for. So I mean pay, like that's paying ourselves doing that kind of thing.
(20:49): That too, yeah, There you go. I know so many business owners who don't implement Profit First cuz they're like, Yeah, well, uh, I, I don't even pay myself. So the next episode is two weeks away though. So if you wanna build that confident sooner in a step-by-step quest within the community, visit www dot wealth wisdom fp that's financial partners.com/profit for all the details. Remember, our access is complimentary with your membership in the Wealth wisdom financial community for the month of November. But we will be charging for this course separately, uh, after the month of November. And if you think you can get loads of joy from your business without putting profit first, we wanna know how because we've never seen any other way work for very long.
(21:41): So until the next time, keep growing and protecting your foundational wealth so you're ready for the next adventure. Life brings your way in life and business. We hope you live long and profit. The topics presented in this podcast are for general information only and not for the purpose of boarding legal, counseling or investment and advice on such matters. Please consult a professional who knows your specific situation.
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