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Monthly Archives: May 2021

Are You Making This Profit First Mistake?

There are several mistakes that a business owner can make while implementing the Profit First system into their business. And chief among them: not following the instructions to a “T.”

A bit about me: My wife loves it when I cook (which I could do more often), and she often likes what I cook. And I tell her, “I don’t cook. I simply follow the instructions.”

Now I’m nowhere near my mom or grandma’s level of culinary genius; they don’t use or need measuring utensils the way I do. But, my food almost always comes out good because I follow the instructions to a “T,” despite my lack of experience.

The same is true for following the Profit First system. It works well. And I suspect you know it works well too, or you wouldn’t be reading this article. It works because it’s based on time-tested, solid financial principles.

(It also works for personal finances, if that’s something you struggle with.)

Now, in terms of which points in the system should be adhered to the most closely, at the top of the list is limiting business spending to what’s available in the OPEX account.

In my humble opinion, being able to keep business spending to what’s available in OPEX (i.e. making the hard decisions when it’s low, avoiding using funds from other accounts to handle the business’s spending, etc.) is the crux of the entire system. If everything else is done correctly except for compromises in this area, you will not get the promised results. It’s that simple. We guarantee our profits by keeping strict limits on what the business can spend as a percentage of revenue.

It is super important to be watchful and vigilant over monitoring your business’s monthly expenses. We must be proactively innovative and creative when it comes to limiting our expenses. I’m not suggesting we be cheap, but we should cut all unnecessary spending and make sure we are receiving maximum value for every dollar spent. And if it comes to it, we must make the hard choice to cut or reduce whatever is necessary to stay within the amounts of the OPEX account whenever there are more expenses than cash available within that account (with emphasis on “within that account”).

Life will happen, and there are times when we’ll have to adjust, although not frequently. And that’s OK. But there are also ways that we can preempt large or unexpected expenses:

  1. In using the Profit account, 50% will stay in this account as an emergency fund. So, any emergency funds needed should be available to your business if you’ve been running the system for a few months/quarters/years. But you can only use it for business spending if it’s a true emergency.
  2. Establish a special account for large expenses. For example, if you have an annual recurring expense that you often forget about until after they take funds from your account, you can consider opening an annual expense account that will hold the funds for the purchase each year without sacrificing the OPEX budget, your pay, profit, or taxes. Also, If you need to purchase expensive equipment or have regular maintenance needs, you can establish an account that will have funds available for your equipment purchases or routine maintenance.
  3. While this isn’t a direct Profit First strategy, proper insurance will protect you from certain emergencies and allow your business to stay viable under extreme duress. We recommend having a conversation with a legal representative and having a quality insurance policy to protect yourself and your business.

So, follow the system. Don’t take shortcuts when implementing Profit First. The system is already simple and broken down to its simplest form for maximum results; there’s nothing added to it that isn’t necessary. If you want the results that the system promises, just follow the system and instructions to a “T.”

If you need help implementing Profit First in your business, let’s talk!

Prepping Your Wellness Business for the Summer Slow-Down

Summer is getting closer. Days are longer. The sun is shining, and people are out!
With the pandemic (hopefully) in its last legs and the increased availability of vaccinated friends and family to hang out with, your business might once again be susceptible to the dreaded summer slow-down.

Granted 2020 threw any “normal” business pattern out the window. Still, if owning a business through a pandemic taught us anything at all, it’s to always be prepared—even for the unexpected. Of course, maintaining a solid paycheck is important, even when your revenue is on a roller coaster.

By prepping your business today for the future, you’ll be ready for next summer and all the summer slowdowns after that!

Utilize your time

While an influx of free time in your business is a nice change of pace, it can also come with the anxiety-inducing stress of being uncertain of when and if the business will come back.

The best way to combat any down-time anxiety is to get busy. Having a slow season is a perfect time to get those project ideas off of the shelf and put some work into developing your business instead of always working in your business.

Utilize the time you have to create new revenue models—which leads me to my next point.

Adjust your revenue models

The most failsafe way to ensure you never have a summer slow down is by creating a monthly recurring revenue model. When your clients take a week or two off to vacation with their families, you still get paid.

But how do you incentivize your clients to pay even if they aren’t using your services? You might be thinking of a discount, and you’re right. But we are NOT talking about discounting your services.

There are many ways to entice your clients to capitalize on a pre-pay model: retail discounts, faster response time, exclusive access, add-on bonuses. The list goes on.

We have worked with massage therapists who offer a regular monthly massage to their pre-paid clients. If they don’t use their massage that month, they can have two the next month. This type of model was HUGELY helpful during the pandemic—clients were racking up unused credits, and business owners could count on the monthly revenue.

You know your business better than anyone else, so get creative. The important part is to create a way to have an income you can count on even when the lean times take hold.

Create a summer account

You’re still coming up with the perfect monthly recurring offering for your business, but that doesn’t mean you can’t proactively prepare for slower summer months.

Many dance studios will run camps, or gyms can run summer workout initiatives. Those are great ways to keep income flowing. If you find yourself without monthly recurring offerings or the ability to run camps, the next best way to help over the summer is to set up a summer savings account.

Figure out the bare necessities you and your business need to get through the summer. You know you’ll need rent, AC, insurance, admin payroll, etc., so after totaling your amount needed for necessities, divide that number by nine and allocate it into your summer account the other nine months of the year.

By creating an extra summer account, you know your basics are covered. Any additional revenue that comes in is “extra” and will cover payroll. If you have a camp over the summer, your basic needs are covered, and teacher payroll will be covered by camp revenue.

It’s hard to enjoy time off with your family if you’re constantly worried about how rent is getting paid. Ensuring your operating expenses and owner’s pay are accounted for no matter what the season brings, you create a more substantial, more sustainable business for you and your clients.

If this all seems overwhelming, reach out. We’re happy to help.

Do You Fix This Next (or That) in Your Biz?

The best way to identify your Next Vital Need is to take the assessment, but if you’re wondering what that even means then read on!

You’ve been in business a while but there always seems to be an urgent task that needs to be done. And every time something comes up, it derails you. This just might be what you need to fix next in your business.

Everything in business feels like a priority, especially when you have team members, customers, equipment, marketing, and so much more pulling you in different directions. But the reality is that there’s a hierarchy to where you need to focus your energy.

It’s up to you to determine where you are and how to proceed.

We’ve talked before about your business hierarchy of needs, but let’s look at a quick rundown:

  1. Sales – You need to create cash to call what you do a business.
  2. Profit – Making more than you’re spending creates stability.
  3. Order – An efficient business runs more smoothly.
  4. Impact – Make a difference in the world.
  5. Legacy – Create permanence with your business and your ideas.

The Business Hierarchy of Needs Chart

Logic tells you that you can’t possibly work on all these very important parts of your business at once. Trying to do this, as many business owners often do, will dilute your time, energy, and focus, and you won’t fix anything very well.

At the same time, your business will break down at the weakest link, the need that is in most need of help. This is what we call your Vital Need. And once you identify it, you can throw all your energy into fixing it so you can move on to fixing your next Vital Need. (It never stops, but thankfully it does get easier.)

So how do you identify your Vital Need? Using Mike Michalowicz’s Fix This Next system.

Identify

Take a look at the Business Hierarchy of Needs. Is your business meeting your sales needs? Your profit needs? Check off which needs you’re adequately meeting.

Pinpoint

What’s your lowest level unchecked core need? For example, if you checked order and sales but not profit, then profit is your core need right now.

Fulfill

Now that you know that your core need is profit, identify solutions to that need. Brainstorm a list of how you can increase profit and then implement them. (Of course, we recommend adding Profit First to that list.) As a side note, increasing sales should likely not be on your list of solutions in this example because it’s not your core need.

Repeat

Once you’ve implemented your solutions to your core need, your core need will change. So you repeat this process as you uplevel your business.

Once you’ve reached Impact and Legacy, chances are you may find that your weak link is Sales or Order again. This simply means that you’ve grown and scaled to another level, causing something to break at a more foundational level. Don’t be discouraged; celebrate that you’re growing!

Sometimes going through this process alone is a challenge. We have a tool that can help you determine your next vital need or core need, and we offer coaching to walk you through the process of Fix(ing) This Next.

How to Leverage Team Members in Your Wellness Business

It’s no secret that time management is crucial to your success as a business owner. If you find yourself wearing all the hats all the time, you know that you need to bring on new team members. But how do you know when it’s time to bring on your next hire, and how do you make the most of your new employees once they get there?

Growing your team, if done correctly, requires preparation—emotionally and financially. We’re going to look at three ways to prepare yourself, your business, and your team for successful growth while maximizing your ROI and freeing up your time and brain space. 

Releasing control

Your business is your baby. But the truth of the matter is you won’t escape the daily overwhelm if you don’t build a team. One question I hear from a lot of clients who are ready to grow is “What if my team doesn’t do their tasks in the same way I always have?”

Spoiler alert: your new team members won’t do things in the same ways you do—and that’s a good thing. 

By expanding your team, you open your business up to new, possibly better, ways of operating. We can’t know everything all the time. Making room for new people, new ideas, and new ways of completing tasks enriches your relationships and your operations. 

To make the most of your new hires, you need to create systems and develop your own leadership skills. Establishing an infrastructure for growth can be challenging, but ultimately a very profitable one.

Just remember your team will make mistakes. They won’t get everything right the first time, but chances are neither did you. 

Hiring your first employee

Take a second to assess the lowest dollar tasks you are performing in your business. Chances are they are ALL administrative. For most business owners, hiring a virtual assistant or administrative assistant is a great first step toward building your team.

Start by identifying the back end or customer service tasks that must happen. In the past, I’ve delegated very routine marketing tasks to administrative assistants. Reaching out to potential clients on Facebook can be a time-consuming task. Either you spend time you don’t have halfway connecting with people because your attention is drawn elsewhere OR you can template your best conversation starters and tell your VA to go get ‘em! 

By documenting and systematizing your tasks, you ensure the transition is as seamless as possible for your business—and your new employee. After identifying the tasks you’d like to delegate, create a quick video of yourself in action, and offer that as training to your new hire!

When you’re no longer consumed by the onslaught of administrative tasks, you are free to sell, generate additional revenue, or provide an additional service to your clients. The return on your “free” time is massive

Preparing for additional team members

Your administrative assistant is in place, but how do you know when it’s time to bring on your next trainer, massage therapist, or esthetician? This decision completely depends on the business, but here is how to make sure you’re not caught with your financial pants down:

Using the Profit First model, create a new bank account, and start saving for your future team member. When you can allocate their salary to the account each week, it’s the right time. 

By knowing their salary and banking that amount every month, you are creating the one-month salary buffer we recommend, but you are also getting an accurate view of how far you potentially have to go before you’re ready to financially commit to a new team member.

Once you can easily bank their salary month to month, you’re ready! 

If you find yourself struggling to stash the money away that you need to grow your team, and increase your peace of mind, reach out to us. We would love to help you implement Profit First so it works for you

When you’re feeling overwhelmed in your business, growing your team seems urgent—and sometimes it is! But the more you can prepare yourself and your finances before adding on a new team member, the better the ROI is for you, your business, and your new employees. When you make deliberate financial and training decisions, you create a team as loyal to your business as you are! 

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