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Today’s guest is someone truly special whose work spans just about every industry, not just property management. Mike Michalowicz is the author of the groundbreaking book Profit First, which revolutionized the way that many businesses handle making money. We’ve implemented his system in his business and are already seeing fantastic results.
Imagine this: you run your business solidly, and at the end of the year, you see a nice, fat number for your profit that year. Your bank account, though, doesn’t reflect this. In fact, if you’re like the majority of small business owners in the United States, your business is probably operating from month to month, and paycheck to paycheck. So where, exactly, has that profit gone? The sad fact is that it’s already spent and isn’t truly profit in the sense that we think of it.
Here’s why that happens: we think that the formula is sales - expenses = profit. Logically, that makes sense, but in reality it doesn’t work out that way. Instead, we need to swap the formula into a far more effective one: sales - profits = expenses. In other words, instead of running a business and thinking of everything left after we pay all the expenses as profit, we need to pay ourselves first. Whatever is left after you set aside a designated amount of profit is what you’re allowed to use on expenses.
This doesn’t mean you can jump right into setting aside 25% or 30% of your sales as profit. Instead, think of this profit-first methodology as being like exercise. You wouldn’t go straight from being a complete couch potato to running a full marathon, right? Doing so would just leave you injured and in worse shape than before. Similarly, you need to gradually build up your profit. Start with a very small percentage, and gradually increase from there.
Mike will explain all of this in depth, and I’ll talk about how it relates to the property management industry. We’ll also discuss why it can be a great idea to split your business into different parts if you offer different services. This is going to be a great episode, so tune in to learn all about how to truly see a profit from your property management business!