Cash Flow Mastery: The Profit First Method

Speaker A: Yep. A couple things. My company, so unique, it'll never work. No, it's not. Right. I've worked with, you know, everything from startups to 100 million dollar businesses in almost every country. You know, of every currency of any domain. It'll work. Okay. Um, my company's too small. My company's too big.

Speaker B: Right.

Speaker A: So again, we're talking there. Um, the best one is the best one. My accountant says I don't need it. Get yourself a new accountant.

Speaker B: Welcome to the Natural Products Marketer podcast. I'm Tina. And I'm Amanda. And we're here to make marketing easier for natural products businesses so you can reach more people and change more lives. Well, Ron, it's so exciting to have you on the Natural Products Marketer podcast with us. Um, Profit first is something that's very near and dear to my heart because it has helped me buy a house, um, grow my business and remain profitable in the black so that I can reinvest and create more and more growth for myself. And it's been something that I've shared with others over and over again. So it's really, um, turned around the way that I do business in my financials and my own business, and it's changed the way that I'm able to live as a result of being a business owner. So I love Profit First. But for the uninitiated, we would love for you to introduce yourself and the process of Profit first and, um, what you're going to be able to share with us here on the show today.

Speaker A: All right, awesome. Well, thank you, Tina and Amanda, for having me on the show. My name is Ron Saharian and I am the co founder of Profit First Professionals. Profit first is a book and a methodology actually written by my, uh, business partner, Mike. Okay. Profit first, you can see the original on, uh, right there behind me if this is going to video. But if not, what? Profit first is not, it is not accounting. It is not bookkeeping. What it is, is a system. It is a system that is the most neglected system in every business. It's an allocation method. It's a system that resides between financials, which are historical documents, and forecasting, which are hopes and dreams. Profit first is the ultimate cash flow system. Yeah, so that's exactly what it is. So when people say Profit first accounting, I like to correct them because it's not accounting how you do accounting, how you do bookkeeping, how you do tax is the same. Profit first is a way to help you have financial clarity on your cash flow. Where are you Spending it, Where are you putting it in? How much are you putting in your pocket? Right. How much is going to staff? It prevents you from overspending. It's, it puts guardrails. Okay. Um, in place. And it's fashioned after grandmother's budgeting envelope. Budgeting methodology. Right.

Speaker B: Yeah, I love that part of it, Ron. So, um, some people are going to be listening to this and thinking, what in the world are we doing talking about money on this marketing podcast? And the reason is, there are a number of reasons, but first, we are here to help you grow a profitable business through marketing efforts. And second, if you don't budget correctly, you won't have any money to spend on marketing and to invest in the growth of your business. And third, man, we want you to be able to live well as a result of owning this business. So all of those things, three things come together. And I, and Amanda asked me one day, she was like, is there any way that we can get someone on, um, here to talk about getting financials right so that the people who are owning this business can live better as a result of helping other people live better lives. Lives with natural products. And I was like, ooh, I know, I know exactly who we need to get profit first. And um, Ron, just tell us a little bit about the organization of profit first. So you're talking about a system that can help you grow your business profitably, but also you guys have people who can help people, you train people in this process so that they can help people implement profit first in their business.

Speaker A: Absolutely. And um, you know, I'm not an accountant. I'm not a bookkeeper either. I don't touch that stuff with a 10 foot pole. Most business owners don't go into running a business because they love accounting and bookkeeping. They do it because of the love of the product and those who they're serving. Right. But unfortunately In America here, 83% of businesses are check to check. Right. The Small Business Administration classes. Any business under 25 million is small. I'd like $25 million small business personally. Right. Um, but out of those 83% are check to check. That means many business owners are not paying themselves. They're foregoing pay to meet payroll. Many of them are in debt out to, they're just get out of debt, debt, debt, debt, debt. And they're not profitable. Right. And so that's no way to run a business. And so, you know, we have to take that back. Right. Because you know, accounting is historical information, but we're living in the real World, we need front windshield approach to information. We need to be able to make decisions real time versus looking back and saying, oops, I made that mistake. This is a way to correct it. Okay, so where they say, um, probably in your business and most businesses they say cash is king. Well, it's, it's, it is. But there's something that trumps that. And you know business owners, we do everything we can. If we're in a cash crunch, you're going to sell products, you're going to sell this, you're going to do a fire sale, you're going to do everything. We're going to get money involved and we're going to keep the lights on. But here's the problem. If we don't have the proper system in place, we're going to be making those same mistakes. Right? And so that's why year after year businesses are on this merry go round. They're selling, selling, selling, incurring expenses, occurring expenses. They're not putting any more in their pocket. Right. Or that they're doing this. So what Profit first does is it takes some very important elements to a business and puts a spotlight on them. The number one thing a business owner should be doing is paying themselves first. If you're not paying yourself, that's crazy. You're staying up later than anybody, you're sacrificing more than anybody. You need to pay yourself, otherwise you're going to resent your business. Right. Two, expenses are out of control, right? We need to have a focus on what we're spending on and get a return on it. Three, we're not profitable. But with profit, you can pay down debt. You could celebrate the health of the company or you can hire. When small businesses can hire, they relieve a lot of the stress from the helm. Right? Okay. And so what Profit first does is we're going to take a few elements and we're going to really look to make sure that that's getting the spotlight. One, the owner paying themselves. Two, profit. Three, tax. Those are very important. Okay? And so, you know, one of the things is, is that the book is conceptually simple. All we're doing is taking a little bit of money and putting it into a bucket. Right? These buckets are bank accounts. But as you indicated, Tina, the devils are in the details. And so our organization, Profit First Professionals is a, uh, global organization. We're in 40 different countries. We have certified over 800 accounting and bookkeeping firms so that they can do this right for you. You shouldn't be guessing on your finances. And you shouldn't be working with somebody who guesses on your finances. You should be working with an expert so that you can have the clarity that you want. And so my organization is a membership organization of elite accountants and bookkeepers that all subscribe to Profit First. They're running it in their business. They go through three to six months of, you know, certification. They have to remain in good standings. Their tests, their quizzes, and they roll this out to all of their customers. And so, you know, this is, again, I can't stress. It's not accounting, it's not bookkeeping. This is a system. So once the business owner realizes that it's a system, the fear of numbers kind of is removed. Okay. But then it comes back because we are working with numbers and percentages, right? And so, you know, my, my advice is always, is to read the book. Start small. You know, one, one of the things is, and I, I saw here that, um, banks, right, Banks. If we want to get into banks, I have a list of banks. But my organization supports you guys, right? So all you have to do is go to profit first professionals.com, fill out a finder, and we will introduce you to a certified Profit First Professional.

Speaker B: So, Ron, when I got started using Profit First, I read the book first, and I started these incremental moves toward the percentages that you guys are talking about. And just to kind of break it down for the audience, what we're talking about is you have a revenue number and you have some cost of goods expenses that come out of that, and then you're left with what your real revenue is. And once you have that number, then you allocate a percentage to profit, a percentage to taxes, a percentage to paying yourself, and a percentage to operating expenses. And there are certain percentages that you guys make suggestions based on what your real revenue number is. And most the time, let's just admit, when you look at that and you do the math for yourself, you're not hitting the right amounts in the right buckets. So talk to us about getting started. Like, what can you do first?

Speaker A: So in the book, there's something called the instant assessment. The instant assessment is a snapshot of what Profit first may or may not look like in your business. And so there are percentages. We call these targeted allocations. And this is what we're shooting for. This is the ideal. If you're at these allocations, you're running a great business. But most businesses, they're not. And so you can't just take 20% out of an operating expense account and say okay, 5 to profit. Here's the owner's pay. You just can't do that. It'll fracture the company. So what we always recommend is starting small, like when you first work out, right? You know, if I, if I were to go to the gym and I haven't worked out in 10 years, I'm not going to go to the bench press and put on £300 and try to do it. It'll crush me. Same thing with profit first. You can't take 20% out of this and allocate it to profit. You can't. So you start small. You, you start with 1%. Okay? You open up the foundation five accounts, you put 1% in profit, 1% in owner's pay, 1% in tax and you run the business on the uh, percent. Otherwise then if you're still paying your obligations, you add another percent of profit, another percent of owners pay another percent of tax. Are you still able to pay your bills? You gamify it to get to these elite percentages over time, right? And so profit first will always work. If you do it small, if you bite off more than you can chew, it's going to have an adverse effect and it's going to ruin your company. Right? And so this is not a get rich quick application. This is, this is a time tested conservative model that will stabilize your business, then has the power to turn into a growth tool. How to create a greater ebitda, how to lock it in a company, in a community to pay great jobs, how to do profit sharing, how to do all this stuff. Because one of the things is, is that when we're doing our pricing in your natural beauty products and stuff, we have to price accordingly. Guys, one of the things is, is we price for burnt muffin, spilled batter and freebies. You know, that's one of the things that we're not taking into it. So one of the, your whole thing too is helping that industry, this industry market. You need a marketing account, right? You just that you need an owner's pay account, a tax account, a profit account, a marketing account in profit first. For law firms, we mandate that they have a marketing account. Now I don't want to just take 10% out of the budget and put it in there because you probably can't do it. But what we can do is do 1%, see how it goes, build it up. We're running the business on whatever's left over. So in actuality, if we really want to get down to it, profit first is, well, we're all familiar with sales minus expenses, equal profit, right? You sell, sell, sell, expenses, profit. We're saying that's wrong. We're saying it's selling. Take your profit, manage your business on the expenses, right? But the important part to realize here is that P is not just representative of profit. Profit, but owners pay tax, right? How about security? Every company and household should have three to six months of core capital available. So let's write security down there. Then how about Mission Purpose, Vision Charity tithing? Okay, so let's put down that Mission Vision, Purpose mvp, right? So what we're doing because we're good stewards of this world, we're, we're selling, selling, selling. We're taking a little profit. We're taking owners pay, we're taking tax because we're profitable and Uncle Sam wants his money. But we're putting a little away. Why? I don't know. In case a pandemic happens. I don't know. Uh, California is going to burn. Oh, the Midwest is flooding. Oh, the Gulf states are going to get hit by a hurricane and we're going to have blizzards in New Jersey. These regional disasters happen all over the place. Right? We need the security and mission value purpose. Our mission is to eradicate entrepreneurial poverty. My goal is to have a family first environment where my staff is accomplishing their dreams, where we're giving profit distributions, where they have half day Fridays, where they have up to eight weeks paid vacation. This is how we design a business, right? With the cash flow, clarity in mind to really design it in a way that we've always wanted. Profit first is exactly what the industry is looking for. If you feel, uh, your industry's out of control all over the place, you know what you want to do more of, but you can't figure it out. You know what you want to stop doing, but you can't figure it out. You want to wrap your arms around your business, get rid of the products that you, that are garbage that you don't want to offer, and double down on the ones you want to create, create more and have the right inventory and not go to waste. And all this. You need clarity. Profit first provides you with that. We're going to have an inventory account, we're going to have a pay account, you're going to have a marketing account. You're going to, uh, associate a purpose with the dollars that you have coming onto the business. A, uh, purpose with clarity that you've never seen before. Not just, hey, let's hope it works. No, let's use Mechanisms to have clarity, keep ourselves under guidelines. And if it's not there and allocated for it, we can't buy it. Right. If you don't have money for this, you can't buy it. It's the company telling you. Right. That's the beauty of profit first. It prevents us from pulling the wool over our own eyes. Right. It invites innovation. And so profit first is a lot like the 401k. You guys ever have a 401k, right? I did too. When we first got that bad boy. I remember my wife and I sitting at the table, we put 3% in, right. We could have put up to 15. We put 3%. See how it did then after about two years of slowly increasing, I said to Mary, can you believe we're living the same lifestyle with 30% of our top line salaries coming off? I didn't know what Parkinson's was. I didn't know there was laws of this stuff. I was just like, huh, Couldn't believe it. And that's what Profit first is doing. We're removing it from temptation. You put your profit and your stuff at another account, okay. And you only focus on what you have. The reason the 401 so good, because they remove it from temptation. You open up your bank account and it ain't in there, so you can't spend it well.

Speaker B: And one of the things that's making me think about too is a lot of times business owners have in their mind, and you're right, we, we have no idea what the business owner might be thinking. But a lot of times the business owners and these retail owner first owners for sure believe if they can grow their revenue enough, then eventually they'll be able to pay themselves. Yeah, just a few more sales or just, you know, another thousand dollars a month or another $10,000 a month.

Speaker A: Yeah, that's the cash is king, you know. Oh, I, uh, I uh, just need another sale. I just need the other sale. Well, you've been doing that all your life and look what it's gotten you. It's gotten you that other sale. But you haven't solved the problems.

Speaker B: Yeah. So that I think the good news is if you're listening to this and you've thought that in the past, but you've increased your sales and things haven't changed dramatically for you to be able to pay yourself or to be able to reinvest in other ways, marketing, mission, vision, purpose, any of those areas. If you are still struggling and it still feels like check to check, then there's probably a Reason. And I think Profit first is an incredible diagnostic tool around where things are out of balance as much as it is helping you grow and helping you be able to pay yourself. Pay yourself. You can actually see, see where things are going wrong.

Speaker A: Yeah. The first thing that happens when, you know, especially with creatives, you know, and um, the first thing when a creative, when they work with a profit first professional. Okay. Um, they get a report and the report is a plan, basically a plan how we're going to implement Profit first, what it's going to look like, what are the starting percentages, what it's going to look like over time. Okay. They feel relief, like, huh, uh, I got a plan for the first time. Right. Then Tina, when you move that money, when you allocate that money, how'd that feel? Probably pretty good, right?

Speaker B: Yeah. I mean the other thing that it felt, Ron, was not painful, it was empowering.

Speaker A: So the next thing is you're empowered. You're empowered because you're actually in charge of your money. You're executing the plan, you're physically controlling the money. That is so empowering for so many people. People that's never had that kind of control over their money. Right. So you're relieved. You're empowered. Right now you have the system that's taking care of it. You have the system. Imagine starting a business not worrying about how am I going to pay myself, how am I going to be profitable, how am I going to keep my expenses in control and all I need to do is make beautiful product.

Speaker B: Yeah. Or, or help people, you know, make decisions around their health. So that's a lot of where our retailers are coming from. Like they just want to help people in their stores and instead they're having to grapple with, can I make payroll, can I pay myself, can I do all these things? And so this is a powerful way to get started. And what I'll tell you, my experience has been, and Ron, you can just tell me if this is normal, but my experience was when I started with 1% or even 2%, like it didn't make that big of a change for me.

Speaker A: Right.

Speaker B: Uh, it didn't feel dramatic, like I wasn't able to pay other bills, but there was a moment where it started to be like, I don't know how to increase this more or decrease this or change things around. And that's when I had to call a, ah, professional and say, okay, profit first professional. What am I not seeing? What have you seen across the board that I just don't know how to Do.

Speaker A: Yeah.

Speaker B: And that's when bigger change happened. So the small changes and increases were very doable and they were not that painful. But there was a moment where it was like, well, I don't know how to get any further.

Speaker A: You know what? You're awesome. First and foremost, that's awesome. And that is absolutely normal. But here's the thing. Why you're even awesomer is because you didn't stop, you didn't pack it in, you didn't keep it where it was at. Too many people stop at that point where it gets difficult. Right? So when I tell, there, uh, are a few things I tell people who are new to profit first. One, be open. Be open to new. Be open. Be open to a different way of doing something. Be open. Then when you're open, accept it, get it. I'm not saying you have to understand it, but be curious about it. Not to show that it doesn't work, but be curious to learn more about it. Then. Okay. When you're doing it, that's when you strengthen your mental fortitude. You strengthened your mental fortitude to get over that hump. That, over that hump, over that plateau was when you really started seeing a lot of change. Right? And so that is the true professional when you're strengthening your mental fortitude, when things get tough, to not go back to where you were, but to fight and continue on that path where the path is not necessarily clear, but the next step was right. And so you took that next step not knowing that the path was clear. You asked for help, you got a profit first professional. Great. They started taking things at a different perspective. And you're like, oh, my gosh, that was great. And so I encourage everybody to start it. You can go to Relay Relay Bank. I don't know if you guys heard of Relay bank, but Relay is our banking partner. You can have up to 20 bank accounts for free. They do automated transfer on the percentages based upon the date, all sorts of stuff. That's a great place to get started. Then once you get started and start small, have fun with it. Then when you're ready to go, um, reach out and we'll introduce you to a profit first professional. And so one of the things that there's, you know, in, in the world. I'm looking at a, uh, website. Um, Annette Giacomb. I don't know if you know her or not, but she, she owns a manufacturing business. And while it's not health and beauty, it is called Cast Covers. She was on Shark Tank. She was on. Basically, she's the first one that came up with really cool sleeves for children's casts. All sorts of like, like manufacturing. And so, you know, she, her, I mean it's talking about a large manufacturing company as well for making good, healthy things for kids. Right. That it was out of control. She utilized profit first, helped, uh, her with her business. She reached out to a profit first professional, um, got the help she wanted and then decided, you know what, I want to start coaching other manufacturing businesses. So she's, she, she has morphed into she makes products. So she might be the. She makes products. Got all sorts of different products on there. And so she's a product based, profit first professional that probably be more than willing to help anybody out. Um, and I can make an introduction to Annette or anybody, uh, for us. So it doesn't matter where you are in your business. It doesn't matter if you're 20k in the rears. Doesn't matter if you're a million dollar business or, uh, haven't even gotten anything you can benefit from profit first if you're open, if you start small, if you continue on the path and you continue to strengthen your mental fortitude when things get tough.

Speaker B: Yeah, and I think you started talking a little bit about the bank accounts there and relay and just for the audience, if you've not heard anything about profit first and you're not necessarily understanding why you would need 20 bank accounts and you might not need 20, but it's good to have up to 20. Because what we're talking about is like you talked about the envelope method of allocating your money and getting it out of your main operating account so that you're not tempted to, to spend it when you don't really have it. Because here's how I used to do my business. I would look and see if I had money in my checking account. And if I did, then I was like, oh, I'm good to go. I'll make this expense. The problem was there would be bigger expenses that would be coming the next month that I forgot about. That was something like an annual expense. And then I would be like, wait, I don't have money to pay for that when it actually arrived or a tax bill came. That's one of the biggest things. Yeah, it's one of the biggest things that, um, I hear from business owners like, I never have money to pay my taxes and then I'm on some payment plan forever. So the reason you have separate, um, accounts is because when that money comes in, you shoot it right over to the other accounts as soon as it drops into that operating account so that you can see what's actually in your bank account to use for that month. M versus things that you need to save for. Annual expenses. As an example, taxes, putting profit away, marketing expenses, Mission Vision Purpose, all the things that we've talked about. And you can have separate accounts for those. That makes it easy, easier to see, like, oh, I have money in our, uh, Mission Vision Purpose account. So, yes, I can put money into this charity when they come ask, or this local school that we're supporting or whatever it is you have. You know what money goes where because they're in separate accounts. And you can be like, oh, uh, yep, that has a balance. Great.

Speaker A: We have 25 bank accounts at five different institutions. The reconciliation of all those accounts takes under eight minutes. The financial clarity that Mike and I have globally is second to none. We're an S corp, right? We have partners, um, all over the globe. We have book deals, we have membership deals, we have conferences, all sorts of stuff. Right. We have a profit con account. I missed an insurance payment a couple years ago, and, um, I was like, oh, my God. And the insurance was like, $15,000. And I'm like, uh, aha. Where am I gonna get it? So we had a, you know, struggle. We got it because one of the things is we're running our opex down to almost zero all the time. It's uncomfortable, but you get used to it after a while. And so then I'm like, this will never happen again. So I opened up an insurance account and then started funding it and funding it. And then, um, I got. You ever get those chills? Like, did I do that? Like, a year later? I'm like, oh, my God, I got the bill. I'm like, oh, my God. Did I please, please say I opened an account for this? Linda? Do we. Yep. You got it, Ron. And the money's all in here. Yes. High five. So, you know, when in doubt, open an account.

Speaker B: Yeah. Especially for those expenses that you are likely to forget about if you're anything like me. Now, some people are very detailed, but I am not. And I forget that things are going to come up and then they happen. And they're big expenses. Insurance is a great example of one of them. And when it hits, I'm always like, oh, do I have the money to pay it? And then you go, look in the account, and there it is. So just takes a lot of that extra worry off of a business owner's plate when you're allocating immediately. As soon as the money comes in, you don't have to think about and worry about, am I going to have the money when the bill comes? It's there.

Speaker A: And if you do it right. Right. Yeah, do it right.

Speaker B: And so that's one of the reasons I love it.

Speaker A: Yeah. So here's. Here's something else. We're talking business, right? But we're in business for different purposes, and most of it is life, right? For. For our family and to help us and them live the lifestyles. Um, I have a daughter. She's 13 years old. She does track. And, um, it was 75 for Traxis. They don't have a track. They. They run around a parking lot. Okay? One of our members has five children. Each one of them is a Division 1 athlete. He spends over $50,000 a year on sports, travel, leagues, coaches, stuff like that. Right. Lacrosse is big over here in New Jersey. A season is three grand, right? Equipment sticks are $100 in the book. Profit first. Mike was so destitute that he couldn't even pay $25 for his daughter's riding lessons. How many parents are telling their kids no for sports because they cannot afford it? That is a travesty in my mind, okay? And so one of the things I recommend is a sports travel account, okay? Allocate that money all year long into a sports travel account, regardless of what it is. That way you're always able to have that for your children. You could look at it like layaway for Christmas. You could have a Christmas account. Right? That's what we're talking about. We're talking about fiscal responsibility and purpose. When things are good, you know, things are easy. But, you know, when things got bad during the, you know, the, whatever, the virus, you saw what really happened. And then all the money, everything, you started seeing innovation, like crazy, crazy innovation. Then all the PPP money and the innovation stopped because everybody got comfortable again. Now everybody who took that money has to pay that back. More people. More people. So if you've taken money, allocate, you know, debt, debt account, stuff like that, because it's coming. But that's all we're really talking about, guys, is, you know, real fiscal responsibility and trying to get out of the comparison business.

Speaker B: So what I'm hearing, and I know you had mentioned this earlier, is kind of one of the obstacles for people is that their ego can get too big. What are some of the other obstacles that people kind of have to work through before they implement profit first?

Speaker A: Yep. A couple things my company's so unique. It'll never work. No, it's not. Right. I've worked with, you know, everything from startups to 100 million dollar businesses in almost every country, you know, of every currency of any domain. It'll work. Okay, um, my company's too small. My company's too big. Right. So again we're talking there. Um, the best one is the best one. My accountant says, I don't need it. Get yourself a new accountant. Anytime your accountant or bookkeeper or tax professional says you don't need this, ask them what is the pay yourself first system that they're running in their business and that they're teaching to the customers to ensure that the business owner is profitable and they're paying themselves first. If they say. If any accountant says, well, this, you kind of. You sell, right? You sell. You manage your expenses. Yeah. Then whatever you have left over, that's your profit run for the hills. Okay? That's the same thing over and over and over. They're not opening. How are they doing for you now? Are they giving you advice? Are you meeting with them strategically? Do you want to meet with your accountant? Do you want a relationship with your accountant? Right. I talk to my bookkeeper every other Thursday at 10am It's 15, 20 minutes. It's a cash call. Ron, you have all these accounts. This is what your positions are. This is money in, this is money out. What do you got going on? I pay for that. Then the accountant that you don't talk to, if you don't talk to your accountant or they're not strategizing with you quarterly, it's a problem. It's a problem. Also if you ask them for your updated financials and they say, why do you need them? Okay, get yourself a new accountant. If they say, um, yeah, yeah, you don't need. Oh, you don't need. That is the worst. Oh, it'll take so much time for me to reconcile. Uh, but they just don't want to do it there. You know, accounting is it, it's guaranteed business. Like doctors, people are going to be sick. There's some, I mean, cob. I know a lot of the accounting dirty secrets and accountants don't run good businesses. A lot of them don't. Just like a lot of lawyers don't. Just like a lot of doctors don't. They run great practices for you guys. They're great at delivering their accounting services, their tax services, their legal stuff, but behind the scenes they're a hot mess just like everybody else. That's why it's mandatory of uh, every single one of our certified accountants to be experiencing profit first. That's why certification team can take up to six months once. That's why we really make sure because you it's a lot more than just taking a little bit of money and putting it in a bucket. But that's the best place to start. The best place to start is to open up one account, start putting one 1 to 3% in there, let it ride, see how it does. Then whatever that purpose is on that, that, that bank account, it could be to pay down debt, it could be to celebrate whatever it happens to be, start that way, build it up, then stack another one, then another one, then another one.

Speaker B: Yeah. And I think Ron, like that's how I started for sure was I just, I opened two accounts. It my current bank would let me do it. And so I started with a profit account and a tax account and then I left the other one as the operating account because I was like, oh, uh, this is going to be too hard. I did my own accounting. So it was like this is going to be too hard to keep up with. I don't want to sit here and allocate money and then put money back and figure all this out every single week, every whatever. Um, and it turned into something that was so easy. Took me five to 15 minutes a week. Then it was every other week. So it's easier than you think. But just getting over that mental barrier of this is going to be complicated. And then it turns into something that's a whole lot easier once you start doing it.

Speaker A: You're absolutely right. And our whole thing is it doesn't have to be complex to be impactful. Right. But the um, the thing is, is we have a tendency to over complicate things. That's why I break it down in its simplest form. Open up a bank account and allocate 1 to 3%, keep it off to the side, see what happens, focus, right? But also, you know, go line by line over your P and L, line by line and question every single line on there. Is this necessary for the survival of the business? And if it's uh, a no, get rid of it. And that all those percent, all that waste, all that stuff that you're getting rid of, that instantly goes to profit or owner's pay. That easy. And so by going line by line by line, also then doing an inventory analysis, an inventory review, you know, that's a lot. Another thing, you know, uh, are, uh, we do we have product that is just lying around, right? Then we need to do a product profit analysis. Right. We might enjoy making this one product and it might sell a lot because it's cheap, but this one we have so much more margin on. And if we just push this one a little bit harder, we would be less effort and more money. Right. And so there's all sorts of fun things we can do once we have clarity. But if we're just all over the place without the clarity, we're going to be making the same decisions.

Speaker B: Yeah. And that's something that we come in. It's the same kind of thing with marketing too. You start with the small things that are going to have high impact and then you can start having more fun where you dig into the analysis of, okay, what products are you selling while and which ones have the most margin? Which are the most popular? Are any of these bought at the same time? You know, we can start mixing and matching, but you have to start simple first. Are you sending out emails every week? You know, there are small things that you can do that make big impact. And that's what I think about this. Opening the 1 to 2 accounts and starting to put 1 to 3% in each of them for taxes and profit. And then you can get more fun with it like having your insurance account. And then the next year, don't worry about it. It's, it's these incremental changes that end up making a really big difference over three years, five years, 10 years in, and then you're an entirely different place. Yeah.

Speaker A: Um, when in your business, when things start taking a downturn to the business. I've noticed that in restaurants that usually then default to cheaper ingredients. Does that happen in your industry as well?

Speaker B: Well, I mean, I think Amanda can speak to from the manufacturer perspective that we've seen some of these manufacturers that are going after bigger revenue dollars will change ingredients so that they can get into food, drug and mass, like Walmart, those kind of places. And then. But they'll have higher margin in some of our independent retail stores that we work with, but they change formulations to get the bigger revenue graph and it's stuff that they couldn't get away with in a health food store with a more educated, ah, staff and consumer base that knows, oh, these are the more effective forms of B vitamins, but they'll put them in the products at Walmart under the same size type of packaging. Hard to tell the difference between the two. Um, so that, that is something that has been happening much more over the last, uh, few years than I would

Speaker A: like yeah, no, because. And so how does the business that specializes in, you know, the really good stuff. Right. Remain competitive? Well, they have to build that into their marketing, they have to build that into their pricing. They have to build that into their education of the outside world. You know, you have to educate more and more and more and more and more as the quality of your stuff go gets more expensive compared to some of the other stuff. But also I think the business owner has to make a decision as to who their market is. Mhm, right.

Speaker B: Yeah. And some of that analysis as to what is the more profitable margin that will allow me to still create a really great product that people really need and where can I go for that? Which is one of the reasons that we love the independent retail channel. Because they prefer the best ingredients. They're going to keep that margin high for different, for the manufacturers and they're going to get the product to consumers

Speaker A: who really need it and they realize that person making the stuff really, like when you're selling to Walmart and some of these other, you know, Rite Aids, Walgreens, stuff like that, um, it's all, it's all contracts, it's all government pricing, it's all this, it's all nonsense. It is whatever. But they don't care about your culture, they don't care about your philanthropic opportunities. They don't care if you want to give, uh, staff vacation profit sharing. They don't care. You know, and so what is the business that you're designing? What do you care about? Right. Because if we care about some of these other things, well, we're going to have to price accordingly. We're going to have to have, you know, fiscal controls in place. We're going to have to really have a pulse and clarity on our cash flow, especially if we're smaller.

Speaker B: Yeah, yeah. And really get creative around it. Well, Ron, this has been amazing. Thank you so much for spending time with us. And um, I think it's going to be really helpful, especially for some of our smaller retailers who I, I promise some of the complaints or the frustrations that we get coming in the door is I haven't paid myself in years. And so having a system like this I think could be life changing for them if they will start small and stick with it over the years and probably hire a Profit first professional to help them out.

Speaker A: I'll tell you what, I've got five gift books, books for anybody in your audience. If anybody reaches out to you ladies and says, hey, I'd love a copy of Profit first, you know, I got five copies. All you have to do is, um, email me their addresses and I'll send them a copy in the mail.

Speaker B: Perfect. Yeah. We will have a form available for people associated with this podcast episode. So thank you so much for doing that.

Speaker A: Yeah, absolutely.

Speaker B: We appreciate it. So if anyone does want to, um, reach out to a Profit first professional, where should they go?

Speaker A: Profit first professionals dot com. Pretty simple enough. Yeah. And you can connect on me on LinkedIn, um, Facebook, anywhere. I'm the only Ron Saharan out there, I believe. Um, yeah, hook me up. I'll be more than happy to answer, uh, any questions that you have.

Speaker B: Well, thank you so much for being with us today, Ron.

Speaker A: Yeah, guys, thank you for having me. It was a pleasure.

Speaker B: Thanks so much for listening to the Natural Podcast Marketer Podcast. We hope you found this episode to be super helpful. Make sure you check out the show notes for any of those valuable resources that we mentioned on today's episode. And before you go, we would love for you to give us a review, follow like, and subscribe on Apple Podcasts, Spotify, YouTube, or wherever you're listening today. And make sure you join us for our next episode where we give you more marketing tips so that you can reach more people and change more lives. Lives.