Profit First Nation Ep. 148- Q&A: Instant Assessments with Mike Michalowicz
In this episode, Danielle is joined by Mike Michalowicz, the author of Profit First, as they tackle questions from Mike's email inbox regarding doing your Instant Assessment.
In addition to highlighting the importance of adhering to established profit percentages as a business grows, they provide additional guidance to another business owner to use the Profit First Target Allocation Percentages Chart for financial clarity, and help yet another entrepreneur on how to simplify income and expense categorization.
BONUS: Danielle provides additional valuable insights, emphasizing the significance of sales and providing practical pricing strategies for service-based businesses.
IN THIS EPISODE:
- [00:36] Introduction to Episode - Q&A about instant assessments
- [00:47] Question 1 - Real revenue calculation for a fitness equipment distributor
- [04:10] Question 2 - Owner's comp and adjusting allocation percentages as the business grows
- [07:40]Question 3 - Challenges in understanding real revenue for a telehealth business
- [15:36] Question 4 - Calculating materials and subs for a plumbing business
- [21:27] Question 5 - Allocating expenses for an Airbnb management business
KEY TAKEAWAYS:
- For businesses with significant material costs, especially those exceeding 10% of gross revenue, it's crucial to make a real revenue adjustment. Subtracting these costs gives a more accurate picture of the service-based real revenue generated.
- As a business grows or experiences changes, adhere to the Target Allocation Percentages Chart, but be open to dynamic adjustments. Working with a Profit First professional helps in recalibrating allocations based on the current business status.
- Keep expense categorization simple. Break down costs transparently for customers when necessary, allowing for better communication and potentially higher acceptance of fees. If managing multiple entities, maintain clarity by treating each business separately.
ABOUT THE HOSTS:
Danielle Mulvey is a former flight attendant-turned-entrepreneur and owns multiple businesses doing $50 million in annual revenue. She is one of the exclusive, select group of Mastery-Certified Profit First Professionals worldwide and the go-to “HOW TO IMPLEMENT” workshop facilitator for Profit First and WSJ Journal best-selling author Mike Michalowicz following his keynote speeches. Danielle is currently running multiple businesses, from start-ups to mature businesses with 10-year plus track records and revenues ranging from $1M to $40 million in annual revenues and is a certified numbers geek about Profit First, leveraging the DIY cash management system for small business to achieve maximum profitability. She can personally guide business owners to achieve maximum profitability based on her 25 years of experience as an entrepreneur who has been there and done that.
Additionally, Danielle authored the book The Rapid Read™ Guide to The 5-Star Employee Hiring System™ and is currently collaborating with Wall Street Journal best-selling author Mike Michalowicz on his new book, to be released in Q1 2024, titled ALL IN: How Great Leaders Build Unstoppable Teams.
Mike Michalowicz is an entrepreneur and New York Times and Wall Street Journal best-selling author of Profit First, The Pumpkin Plan, SURGE, Toilet Paper Entrepreneur, Clockwork, Fix This Next and Get Different. BusinessWeek called Toilet Paper Entrepreneur, a business cult classic. His books have been translated into ten languages, and Mike has had the privilege to speak on stages worldwide because of his passion for connecting with entrepreneurs.
As the founder of Profit First Professionals, he empowers accountants, bookkeepers, and business coaches with the tools and techniques to maximize client profitability, allowing them to uplevel from being one of the 83% of small businesses operating check-to-check and struggling to be profitable to becoming one of the 17% of thriving and highly valuable businesses with cash in the bank to correlate to profitability. Mike also co-founded the business growth consultancy Provendus Group and has successfully founded, built, and sold two technology service-based companies. He is passionate about sharing his experiences and advice with entrepreneurs and sits on formal and informal advisory boards while maintaining relationships with angel and early-stage investors.
RESOURCES:
Profit First Professionals - Website