Profit First Nation Ep. 120: Profit First Q&A Extravaganza: Essential Accounts, Revenue Breakdowns, and Business Evaluations Unveiled
Today is a dedicated episode for questions and answers, where Danielle addresses the most commonly asked questions in depth. Profit First's guiding principle is "When in doubt, add an account." Therefore, we will discuss essential accounts that every business should have and additional accounts for specific scenarios. We will also tackle inquiries related to actual revenue, compensation for owners, distributions, and how to allocate these funds. Moreover, you will gain insights into evaluating a business you might be interested in acquiring. This episode is filled with valuable information for entrepreneurs, so don’t miss it.
IN THIS EPISODE:
- [01:18] What does real revenue mean
- [06:32] How many accounts should I have if I operate with goods or subcontractors, et cetera
- [08:38] What if I receive a paycheck? Does it still go through the owner’s pay account
- [09:34] Do I only do allocations on the 10th and the 25th
- [12:06] Do you need a profit account and a separate owner’s pay account if you take your pay in distributions
- [13:28] Can I use Profit First to identify which business to buy? Danielle gives an example of what not to do
- [17:30] Is it ever a good idea to run a profit assessment on a large business representing many services, or how should it be done
- [21:38] Submit any questions you have to profitfirstnation.com
KEY TAKEAWAYS:
- Never purchase a business without first looking at the owner’s taxes.
- There are five accounts a business needs; an income, a profit, the owner's pay, a tax account and the operating expense account.
- Self-employed people who receive their income irregularly should make allocations based on when they receive income.
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 Rating 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