[00:00] Welcome back to the Focus B show. This is Katie Sudddart here aka the focus b. And on this show I interview high performers and leaders around the world to discover their secrets on peak performance, productivity, mindfulness and leadership. So if you want to take your performance and your leadership to the next level, then you're in the right place. Listen up and connect with the magic.

[00:37] We're starting the new pillar on profit. The idea behind Tea and Pie is to master your time, energy and attention in order to increase profit impact and expertise in your business. I have found that if you're able to optimize how you use your time, your energy, your attention, it has a ripple effect on your profit impact and expertise. I still wanted to create specific episodes dedicated to the topics of pie, profit impact and expertise. And today's topic is on profit first. You might have heard of the book Profit First by Mike Michel Lewicks, if I'm not butchering his name too much. And the concept here is that most business owners are so passionate about business growth that they don't actually invest time, energy, thought on profit. This is paradoxical, maybe to hear, but if you look at how many business owners, and maybe you included prioritize growth over profit, it's astounding what happens with this, we believe as business owners. And maybe you believe that when you have more sales, this will lead to more profit. And therefore, to have more sales, you focus on the growth aspect of things. And this might include extra costs. So you might involve more costs in personnel or in softwares or in many other things in order to grow your business. And it's as if you justify all the expenses because it's leading to business growth. And this is really where you put your focus and you put your attention on once more. As I mentioned, being able to manage where you place your attention has a ripple effect. Then, for example, on your profit. The traditional way of thinking of profit in a business is to think of income or money coming in minus expenses. So sales minus expenses equals profit. And what Mike in his book invites us to do instead is to think of the sales, the income, whatever money's coming in minus the profit equals how much you're going to put in expenses. This might not sound totally mind blowing at first, but I guarantee it really is. First of all, I highly invite you to read the book. It goes into so much depth and it covers so many essentials here. I just can't believe I ran a business without knowing this book or without knowing about this concept. It was my mentor, Coach Louisa, who recommended it. And it has been absolutely life changing and business changing for that matter. So coming back to this formula, the income, the sales, minus how much you've decide you're putting aside for profit dictates how much you have left for expenses. And here's what happens when you start to apply this formula. Instead of just spending, spending, spending, getting a greater office or more personnel or certain softwares in the order of growth and maybe one day profit, you start to make profit from day one, because from every sale you make, you decide that you're going to put 5% or 10% or however much you want into profit. And then whatever is left is how much you can afford to spend on your business and you can't afford to spend more. And the reason there are many reasons why this is so incredibly powerful. One of them is because we have a tendency to spend or see how much we can afford, depending on how much has come in. So if you look at your bank account and you have X amount in there, you think you can spend X again on a new software, a new coach, new training, whatever it is. And although on the moment maybe this is true, obviously if you want to pay yourself a salary and if you need to pay your taxes, this doesn't work out. And this is how so many businesses end up closing because they haven't been able to be profitable. And this is after years. And in the book, he gives examples of multimillion dollar businesses. It's not just poor little Joe and Anna starting off by the way, joe and Anna aren't real people. But I was just imagining business owners, freelancers, just starting off in the early 20s, trying to figure out life. No, this also happens to people who have years of experience in business and they end up depending on the next monthly check, the next sales, otherwise their business would be bankrupt. How crazy is that? One technique that Mike Michelowic talks about in his book is to open different bank accounts. So you'd have one bank account that is dedicated to the incoming money where people pay you and then from that instantly you would transfer a certain percentage 5% ten you can calculate into a profit account. Then a certain percentage into tax account, which is however much you'll have to pay on tax and a certain percentage on how much you're willing to put for your expenses. I think there was one more category also for businesses. You can find that more in the book. But those were the main three I find the profit, the tax and then expenses. And once you do that, the next time you need to spend money on a new software, a new tool, new office, you name it, you look at how much do you have available in your expense bank account. You don't look at your overall one, you look at the expense bank account. And I started to do this. I created separate bank accounts. I have a sheet where I calculate the percentage, how much goes into profit, how much goes into the tax account, and how much goes into expenses and it also helps you to think differently about money. And I don't know about you, but I really needed this because how much you spend, as I said before, isn't the same as how much you've earned. You can't just spend the exact same amount. It's not like when you were a kid and you were given five francs in my case, because I grew up in France, five francs from your parents and then you could spend five francs on that toy or that magazine. This doesn't work in business. You get five k, for example, from a client. You can't get to spend that same five K on getting a new training. You need to put some money aside for your profit and for the taxes that you'll have to pay on it and for your expenses. So if you don't want to go down the route of actually closing your business because it's not profitable, it might be useful for you to apply this formula once more. It's covered in more depth in the book and I highly recommend it. But if you don't fancy reading or if you wanted to apply it instantly, then open different bank accounts and they can be within the same bank, so it can just be different subbank accounts. I did this using revolut. I recommend revolut. It's a great bank system, it's fantastic. So just open different ones there and then every time you receive money, either put in place an automatic sort of way of transferring it or discuss it with your accountant. I mean, you should sort out the logistics here, but make sure that you've calculated a percentage for the profit, for the expenses and for taxes. And once you start to do this, your business becomes profitable from day one. From day one. Because as soon as money comes in, x amount goes to profit. And incidentally, you can also use this to your personal life also, for instance, every time you receive your salary, you can also decide that X amount will be dedicated to daily expenses and groceries, et cetera. Another percentage for maybe other things such as traveling and maybe another for savings, maybe for future for a house or something like that. And the idea would be the same. You'd first decide how much you want to put aside every month, how much do you want to keep, how much seems reasonable for you, how much you want to set aside every month and then whatever is left goes towards expenses and maybe eating out once in a while, or groceries, et cetera, et cetera. But you don't first look at, okay, how much can I use this month? Whatever is left is going to go to my reserves and I will keep for a house. Because then the chances are depending on your personality and temperament, but it's likely that you will spend a lot more than if you did it the other way around. Once more concept is profit first. It is absolutely game changing. If you're already using this in your business or in your life, fantastic. And if you're not changed today, it is life changing, game changing, super powerful. Read the book and I hope you've enjoyed today's episode on this. Thank you so much for tuning in and if you found this useful and you want to help other people to find it, then tell them about the podcast or leave a review and either way it's highly appreciated. Thanks again for tuning in. Wishing you a great day.

[10:46] Thank you so much for tuning in today to the Focus Bee Show. I would absolutely love to hear your feedback, so let me know in an Apple review or YouTube comment what was most valuable for you, and feel free to share this episode with a friend or a family member. Wishing you a wonderful, magical and focused day ahead.