We’ve all been there – the bad business investment, the over-hiring spree, and even the more-than-occasional purchase you just had to have for your business…
But staying indebted to your real estate business doesn’t have to be your new reality. In fact, it’s possible to pay off debt and still have profits in your business every quarter!
If you’re like most real estate professionals, you live and breathe by the idea that Revenue – Expenses = Profit, and when you’re barely making enough to pay the bills (and yourself!), there isn’t enough left over to tackle your debt head-on.
And when revenue becomes your focus, it’s easy to fall into the trap of “sell, sell, sell!”
So how can we find the money we need to finally run a debt-free business without sacrificing our health (and sanity!)? The answer comes down to a simple shift in how we view our cash flow mindset.
The Profit First System
Founded by entrepreneurial guru Mike Michalowicz, Profit First is a money management system designed to transform your business from a cash-eating monster to a money-making machine. Using bank account balances and a simple accounting formula, Profit First is designed to put profit as your top line while helping you run a lean, cash-producing business.
This system puts traditional GAAP on its head by flipping the formula to Revenue – Profit = Expenses. Although this sounds like a mere concept, Mike Michalowicz’s system has created thousands of success stories amongst business owners worldwide.
Using Profit to Eliminate Debt
The core of Profit First relies on regular, bi-weekly allocations of your net revenue account to four foundational bank accounts: Profit, Taxes, Owner’s Pay, and Operating Expenses. Each account is assigned an appropriate allocation percentage to ensure you are getting paid while eliminating unnecessary expense to ultimately generate debt-crushing profit.
During your bi-weekly allocations, you must fulfill the needs of your Profit, Tax, and Owner’s Pay accounts prior to OpEx. If (and most of the time when!) your expenses exceed your allocation budget, you must work to aggressively eliminate and reduce expenses in order to operate within your means. For most of us, that’s a hard pill to swallow!
Our goal is to put you first without losing the business you’ve worked so hard to grow. Working with a Certified Profit First Professional will help you cut the right expenses in your business so you can focus on operating as lean as possible!
Once you have run a full quarterly cycle of this system, you will use 90-99% of your profits to pay off any debts you have accrued, with the remaining taken as a reward just for YOU! That’s right – we believe in the idea of celebrating our business wins in order to encourage future success with the system, so take the remaining 1-10% and spend it on you (but do NOT reinvest this in your business!).
A Shift in Your Money Mindset
When it comes to money management, it’s all about shifting the way we view our cash flow. We can choose to be stuck in a sell more, profit later mentality, or we can allow our business to work for us while designing the lifestyle we’ve always dreamed of.
No one wants to be stuck wondering how the bills (or you) will be paid, so why not focus on creating an efficient, guaranteed-success system that breaks you free from the undesirable business owner hustle?
If you’re ready to eliminate debt, pay yourself first, and finally grow your profitable real estate business, our team is ready to work with you!