The ultimate goal of the Profit First system is financial freedom. But what does that mean exactly? Mike Michalowicz says it’s doing what you choose to do whenever you choose to do it. We think it’s more than that. It’s peace of mind. As we all know, in business and life, that can be a moving target, changing year to year or even month to month.
Take for example Laurie Dutcher, CEO and owner of Secretly Spoiled who was living check to check. At first, financial freedom meant taking a salary. Then it meant vacations with her family. For Jorge Morales, co-owner of Specialized ECU Repair, Profit First helped fund his wife’s law degree. There are hundreds of these great examples in the book and online, but at Go Figure, we love championing our own clients’ successes.
“With Profit First, you’re always looking forward to something exciting, growing, expanding, experiencing as opposed to always worrying about what bills are left to pay.”
For Dr. Scott Colonna—physician, entrepreneur, and business consultant—that means expanding and scaling his businesses, Westminster Eyecare Associates, GMC Properties, Mandalay Optical Labs, and Uppercut Consulting, while providing for his family.
Dr. Colonna, a longtime Go Figure Accounting client, became one of the very first Profit First Professional clients, starting in December 2020. With a full year under his belt, we thought it we’d share his perspective with you.
How long have you been doing Profit First?
Officially, just a little longer than one year. However, informally, I’ve been doing a version of Profit First for 21 years.
How so?
I say informally because my mother, and my grandmother, used a similar approach in managing family finances back in Brooklyn, New York where I was raised. The envelope method, that’s what Profit First reminds me of. When my grandfather got paid, the money would get divided into white envelopes: one envelope for rent, another for food, another for savings. There was even an envelope for Christmas gifts. That’s how she taught my mother to manage money, and that’s how I was taught. My business partner, Dr. John Ormando, was raised the same way. So that’s why I say it’s how John and I have done things for since we started our first business 21 years ago. Obviously, Profit First is more sophisticated, but the concept is familiar.
Do you think that made your onboarding experience easier?
Absolutely. But I would also say that even though the envelope system helped me understand the concept, there was still a learning curve. The formal steps of implementing Profit First across all of our business took real effort. To be honest, our business was already so big, I don’t think we would have been able to get Profit First up and running without the Go Figure team. Certainly not as quickly or as seamlessly.
What would you say was your biggest challenge?
I would say the biggest learning curve was the actual setting up of the multiple Profit First accounts. There were accounts for payroll, income, expenses, and operational costs, but we also needed diverse accounts for taxes and other things that we knew were coming forward. And then, the second hurdle was figuring our the percentages to allocate. That was definitely a challenge.
Tell me about that process.
We started very conservative, but by doing so, we could make minor adjustments every month. And then, quarterly, we would review the big picture with Rachel and Cindy and pivot from there. Starting small allowed us to see progress without really stressing our businesses, and it gave us more confidence to make larger leaps every quarter.
During the course of the last year, what surprised you the most about Profit First?
I would say how calming it was to know the we had Profit First in place. Almost every day it felt like there was something new to deal with: staffing issues, health care policies, and mandates. Knowing that we were running by a predetermined budget and percentages, and setting ourselves up for success in a way that would keep the business profitable, was reassuring. Knowing that our financial foundation was strong, and could adapt during challenging economic times was comforting.
How does that compare to 2020, before you were using Profit First?
Good question. That’s also the first year of the pandemic, so first I have to say that Rachel’s team did an awesome job helping us navigate the challenges of COVID-19, from helping with PPP loans to reassessing and pivoting our business goals. The pandemic is still affecting our business, obviously, but there are differences between 2020 and 2021.
What I can say is that 2020 really forced us to take deep dive into our finances. John and I had whiteboards on every wall in our offices, and we literally wrote out every single expense for every practice, and every business. Seeing it in black and white really helped us learn a great deal about our company finances, good and bad. So when it came time to launch Profit First, we went into it with a true understanding of what is really being utilized and valuable, so that we could set up our budgets, percentages, and so forth. Other companies just starting out with Profit First will need to do that kind of deep dive, which will make their ramp up a little slower than ours, probably. But that’s something Rachel and Cindy are really good at, so it’s not insurmountable. I just think we were able to use our experience from 2020 in a way that set us up to maximize Profit First faster in 2021.
Would you say that your first year of Profit First was a success?
Absolutely! Without a doubt.
In what way?
Well, expansion has been at the heart of our business for a while. Expansion and scaling. 2020 slowed that progression, but we really wanted this to be the year that we pushed forward. With that in mind, we were able to set up Profit First in a way that created a specific account to help us achieve that goal. And we did. By using the Profit First model, we were able to purchase an additional practice without having to take on any more debt. That’s a big win. Another success is the way Profit First really built a solid, trackable, financial foundation that made us attractive to banks for financing. Not only were we able to grow and expand our business with Profit First, but we’ve also set ourselves up further that growth even faster by being attractive to lenders.
That’s fantastic! So what’s the plan for 2022? Are you making any pivots or changes to your strategies?
So right now, our plan is to continue to expand our organization through additional practices. That would be the primary focus. Secondarily, we have a medical lab business, Mandalay Optical that will see more of our attention in 2022. Our goal is truly to develop that company into a model that services our clients and future clients all over the United States. Also, and this is something every business can relate to right now, we’re using Profit First to budget for increased hiring and marketing costs. Hiring staff is such a challenge right now. It needs to be a focus.
Based on your experience, how would you explain Profit First to another business considering trying it out?
Just do it. Hire a great Profit First Professional team like Go Figure to support you. That will make it so much simpler. But honestly, you have nothing to lose and everything to gain.
The most challenging part of the program is easily the first three months where you have to schedule an undivided time to focus on your books and truly understand where your company is spending money. Making that time, and sticking to it, is definitely the most challenging for business owners. But the setup is so important. If you don’t do the hard work in the beginning, it won’t work. Or it won’t work as well.
Any parting thoughts?
Here’s the thing about Profit First I wish more people would talk about: peace of mind. As a business owner or entrepreneur, worrying about money, paying bills, taking risks, it’s all very stressful. Is the money going to be there? Will we have enough? What happens if there is another pandemic? The questions and doubt are always there. But Profit First helps take away the worry. From business owner to business owner, think about eliminating the financial worry from your company. Even if you don’t want to expand your business like I do; maybe you just want to your family to be better off. Fine. When your business is healthy, your family life can be financially healthy. With Profit First, you’re always looking forward to something exciting, growing, expanding, experiencing as opposed to always worrying about what bills are left to pay. Profit First is peace of mind.
TAKE ACTION
While you can absolutely stick with Profit First and avoid the biggest mistakes on your own, working with a Profit First Professional will make it easier. Working with someone who has already has the experience and knowledge of navigating challenges with other companies will not only help you profit faster, but with fewer problems.
At Go Figure, we have that experience. And we’d love nothing more than to share it with you, so that next year, you can be our success story!