6-Figure MT Newsletter #8

January 27, 2024

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This changed the way I look at my bank account

 

READ TIME - 3 MINUTES 

Hey Fellow MT's,

Today, I want to share something that's been a game-changer for my massage business – a system I discovered in the book "Profit First." (Quick heads-up: I'm not affiliated with this book or its author; I'm just a fan of the method.)

As massage therapists, we're in the business of making our clients feel better, but often, the business side of things can be overwhelming, especially when it comes to finances. That's where "Profit First" comes in – it's a straightforward yet effective way to manage your finances, ensuring you take care of your income, expenses, taxes, and growth.

Adopting a system like "Profit First" isn't just about numbers; it's about changing your approach to your business finances. By embracing this method, you're not just looking after your business but also your own financial wellbeing. 

A Quick Disclaimer:

This isn't financial advice – it's for entertainment and educational purposes. Remember, every personal situation is unique, and these ideas are based on the author's recommendations. 

Profit First: Breaking It Down

The main idea is simple: split your income into four parts:

- 50% Owner's Pay (that's for us!)

- 30% Operating Expenses

- 15% Taxes

- 5% Profit.

This is like the modern, digital version of the old-school envelope system. You're setting aside specific amounts for each aspect of your business.

Example Time:

Let's say your monthly revenue is $5,000.

According to "Profit First," you'd allocate:

- $2,500 for Owner's Pay

- $1,500 for Operating Expenses

- $750 for Taxes

- $250 for Profit.

The author suggests using separate checking accounts for these categories, but I've adopted a hybrid approach that works for me, keeping things simpler yet effective.

Empowering Decisions in Your Business:

One of the best parts of "Profit First" for me has been its impact on decision-making. It's given me a clear understanding of how much I should be spending on business expenses and if I'm on track with my revenue goals.

Example: If I find my expenses are over the 30% mark, I know I need to either bring in more clients or cut back on costs. This keeps me from dipping into my personal income to cover business expenses.

 

Clarity in Finances:

Before this system, I was just eyeballing my bank balance and hoping for the best. Now, I know exactly what I earn and how much I should responsibly spend on my business.

 

Reducing Financial Stress:

Come tax season, there's no panic. I've already set aside 15% of every dollar for taxes. This kind of planning has been a major stress reliever.

 

Building a Financially Sound Business:

By consistently setting aside 5% for profit, I'm building a financial cushion. This can be a lifesaver during slow periods or when I'm ready to invest in growing my business.

 

Long-Term Success and Stability:

After years of using "Profit First," my business is healthy and I'm not intimidated by 'looking at the numbers' anymore.

 

Embracing "Profit First" is about more than just managing your finances. It's about giving you the space to focus on our craft, without finances taking up our mindshare. If you're in need of structure in your business finances, give it a try, it might just be the change you need!

 

Let's keep crushing it!

 

Joe

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