BRX Pro Tip: Pay Yourself First
Stone Payton : Welcome back to BRX Pro Tips. Lee Kantor and Stone Payton here. Lee, one of the disciplines that, fortunately, we adopted pretty early on as we built this thing of ours out and I think it served us well, and our recommendation would be that other entrepreneurs, other people who aspire to build something, that they follow this advice as well. Simply put, three words. Pay yourself first.
Lee Kantor: Yeah. Early on we found the Profit First methodology of Mike Michalowicz, and that book was really instrumental, I think, in reframing how we thought about, you know, how we go and do business as Business RadioX.
Lee Kantor: So, that old formula of sales minus expenses equals profit, that just wasn’t working for us. You know, when you do it that way, then whatever’s left is what the profit is. And we found that it’s more useful to do it kind of the Profit First way where it’s sales minus profit equals expenses. So, when you have your sales and then you then take your profits, then whatever is left is your expenses. And that’s where you’ve got to kind of live within your means of your expenses based upon that formula. So, that allows us to pay ourselves first and then still live below our means.
Lee Kantor: So, our first move is to adjust expenses, not profits, and then we see if we can efficiently and effectively deliver our brand promise to our folks within those expenses. That’s our first choice. And so, that’s really been instrumental in terms of keeping us going and keeping us through hard times and good times. So, I think it’s worth exploring for folks who haven’t heard about it. That book is called Profit First, and I think it’s something that you should consider, especially a new company consultant, the coach, I think that this is a really good methodology when it comes to running a business.
Stone Payton : Well, so do I. And I mean, look, let’s be candid, we are actually taping this particular pro tip on the very last day of the month. So, tomorrow I’m going to look at sales volume for this previous month. And I can tell you right now, unless a check comes in today, it’s not as much as we thought it was going to be. And I don’t have to clutter my mind with a lot of decisions. I’m going to take that number times it by the percentage that we’ve agreed to pay ourselves first, and those are the checks that we’re going to cut. I don’t have to worry about that. I don’t have to put a lot of energy and effort into it.
Stone Payton : And then, next month, you know, maybe it’s going to be a little bit bigger, but it just removes a lot of the clutter. It takes the emotion out of it. And, yeah, I think it’s one of the best decisions we’ve ever made, man.
