EP169: How to Set up Profit First for Real Estate Investing – Interview with Mike Michalowicz (encore episode)
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Finances are an integral part of running any business, and real estate investing is no different. Figuring out how to properly and effectively structure your finances can be confusing, but I’ve discovered a method that has totally changed our business!
On today’s show, my wife Natali and I are sitting down with Mike Michalowicz, the author of Profit First. Profit First is a simple and effective formula aimed to transform your business in order to earn more profit! Mike is a business guru—you don’t want to miss episode 169 of Investing in Real Estate!
More About This Show
Mike came up with the idea for Profit First when he heard a staggering statistic—83% of small businesses that make under $25 million in revenue are non-profitable. This blew Mike away; he couldn’t comprehend why so many intelligent, successful entrepreneurs were living paycheck to paycheck.
Mike posits that the reason so many small business are not profitable is because the system we’ve been told to use is flawed. Most businesses use the following formula: Sales – Expenses = Profit. Logically, that makes sense. Mike explains that it defies human nature.
Profit First is based off the principle that when something is put last, we disregard it’s significance. In order to make a profit, you have to take your profit first. Profit First is Sales – Profit = Expenses. The concept is simple—pay yourself first.
In the current formula, sales and expenses come first, so profit never comes. By taking your profit first, you’re prioritizing what’s important. It’s about thinking of your finances as a business. It’s human nature to be drawn to the familiar; we are creatures of habit. But the current system doesn’t work!
Profit First is so effective because it’s a behavioral system. It works within your natural default behavior! Once you get the system in place, it runs smoothly and effortlessly, and your business becomes more profitable.
On today’s show, Mike goes in depth about Profit First, why it works, and exactly how to put the system into motion. We also talk about changing the way you think of your business, loss aversion, and why relying on willpower doesn’t work!
If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.
On this episode you’ll learn:
- How often you should do profit distribution.
- How many checking accounts should your business have?
- The importance of rewarding yourself.
- How can you incorporate Profit First if you have debt?
- How to use Profit First to maximize tax benefits in your business.
- And more!
The Pumpkin Plan by Mike Michalowicz
Tax-Free Wealth by Tom Wheelwright
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