Welcome to a real-world MBA, where entrepreneurs guide you through what it really takes to start, scale, and sell your own business. Your hosts: J and Carol Scott, who left careers in corporate management to launch their own house-flipping business. Every Tuesday, you'll meet a new guest and learn actionable tips for hiring, firing, marketing, raising capital and more. So whether you're looking to boost profits or bring a new idea to life, you'll come away informed and inspired. Tune in, and learn how to treat your business like a business!
https://www.biggerpockets.com/biggerpockets-business-podcast
episode 97: Put Profit First: How to Compound Your Business and Personal Income with Rocky Lalvani
Rocky Lalvani came to the United States as a small child. Like many immigrants, Rocky’s parents arrived with a small amount of money, around $25. As hard workers, they were consistently talking to their friends and relatives about how to make more money so they could have the coveted “American Dream”. This is how Rocky started his education in money and finances, and what pushed him to become wealthy.
Now, Rocky teaches businesses and entrepreneurs the Profit First system, which is exactly what it sounds like. A business usually calculates profits as sales - expenses = profits. Rocky argues that this is an inefficient way to see your true profit, and what the actual calculation should be is sales - profit = expenses.
You may be asking how to minimize expenses so the above formula can work. The solution to this isn’t that you need to manipulate the numbers so your expenses equal the difference between your sales and your profit, but that you need to minimize your expenses when possible. But what about fixed costs? What about startup costs? As Rocky puts it, you need to have a customer before you start having expenses, something businesses rarely realize is not only possible, but profitable.
Rocky also goes into his #1 tip for accumulating wealth and dives deep into why the phrase “the rich get richer” tends to be true. He also goes into how businesses can allocate their profits correctly, have the accurate amount for taxes, and pay themselves first so they’re making money while their money makes money!
In This Episode We Cover:
- How Rocky became a millionaire through compound interest
- What the Profit First system does for businesses and entrepreneurs
- Harnessing the 40% of your work that creates most of your profit
- Dismissing the notion that you need to spend more to grow
- How real estate investors can use Profit First in their businesses
- Setting up separate bank accounts and allocating your money
- And So Much More!
Links from the Show
- Dave Ramsey
- Home Depot
- BiggerPockets Business Podcast 06: How to Manage Your Time Like a Millionaire With Jay Papasan
- BiggerPockets Business Podcast 30: How to Guarantee Profit From Day 1 with Mike Michalowicz
Check the full show notes here: http://biggerpockets.com/bizshow97
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