Joe Sanok 00:00:00  You're someone with a vision for your practice, for your side hustle, and for your personal journey. But when it comes to establishing your path and how to get to where you want to be with your practice, things get a little messy. You're also someone who'd prefer to go in person instead of to groups and listening to everyone else's story. To me, it sounds like you could benefit from one on one consulting with our experienced practice of the practice consultants from 595 a month and up, you can work with a consultant that will give you more direction and practical, tried and tested tips matched to you and your goals. For more information, visit practice of the practice. Com forward slash apply. Again, that's practice of the practice. Com forward slash apply. This is the practice of the practice podcast with Joe Sarna session number 133. Welcome to the practice of the Practice Podcast. I'm Joe Stanek, your host, and I am so excited you are hanging out with me today. Today we are giving you behind the scenes in regards to our membership communities.

Joe Sanok 00:01:16  And so a lot of our consultants are doing teachings every single week. every Tuesday, Wednesday and Thursday we have live teachings going on in our membership. So we wanted to give you a little behind the scenes. So we're going to be hearing from Nicole Ball talking about what to do when referrals are slow, our basics with Andrew, client retention with Ashley, scaling with Nicole Ball, choosing the right project management systems, and all sorts of other things over the coming weeks. I can't wait to dig into this with you. If you want help from one of our consultants, please head on over to practice of the practice. Com forward slash apply. I'll chat with you for 30 minutes to determine if one of our membership communities or consulting might be right for you. Now let's get started with this episode.

Ashley Mielke  00:02:02  Happy Tuesday. okay. So before we jump in and talk about all things profit first and money management kind of what's systems you're currently using and why? I do highly recommend prophet first. If you could pop in the chat a recent win in your business, something going on for you that we can celebrate? Hello Michel, thanks for joining.

Ashley Mielke  00:02:29  I've just asked everyone to put a recent win in the chat so that we can celebrate, and we could just bring life to your wins, no matter how big or small. Brent finished credentialing applications for my newest employee. Awesome. Such. I imagine it's a tedious step to take, but obviously a very important one.

Speaker 3 00:02:56  Yeah, I hate it, but, it's worthwhile. Hopefully. So now we're just waiting to hear back.

Ashley Mielke  00:03:02  Good. Awesome. Brent. Barbara increased referrals. So does that mean intakes or just new referral sources? Both. Amazing. So good. Congratulations on that. Sabrina says my interns are phenomenal this year. Yay! Really pleased with their ability to conceptualize cases and taking feedback. Oh, like that is half the battle, isn't it? With interns or new, they're just being able to conceptualize the issues that clients bring in, taking feedback, building their confidence. Amazing. Great to hear. Michelle. Hello, my name is counselor now has a full schedule. Yay! That must feel so good, Michelle, and I'm sure your therapist is very happy about that.

Ashley Mielke  00:03:49  Rachel says a recent win realizing I'm cash poor because I pay my employees too much loss not knowing how to fix it. Okay. Thank you for sharing, Rachel. You are not alone and you are not the only one. I have helped many others.

Speaker 4 00:04:02  Now I know why I'm cash poor. That was the win, I guess. Yes.

Ashley Mielke  00:04:08  Sometimes we have to learn the hard way. And like I've shared with you all so openly almost over this past three years. Some of you have known a long time here. I have had the most growth as a business owner through my hardest losses and the most painful lessons. And a big one for me too, was around money management and not knowing my numbers, not paying attention to the bank accounts, overpaying staff, bloating, which is really common in businesses as we grow where we just have way too many salaries. So thank you for sharing. It is a win, Rachel. And, we can even talk today about how to fix it. Maybe some steps that you can take today and anyone else who's watching this video or attending.

Ashley Mielke  00:04:54  It's all valuable. We are not accountants. Like, unless you come from a background where you're taught how to manage money like most of us are not, it can be a really painful part of our business. And for all small business owners, not just us. Right. It's like you can ask a small business owner on one day, how's business going? And it's awesome because all this cash has come in or it's been a great month. And then we ask them three days later how business is going, and they're going to say something completely different, right? when do I pay taxes with money left over? Woohoo! That's a great feeling too. And we can even talk about, if we want later once we talk about profit first today, putting money away for taxes or how to make those installments, how to get on top of that. So you're not left with a bill of, you know, maybe it's 20,000. I was in that grind when I first started my private practice, before I actually it was a small group practice, but I wasn't incorporated yet.

Ashley Mielke  00:05:54  I didn't know about this stuff. I didn't care about the stuff. All the money came into one account, just spent it all. And then every year I would get this tax bill. I remember one year I was with my husband and I can't remember I was pregnant with my first son. So this is like literally seven years ago, eight years ago. And it was like, my accountant's like, you owe 17,000 to the CRA. And I was just like a 17,000, like, where am I going to get that cash? I just remember the dread and how important it was to learn how to put away money for taxes and make those installments so that that never happened again. Okey dokey. Well, thank you for joining us today. I'm going to share my screen. If at any point you have questions just interrupt. But I will pop back and forth, okay. Because there's a lot of stuff here that I want to explain and unpack. And, I know that talking about money can be really intimidating.

Ashley Mielke  00:06:50  Like I said, for me, it was a very long time and I think a big part in me sharing this with you today is actually really helpful for me, because it helps me to understand the profit first approach even better. Right? And as we explain things, it helps us to integrate. So this is not only beneficial for you, but this is also a benefit to me. So yay, we all get to learn and digest this stuff. And I'm really going to explain it in a way that makes sense for me. I'm not a money person. my husband is not a money person. Like, you know, there's just some people that just get it. And they've been doing these things a long time. Maybe that's you. Awesome. But if you're like me, then, then a lot of this is new, so I will make it digestible and we'll have some conversation about it so that you can get excited about your finances, too. And hopefully, you know, join the profit first club.

Ashley Mielke  00:07:46  All right. So the first thing I have on the PowerPoint here is you just need to order the book. I don't know if you can see me or not. while my screen is being shared. No idea. But I do have the book here. The profit for first transform your business from a cash eating monster to a money making machine by Mike. McCallum. I think that's how he stays that same. I literally couldn't put it down. it's not a boring accounting book. It's not just about numbers and all of that accounting jargon that we don't understand because we're not accountants. It's a very easy read. It's for people like us, small business people who really have not been taught the financial literacy. That's really, really important for for our businesses, no matter how small. So this isn't something that you start in five years from now, or when you have a team of ten or 15 or 30, you start today. That's the great thing. It's like no matter how big or small you are, we can implement profit first into our businesses and even into our personal lives.

Ashley Mielke  00:08:49  So order the book and read it. I do have some links later as well, like quick 30 minute summary you can listen to on Spotify. And also, a really great podcast that Mike was on. That is a great way for you to learn about it as well. So what I love about Profit First is it's a system that benefits us as the business owners by prioritizing profits first. So it's not that typical traditional accounting system or that approach to accounting where, okay, you get all your money, right? That's you get your gross revenue or your total income, you pay off all your bills, you pay all your people, you pay your salaries, you take care of everything else. And then whatever is left over is the profit. So that's what I have here. This traditional system is sales minus expenses equals profits, right? Where it's this idea that profit can wait because typically then we have we have a little bit of money leftover. And we're so excited to grow our businesses. We're going to take that cash and we're probably going to reinvest it into our business, or we're going to buy some new shiny object for our our office that we need.

Ashley Mielke  00:10:01  Maybe we have to buy a new computer, or we're going to buy that fancy couch we wanted, but we don't ever consider. What about if I put money away first for me, because I'm the one taking all of the risk and starting this business? What a concept. So this is where profit first is is different. Instead of sales minus expenses equals profits, it goes sales minus profits equals expenses. Oops. I just messed that up. Fix that. There. So profit is a priority. So as soon as we get all of that income in. And I'll show this in the next slide twice a month, where we allocate money from the big pot of money, right? That revenue that our businesses generates. We take out our profit first and we have an allocation for that. So when we are cash poor, we don't have a lot of money. Doesn't mean that you have to wait till that you, you have, you know, increased cash flow. you can start small. And so maybe it's just 1% of the gross revenue generated in that period of time, whatever's in the account.

Ashley Mielke  00:11:16  So if it's, okay, I'm getting out my calculator because I'm not awesome at math. So 1% of let's say, so you've got $10,000 in your account. That's $100. Okay. Doesn't seem like a lot like, oh, 100 bucks. But that's also the point, right? You can afford to take that $100 and put it into a profit account and do that twice a month to put that away for you. And then I'll talk about what we do with that profit once it's in there. But you pay yourself first as the shareholder and owner of your company by taking that profit. Then you distribute and we'll talk about the order of where the money goes and how you make decisions in your business with the cash that you have. Profit first encourages you to deduct profits from every sale and use the remaining revenue to cover your expenses. It shifts the focus to the bottom line, which is your net profit, rather than the top line, which is your total income. Right. So when you have your profit and loss statement, that's what we mean by top line and bottom line, we know I mean, I think theoretically that the bottom line is very important, which is your net profit.

Ashley Mielke  00:12:28  That's actually how much money is left over in your business. after all expenses are paid and salaries and, and the owner compensation and all that stuff. but one thing we do focus a lot on as our businesses grow, and I think this is normal for a lot of small businesses as we focus on the top line, how good, how much money is my business generating? So maybe, you know, you got a $2 million business, right? $2 million in gross revenue a year. That's amazing. But more importantly, what is your net profit? How much money are you actually making? Are you even making any money? Is your business profitable? Because that's actually what matters at the end of the day. And if we don't have healthy profit margins, we don't have cash in our businesses. It doesn't matter how much money you're generating, it's better to make less revenue and have higher net profits because that's actually what matters. I'm sure you've heard it before. Cash is king. And, And it's true.

Ashley Mielke  00:13:30  Cash is really what we want to focus on as our businesses grow. This approach values the risk you take in starting a business. You deserve to reward yourself first. So before I move on, I just want to check in. I know I don't see anyone. We've got people's, cameras turned off. So any questions, feedback, comments that you want to pop into the chat right now before we move forward.

Speaker 3 00:13:59  I just put in the chat that, highly recommended profit first for therapist by Julie Harris. the original profit first, author, like, even wrote, like the foreword for her and everything and gave her the thumbs up. It's really, really good. Super easy. Awesome.

Ashley Mielke  00:14:16  I've heard great things about it. I personally have not read it. but absolutely. I've heard awesome things. I've even listened to a couple podcasts with Julie, so you can even like if you're just curious or not, you don't. You're not ready to read. Go to your, the Spotify type in like Profit first and all the podcasts and everything about that will come up and you can just start to listen, get some ideas and, see if this is a fit for you in terms of how you want to move forward with your, with sort of your system of money management.

Ashley Mielke  00:14:50  It is not an accounting system. It's a money management system. It's a way that you are accountable to yourself and your business. It's a way that reinforces that your business serves you. You do not serve your business. And I think that's a mindset shift. That's something I'm working on right now, too. It's like as therapists, we often become martyrs in our business. We want to serve. We want to give everything away. We want to pay people well and and then we sacrifice ourselves in the process. What's the point? Yes.

Speaker 4 00:15:26  I was just going to add, I feel like you're talking directly to me. Like I have the book and I haven't read it because it just seems scary. And yeah, so it's time.

Ashley Mielke  00:15:36  I'm so glad you're here, Rachel, because I was scared too, and I have been terrified of finances in my business for a long time as well. Even though we are generating like our gross almost 2 million a year in gross revenue. So it's like you have a successful business.

Ashley Mielke  00:15:51  But in terms of like talks about how this is in the next slide, it's like you get this big plate of food, right? And it's not the money that jumps into your account. And then you just spend it. You get a dollar, you spend it. I'm very good at getting a dollar and spending that dollar. But it's like what we really need to learn is the skills on actually looking at how much money is going to expenses, how much am I actually paying a taxes? Where where is the money actually going? Not just disappearing. So I'm so glad, Rachel, because yeah, I'm right there with you. Awesome. You're going to love the book. His story that he opens with, about how he spent all his money off his business sale and was literally did not had he had like $100 left to his name and didn't know how he's going to pay his mortgage and pay for all his things. This guy. That's how he came up with the profit first. Like, it's so inspiring this guy's stories and clients that he's worked with that it's not it's not just me or it's not just you.

Ashley Mielke  00:16:56  It's not just us. It's. It's most business owners. And, Yeah, yeah, I'm very passionate about this, which is a big surprise to me because again, like, I've been someone that's like, historically very scared by money. And, you know, we get lots of money and don't know what to do with this. So I'll just spend it. And I don't want that to be you. And and I know Mike and I'm sure, what's, Julie does not want that to be you. So definitely recommend taking next steps. And the other thing is that I've been learning, just doing some mindset stuff, with a business coach of mine is around just really elevating our standards as business owners and as people. And often if we don't learn the lessons we need to learn, those things are going to keep coming up in your life, right? Maybe it's, maybe it's rejection or criticism from other people. I'm just using that as an example. In this context. It's money. Money issues, money struggles, money challenges, cash flow issues.

Ashley Mielke  00:18:03  Okay. This thing is repeatedly coming up and coming up in my life. I need to deal with it. If I'm going to overcome this, I have to learn the skills to address these issues in my business and in my life. And we know that our business is a reflection of our personal life, right? The personal challenges that we face are going to show up in our businesses. So if that's a money thing for you, you're not alone. there's millions of us who've had to learn the skills, and and we're still learning it. I'm still learning to elevate our standards so that we can actually take our businesses to that next level and, and feel really good about these parts of our world. So that's my little encouragement to you. we first have to become the person we need to be to do the things and have the things that we want to have. So just remember that be, do, have first have to become the person, be that person. and so if money is a block for you, I'm actually going to be doing, I think, a money mindset.

Ashley Mielke  00:19:08  Financial mindset. for practice boss coming up here. So make sure you plug that into your calendar so you can come to that as well. Sabrina says I've been using profit first for about six years now. It makes my life so much easier. Sabrina, that is amazing. I'm so happy for you. I would love to hear a bit later just some feedback from you about, what you love about it and what you've learned through that process. Okay, Going back to the PowerPoint. Okay. So setting up your accounts do not get overwhelmed by this slide. It looks it's very text heavy I recognize that. But it's actually very, very straightforward. The book talks about the different accounts to set up. It's actually not that complicated okay. The only thing it's going to do is just require that time for you to go to the bank and do this. So the profit first account, we have several different accounts that we set up. And we can start with five accounts. Some people have more, like six accounts where they separate operating expenses and salaries.

Ashley Mielke  00:20:09  But to start, this is a great place to start. We start with five accounts. Your main bank account today would be your income account. So that's where all of your revenues is deposited. Right. So all of your checks from insurance and client payments, all that go into your income account. That would be just a regular checking account okay. So I set we've got that here. All revenue is deposited here. The next account is our profit account. That would be a savings account. This is the percentage that you take away, right. Twice a month. And I even have that on here. Maybe. Is it the next. Okay. It's coming up twice a month. You take money whatever money is in your bank account. Okay. If you have $1,000 in your income account and then you have certain percentages that you set up, which we will talk about in a little bit. So let's say it's 10%, 10% of that thousand dollars 100 bucks would go into your profit account okay.

Ashley Mielke  00:21:04  That is for you being the owner and shareholder of your company. The next one is the owner's compensation. That is what you pay yourself to live. That's your salary for working in the business. So as we're getting started, we pay ourselves more, probably around 50% of, of our income, because we are maybe the only one working in the business or one of a few different people working in the business. But as your company grows and you step out, your profit account will have a higher percentage and your owner's compensation will be lower. So you'll be mostly getting paid for being a shareholder and less for working in the business. You will see what I mean in a few minutes. Next we have our taxes account. This would be a savings account where you put away corporate and personal taxes. Probably between 15 and 20% of your income would go there. So if it's $1,000, that would be, say, 200 bucks. and then your opex, that's your operating expenses account, another checking account. This is where the money left over for the operating expenses.

Ashley Mielke  00:22:11  So anything left over after you do your profit, your owner's compensation, and your taxes would be left in your operating expenses. Now you're going to say, okay, but now, after I've done all this, I don't have enough money to operate my business. This is where we really start to see where we're overspending. So a big thing to do right away, and I talk about this a little bit later, is you want to cut your expenses at least by 10% if you can and where you can. Right. Are you paying too much in overhead for your office? Do you have a bunch of subscriptions that you're not using? Can you use a cheaper phone system? Are you overpaying your therapist? Do you need to get? Do you need to let go of one of your administrative assistants? This is really where we start to look at how can I operate, more efficiently. on less with less. Okay, so this dinner plate analogy, I love this. The reason why we have all these different accounts, right, is because Mike says how, you know, it's like you, you get all this money that's put into one account or one big plate of food, right? but if we just have one big plate of food, we're just going to eat it.

Ashley Mielke  00:23:24  All right. When we talk about caloric intake and trying to, like, be on a diet, We're just going to eat it all based on the size of the plate. And it's the same thing with our money in our bank account. If everything just goes in and out of this income account, we have no idea. We're not tracking it. We don't know how much is going where. We don't know how much of that percentage I'm paying myself. Taxes, probably not even paying taxes, and certainly not what I'm paying. And operating expenses, like salaries and bills and all of that. So by breaking it all up, you can actually have a lot more control and manage your money better. Just like if you were to replace your big plate with a small plate, when you are cutting calories and you're really watching your your food intake. Okay. So that's sort of the idea of why we have all these different accounts. The next step that Mike asks us to do is to set up a second profit account and a second tax account at a different bank so that we are not only transferring to these accounts, we then transfer it from this profit account to the profit account at the other bank.

Ashley Mielke  00:24:36  And we do that with taxes. And the reason why he recommends that is that we cannot touch that money. So that I don't say, well, it's kind of a slow month, I'll just take money out of my profit account and I'll move it into my operating expenses, right. Or oh, you know, I've got a lot of money in taxes. That's okay. I'll just take a little bit out, because I do have to pay this big bill that came in. So by eliminating that easily accessible money, you can't it's gone. It's out of sight, out of mind. So there's quite a bit of extra steps here getting set up. but it's a system that works. So a couple of things to think about. You want to work with a bank that doesn't charge minimum balance fees, and doesn't charge extra fees for creating multiple accounts, and allows for easy access to accounts online. So you want to be able to easily transfer from your income account to these other four accounts right on your app and then be able to log in to your bank online, say, using your desktop to transfer from your first profit account to your second profit account at the other bank, and your first tax account to your other tax account at the other bank.

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Ashley Mielke  00:26:56  The next thing here, the percentages allotted to each account will be based on your target allocation percentages. I have a slide for that next. So we call this taps. Your current allocation percentages or Caps is how your real revenue is currently being spent. Real revenue means your total income minus subcontractor pay and cost of materials. We consider real revenue when you spend at least 20% of your total income to subcontractors, Otherwise you would just use your total income line. Okay. So real revenue would be your total income. Your top line mine is contractor pay. And this is where we would really see you can actually look at you know, get out your profit and loss statement. Look at where all your money is going. How much are you paying yourself. What. So if you're getting what's your total income okay. That's how much money was generated in your account this month. So you could do this even for August. How much money did your business generate? did you put any way for yourself here? Likely not, unless you are doing profit first.

Ashley Mielke  00:27:57  How much of that did you pay yourself? What's the percentage? How much went to taxes? How much went to operating expenses, including things? Okay. And then you will actually be able to look at what your caps is versus what your taps should be. these are this is a basic, kind of breakdown for what would be considered a healthy and viable breakdown of percentages and allocations. Okay. So if you look above here you can look at what is your real revenue range. Are you and are you making under 250 K a year 250 to 500 K, 500 K 2 million, 1 to 10 million, and so on and so forth. Okay. So I imagine probably a majority of you are in this area. I don't know for sure. maybe even reaching over the 500 K at this point. So this is where we're going to look. So if we if we start here with the 250 K, real revenue is just the income that's generated. So 100% of your money comes into your account, then a great allocation to start with to pay yourself.

Ashley Mielke  00:29:06  Right. This is twice a month. It's a the 10th and the 25th of the month. So whatever money's coming into your account, you will put 5% away in your profit account for you. Right? For being the shareholder, you would pay 50% of that to yourself. Okay. For being one of the main and probably well, at this point, the most important employee in your company is you. You're going to put about 15% away for taxes. But again, this could be you want to check with your particular state to make sure that it, aligns with your taxes. I'm really fortunate not to brag, but in Alberta, in Canada, here we have the lowest, tax percentage for our country. it's like, I can't remember. Now, I should probably know this. It's like something like 8%. Something like that, 8% or less. So it's pretty amazing in terms of the, money that we have to pay for corporate tax. and then some places are a little bit higher. Like, I know there's other places in Canada I believe out it, even in Ontario where it's like significantly higher, where you want to put like more like 20% away.

Ashley Mielke  00:30:19  So you will need to know with your accountant what would be a good percentage to put away and then whatever. After all of these allocations are done, what should be left over is 30% of this would go into your operating expenses. And again, this will be a great eye opener for you. Can you even afford your expenses? After you pay yourself, you pay your owner's pay and your taxes. And it really helps us to figure out ways to get creative and innovative with what we do have. and this is also would be used towards any debt that you have as well. If you've got a credit card or a loan or something like that, then you will notice here as your real revenue increases. Notice this. The profit increases here for you being the shareholder okay. And then it goes it goes down right here a little bit. I don't know why this is but then it increases again. Oh this is why. Because our expenses increased significantly. So our profit accounts will go up. You will also notice your owner's pay will go down.

Ashley Mielke  00:31:30  Okay. But you're not not paying yourself. What you're doing is you're paying yourself as a shareholder, right? So you're paying yourself a dividend. And I'll explain when that would happen through the profit account as opposed to taking a salary as an employee, because at this point, you're no longer the only employee working in your business. You likely have other people. You've got office managers, you have a leadership team. You're in more of that CEO role at this point. Okay. So then eventually when you're making 10 million to 50 million, you're now just taking profit, right? So you're just paying yourself for being a shareholder, and it ends up being a significant amount of money when you're generating this. Right. And and the profit account is building and building every single month. We'll talk about how much do you actually take out of your profit account. and you will notice your operating expenses will increase as well as your company grows because again, salaries, office space, all of that sort of thing.

Ashley Mielke  00:32:32  So this is kind of a good place to start in terms of setting up your targets. but of course you can work with a profit first professional, for profit first professionals.com where you could find someone who works in your area. Okay. So I'm just going to stop for a second. make sure that I haven't lost anyone. I hope that I was explaining that, in a, in a way that was digestible. I've had to look at this stuff a couple of times myself to wrap my head around it. are there any questions or anything coming up right now?

Speaker 4 00:33:11  I'm sorry, I have one, so I'm using a payroll company to pay myself and my three employees. So how does that factor in? Because like our state taxes are pulled out.

Ashley Mielke  00:33:23  Perfect. Perfect. If you've already got it set up that the taxes are immediately taken out, then you're you're already doing that because a lot of us don't do that right. We pay our taxes almost 70. Okay. The other thing is though, I assume that you're incorporated Rachel.

Ashley Mielke  00:33:41  Yes. Okay. So we're talking about personal taxes. What about corporate taxes. Do you put money away for that each month.

Speaker 4 00:33:48  No. And I should be because we get a lot more profitable. So it used to be like baked into my personal tax return. But now it's a separate return. Yes.

Ashley Mielke  00:33:57  So that's where that 15% would come in. So whatever. And that would be high. So if you think about it, if I'm putting 15% away for corporate tax and here's your revenue, but after all expenses are paid, really you're only going to be taxed on your net profit. So 15% would be way more than you you would actually need.

Speaker 4 00:34:17  That's true. Okay, good.

Ashley Mielke  00:34:19  But it's it's a good habit to get into so that you, you, you mostly always have more than you need. And then the fun thing is when your taxes are paid at the end of the year and you're like, I've got another six grand sitting in my tax account, you could leave it there and and continue to build on that or what what Mike would recommend is you take that and you put it into your profit account, right? Or you use it to invest in your business, right? Or use it to pay off debt, like use it for some benefit.

Ashley Mielke  00:34:50  Okay. For your company.

Speaker 4 00:34:51  Okay. Great. Thank you.

Ashley Mielke  00:34:53  Yeah. You're welcome.

Speaker 5 00:34:55  So question this might have been I've been dabbling with profit first for a long time. and it definitely got me through the whole change debacle thing that happened this past year. I had plenty of profit to, like, live off of for several months. but I think you said something quickly about the fact that because I am, I have all contract workers, from my clinicians. And you said something about like real revenue is my the income of the business minus those contract. So we talking about those contract workers that I of my counselors.

Ashley Mielke  00:35:33  Yes, yes. Now I cannot speak too much to that. It's just what I've read about. Yeah. Like what real revenue actually means. when we have subcontractors, which is also how my business is set up. and I don't know why that is considered salaried employee. Like, it's not considering it's not considered like an operating expense.

Speaker 5 00:35:59  Yeah. Okay. So so you actually or.

Ashley Mielke  00:36:01  If I cut out.

Speaker 5 00:36:02  You did cut out for just a second. Can you.

Ashley Mielke  00:36:07  Okay. I can see you and hear you now. Okay.

Speaker 5 00:36:11  So I think you've asked us. We didn't lose you.

Ashley Mielke  00:36:14  Oh, okay. Okay. I'm not sure why that's not considered, like the almost like the salaries part. Yes, that's the part I don't know. I do not know why.

Speaker 5 00:36:25  So you do have your setup that you take your revenue, that your income, and you subtract it for the contract before you start to, like, take your, percentages out.

Ashley Mielke  00:36:36  Well, no, no, but I don't like I don't, but I know this is where I'm.

Speaker 5 00:36:43  Well, I'm wondering whether Brent could, like, say, like, I wonder if the girl on, who wrote the one for counseling for a therapist, whether she speaks to. And she says it differently because it's a different like we do have a slightly different business than your standard business.

Ashley Mielke  00:37:01  Yes. Brent, do you have any insight for us?

Speaker 3 00:37:05  So say that one more time.

Speaker 3 00:37:07  I missed part of it, Esther.

Speaker 5 00:37:09  Oh, and she mentioned something about that, that a real revenue is the income that our business just brought in for that for those two weeks, minus the price, like the amount that we pay our contract counselors for our real revenue and didn't know whether that was really what we had to do and whether it's structured differently for therapists.

Speaker 3 00:37:32  I believe it's the same. If I remember correctly, she goes through real revenue. okay. I was mentioning.

Speaker 5 00:37:40  Okay, I'll play around with it. I've never done it before, and I haven't necessarily felt like I've been dinged for not doing that, but it's definitely something to kind of like play with the numbers and see what that would look like.

Speaker 3 00:37:54  I know in Julie's book, I don't know if Mike's is the same way. Ashley. So you tell me if it is, but I know when Julie's book, she offers different tools along with hers where she has like a whole Google Docs spreadsheet thing that helps you calculate your tabs and things for depending on where your practice is and then even like just step by step on where to find your real revenue and all of your expenses that you would need to categorize in each place.

Speaker 5 00:38:21  Yeah.

Ashley Mielke  00:38:22  Awesome. That is really great. I know he talks about how you can do an assessment online, like an assessment for your business, and it's usually the first thing that a profit first professional would ask you to do. but that's really great to know. Rent and I think really helpful for all of us if we're ready to dig in and kind of see where our business falls. And, and you can even, like I said, pull out your profit and loss statement, get your expenses. You can even do a quick look like from, like a bird's eye view of where you're falling right now. And if you are falling into the recommended taps or not. And, and then maybe some shifts that you want to make in your business moving forward. Okay. Thank you. Let's keep going here. Okay. So we've gone over that now. Money management. so I've talked about this already. If your caps do not align with your taps, do a deep dive into your expenses and see where you can trim the fat in your business.

Ashley Mielke  00:39:17  That would be subscriptions. That would be. Maybe you've got too many at this point, you're likely not going to be there. But these are really good things to think about as you grow where you you don't want to be bloated in top heavy with administrative staff. You don't want to overpay people for things that you can do. and you can get creative in terms of rolling in different responsibilities in people's roles and jobs. If you are in debt, a great place to start with profits is pay only 1% in profits. To start and use as much of your income to pay down your debt and cut your debt by 10% right away. We can definitely find ways to cut out. If you're making 10,000 a month, try and cut out expenses up to $1,000. What is it? Is it buying treats and snacks and and expensive coffee for the office? where is their unnecessary spending? And I know Mike talks about, how, we, you know, we love to have these really fancy, beautiful offices, and we'd love to have all these fancy things.

Ashley Mielke  00:40:22  And, you know, at the end of the day, it's like, that's really wonderful. And we love that. And it's important to create a beautiful space for our clients and for our businesses to grow. But it's not the most important thing. We really want to create, a business that is sustainable long term. And, and that where we're profiting, right, where we can get excited about our money. another thing. Check your accounts regularly. Open up your app. I go into my TD app every day, look at your money, check out your accounts. And I love this. This is a quote that I heard from my business coach. What gets measured, gets managed right. And if you've ever heard people who, if you like, ever heard of like the new app right where you like, log your food and your weight and everything can be quite controversial, right? but it's like people. Research shows people that weigh themselves every day actually lose weight simply because they're weighing themselves, because they're more accountable to the scale.

Ashley Mielke  00:41:31  They're more accountable to what they're eating. It's the same thing with our money, right? The more where we are with our money, the more we measure it, the better it gets managed. So remember that what gets measured gets managed. Move money to each account on the 10th and 25th of the month. That's when you would make those allocations from your total income account to your profit, your taxes, your owner's comp and your operating expenses. Out of sight, out of mind. Then here's the fun part. Each quarter you. So after 90 days, right. Each quarter you take out 50% of the profits out of the profit account for you, and then you leave 50% in the account to continue to grow. So then after 90 days, you're like, okay, I've got $3,000 saved up on my profit account. $1,500 goes to you, then you leave 1500 in, and then 90 days later that 1500 now turns into. I'm not great with math. Let's see if we're adding another 3000.

Ashley Mielke  00:42:33  What's that? 4500, 4500. Then you get to take out half of that. So like 20,200 or whatever that would be. And then you leave that 2200 and every 90 days, right. You get to take out your profits for taking the risk of running your business. And and then you get to do whatever you want with it. That's the fun thing. You get to take that $1,500 or that $5,000, go on that family vacation you want to take by yourself. You know that new, I don't know Louis Vuitton purse that you've been looking at, right. Maybe you go and do a solo trip to do a fun business retreat somewhere. Or maybe you're like, you know what? I've got some debt that I've accumulated for, whatever in your in your family life, and you use it to pay off debt, you can do it, whatever. But it has to be for you. And that is the fun thing. And the more money your business generates, the higher your Taps percentage is, the more profit you'll make and the more fun you'll have making money.

Ashley Mielke  00:43:36  Okay, another point to make here that Mike made profit account should have no more than three months reserve of what? Your business cost to run each month. anything extra should be reinvested into the business for growth. So if you're noticing that that profit account, has a significant amount of money. Not a bad thing, but really, it could be a time to grow. It could be an opportunity to reinvest in your company without going into debt. Right. Cash is king. Benefits of profit. First, you will learn to manage your money better and smarter. You will learn to operate your business with less you, right. You'll get more creative and innovative. You will learn to be more resourceful with your money. You eliminate unnecessary spending and expenses, your profit margins will significantly improve and of course you will pay yourself first. So getting started, order and read the book. Definitely recommend the profit first for therapists. For a quick overview of the book, you can carve out 30 minutes and listen to the book summary here as well.

Ashley Mielke  00:44:34  There's a great podcast with Mike talking about profit versus easy to digest. deep dive into your revenue and expenses and determine your caps and where your targets should be to be healthy and sustainable business. Cut the fat and reduce expenses to ensure you fit into the task. Recommended by Mike. Connect with your bank to see if they are fit and consider working with a profit force, accountant and bookkeeper, which you can find at profit first. Dot com. All right. There you have it. That is my presentation. I'm just going to hop to the chat to see what's happening over here. Okay. Sabrina looked up real revenue and profit first for therapists. This is what Julie wrote. The original profit First does tell you to subtract materials and subcontractors from revenue to get real revenue, because we can't control costs of materials. If we are, say, a construction company, we can't control the cost of lumber are in private practice. We do have control over clinician compensation, whether employees or contractors, because you have control.

Ashley Mielke  00:45:33  I recommend you include payroll in your allocations. Look at that. Perfect. So there we have it. So you would have a separate payroll account. Brent my favorite day each quarter. Yes. So fun right. You get to open up your profit account at your second bank. Right. And, and get your money here is a profit first for therapist Facebook group that Julie runs in case people are interested. Thank you so much, friend. So right on Facebook you can log in and join that. Michelle, thanks so much for the day. Excellent as always. Sorry to hop out early. Something unexpected pop up that needs immediate attention. Well, thank you for joining us Michelle. Okay. Questions, comments? Sharing. While we still have about ten minutes together, maybe you want to discuss some kind of expense cutting in your business or kind of first steps, something that we can kind of get the ball rolling and you can take some action on this, given that you're interested in it, you're interested in this approach to managing your money.

Ashley Mielke  00:46:38  If there's other approaches that work for you, we would also love to hear that as well.

Speaker 4 00:46:43  I think it's probably too big of a topic for right now, but I'm working with Andrew and the 1 to 1 on, just like, how do you dial back when you're. I have two great staff members. They're amazing, but I'm paying them too high of a split. Okay. And how do you undo that? Because that's my biggest issue.

Ashley Mielke  00:47:02  Yeah, that can be really challenging. I'm actually helping a consulting client do that right now as well. so what she has done is she has been really transparent and open about her profit and loss. She has let them know that they're not profitable and haven't been, and that a majority of her, of her services and her company are actually going to pay all the bills and to pay the therapists, and it's just not sustainable. So she was very open about the financial situation, the business. And then, basically approached and has said in order for this to be a sustainable business where you have a job and we all have a job, right? you have to make some some changes here.

Ashley Mielke  00:47:44  And she's giving them notice now for changes coming in January. Okay. So they can fully prepare. She is also prepared for some of them to quit. And so she can she can also prepare herself for rehiring, which sometimes that's what that's that might happen. It's a risk that we take, but it's something that needs to be done.

Speaker 4 00:48:07  Okay. And if she's changing them to salary or just changing the commission split.

Ashley Mielke  00:48:11  Yeah, she's just changing the the split. she has hired some new clinicians under the new split, which is good. and she is prepared to lose some of her, her people. but it's just it's not sustainable. And it's not great for her, right? Emotionally, mentally, all the things, the stress that she carries. So that is something that you can consider. Rachel. Okay.

Speaker 4 00:48:38  Doesn't sound fun. There's only three of us, so. No.

Ashley Mielke  00:48:43  It's it's it's definitely not fun. But again, I feel like this is like, these situations are, as painful as it is, it's such a great opportunity for your growth as a business owner.

Ashley Mielke  00:48:53  Yeah. And you can say, you know what I. I just there's a lot of things I become aware of. Here's what we pay for this. Here's what we pay for this. It cannot we will not have a business if we continue this way we cannot grow. I cannot give you the opportunities I'd like to give you because I have no reinvest in the business.

Speaker 4 00:49:14  So hard about it is that it's essentially it's my error. Like if I've gotten it right when I first hired them, it wouldn't have to end like that. And so I think that's why I'm hiding from it for sure.

Ashley Mielke  00:49:27  Yeah. And you can own it. And I would say exactly that. There's so much that I've learned, I just didn't know. And now I want this to, you know, be a place where we can invest in growth and opportunities for everyone and have a long term, sustainable business for them to, to work in. And, this is going to be one of those growing pains and hopefully they will see the value in staying.

Speaker 4 00:49:54  Thank you so much, guys.

Ashley Mielke  00:49:56  Yeah, you've got it. You've got this, Rachel. We believe in you and you are going to be better for it. I promise you, you will be so much better for it with your business. And you'll be able to take those next steps that you just haven't been able to take. Like this is obviously a barrier. Yeah. And yeah.

Speaker 4 00:50:17  So awesome. Thank you.

Ashley Mielke  00:50:19  You're welcome. There's a question that that I asked myself now and I actually have it right here on a sticky note. It stays on my computer. And you can totally use this when I'm in a challenging situation in my business, or I'm taking a calculated risk and I feel scared. Or in Rachel's case, thank you for being so open and transparent where it's like, we know we have to do this really hard, scary thing. We're avoiding it, but we know we have to do it. I just asked myself, what would the highest version of myself do in this situation? Not the scared version of me.

Ashley Mielke  00:50:51  The part of me that is already in the place where I want to be in my life. What would the highest version of myself do in this situation? Okay, I would take accountability. I would own it. I'd pull myself up, put on my big girl panties, step into courage and do the thing and ask myself, where is the opportunity here? How can I grow? What am I going to learn? How is this going to help me elevate my standards as a business owner, as a person, as a mother, as a whatever, right? So hopefully that can be just a little extra tool for you with whatever it is that you're navigating right now in your business or your personal life. What would the highest version of myself do in this situation? Not the scared version. The part of me that is already in that place I want to be and go in with that mindset. And I know that we all know this. So I'm speaking to the choir, but sometimes I have to remind myself of what courage looks like courage isn't not being scared, right? It's being scared and doing it anyway.

Ashley Mielke  00:51:56  It's recognizing that I'm scared and I'm going to do it anyway. That's what courage is. Courage doesn't exist without fear, and there's always growth in these scary things that we have to do. There's always growth and learning. So ask yourself, what is the opportunity? And another thing, that my business mentor has shared that I love when I'm like complaining about things. He says pressure is privilege. Be grateful we're in the situation we're in. Be grateful. You know, we're business owners. We're building teams. We're trying to learn how to manage money. Pressure is privilege. Okay, I can do this. This is an opportunity. Sometimes it's just that shifts that can give us that little oomph that we need when we're feeling stuck. so definitely come to my financial mindset group practice boss. So we can talk about all of the key things, the focus, some of the mantras that are really important for our growth as business owners. And yeah, thanks for being here today.

Speaker 4 00:53:04  When you just said that about privilege.

Speaker 4 00:53:06  I will just add, I just read this the other day women could legally own a business in the United States in 1988.

Ashley Mielke  00:53:13  Wow.

Speaker 4 00:53:14  Wild. I mean, wow, it was like it was a congressional act. I mean, women did own businesses prior to that, but they weren't protected. So I do try to remember that as I'm looking through it. Yeah.

Ashley Mielke  00:53:29  Absolutely. Such a great reminder. Yeah. It's amazing. We're all here. We're in this together. We have a great community of of like minded, like hearted therapists who are walking similar journeys. And yeah. And it's a real privilege for me to be a part of this and to learn from you all and to share with you all and, yeah. So thank you for the opportunity.

Speaker 5 00:53:51  I say, I know for me, since I've been kind of like trying to put these all my money into the different plates, just the peace of mind of knowing that at least I know for the next month, while my bills are being paid, they.

Speaker 5 00:54:04  And there's something good in that. You're running a business and you're trying to figure out, I know that, like, I pay everything out and I put the money into the operating expense account and I'm like, and I'm good for the next month. And then I just start working on the money for the following month. And so it just kind of gives that breathing room, as business owners, to know to know that.

Ashley Mielke  00:54:28  I love that. So thank you for sharing. That's so good. So inspiring. Well, thank you all. If you do need anything, you can hit me up in the DMs on circle. If there's anything else that I can support you with in this regard. Otherwise, just wishing you all wonderful rest of your day and week, and I really look forward to seeing you at the next group practice Boss webinar. So take care everyone. Thanks for everything today. We'll see you all soon. Bye.

Joe Sanok 00:55:06  Well, thank you so much for listening to the practice of the Practice podcast today.

Joe Sanok 00:55:10  These trainings are available in our membership communities. Now we're going to be opening up our membership communities more than just when we're opening Level Up week. So if there's one that you are interested in, I would love for you to head on over to practice of the practice. Com forward slash membership where there's more details and you can get notifications when those open up. So if you are in solo practice just getting going, if you are building and sustaining a sustainable solo practice, next level practice is for you. If you are looking to launch a group practice, group practice launch is for you and group practice bosses for all those group practice bosses out there. You know we also couldn't do this show without amazing sponsors like Therapy Notes, therapy notes is the best electronic health records out there. They will help you switch over from your current EHR. they also give you two months for free or just money off if you use promo code Joe at checkout. they are phenomenal. They help with automated billing. it's going to make it easier to outsource your billing.

Joe Sanok 00:56:08  So many reasons to switch to therapy notes. Just head on over to therapy notes.com. Read about it and at checkout just use promo code. Joe, thank you so much for letting me into your ears and into your brain. Have a great day. I'll talk to you soon. Special thanks to the band silence Sexy for that intro music. And this podcast is designed to provide accurate and authoritative information in regard to the subject matter cover. It is given with the understanding that neither the host, the producers, the publishers or guests are rendering legal, accounting, clinical or other professional information. If you want a professional, you should find one.