- Danielle Mulvey | Billie Anne Grigg
- November 07, 2023
We welcome back the ever-popular Billie Anne Grigg, Profit First Professional’s Chief Profit Guide. Together, Danielle and Billie Anne dive into the intriguing world of "above the line" expenses within the Profit First framework.
The episode covers above-the-line expenses, such as materials, subcontractor costs, pass-through expenses, franchise fees, and more.
They also emphasize the importance of understanding your financial numbers and owning allocation day to achieve permanent profitability.
IN THIS EPISODE:
[00:55] - Explanation of "above the line" expenses and real revenue.
[01:47] - Common mistakes made with above-the-line expenses.
[03:27] - Handling W-2 employees and commissions.
[06:16] - The importance of pass-through expenses.
[06:56] - Managing franchise fees.
[07:50] - The role of a deposit account in organizing expenses.
[09:00] - Simplifying allocation day using a spreadsheet.
[12:19] - The freedom and clarity Profit First brings to managing finances.
[14:02] - Success stories of large businesses implementing Profit First.
Above-the-line expenses should be items directly tied to revenue, such as materials, subcontractor costs, pass-through expenses, and franchise fees. These should be deducted from total revenue before determining real revenue.
Profit First simplifies financial management by reducing the need for complex budgets and allowing you to focus on one key number – the total amount available for allocation.
Profit First is not just for small businesses; it's essential for large businesses, especially due to the complexities involved in managing cash flow and expenses. The principles of Profit First can benefit businesses of all sizes.