Ep 148 Q&A: Instant Assessments with Mike Michalowicz
In this episode, Danielle is joined by Mike Michalowicz, the author of Profit First, as they tackle questions from Mike's email inbox regarding doing your Instant Assessment.
In addition to highlighting the importance of adhering to established profit percentages as a business grows, they provide additional guidance to another business owner to use the Profit First Target Allocation Percentages Chart for financial clarity, and help yet another entrepreneur on how to simplify income and expense categorization.
BONUS: Danielle provides additional valuable insights, emphasizing the significance of sales and providing practical pricing strategies for service-based businesses.
IN THIS EPISODE:
[00:36] Introduction to Episode - Q&A about instant assessments
[00:47] Question 1 - Real revenue calculation for a fitness equipment distributor
[04:10] Question 2 - Owner's comp and adjusting allocation percentages as the business grows
[07:40]Question 3 - Challenges in understanding real revenue for a telehealth business
[15:36] Question 4 - Calculating materials and subs for a plumbing business
[21:27] Question 5 - Allocating expenses for an Airbnb management business
KEY TAKEAWAYS:
For businesses with significant material costs, especially those exceeding 10% of gross revenue, it's crucial to make a real revenue adjustment. Subtracting these costs gives a more accurate picture of the service-based real revenue generated.
As a business grows or experiences changes, adhere to the Target Allocation Percentages Chart, but be open to dynamic adjustments. Working with a Profit First professional helps in recalibrating allocations based on the current business status.
Keep expense categorization simple. Break down costs transparently for customers when necessary, allowing for better communication and potentially higher acceptance of fees. If managing multiple entities, maintain clarity by treating each business separately.
