Build Your Business Podcast Summary
Episode: Profit First for Founders: How to Take Control of Your Finances
Release Date: July 11, 2025

In this insightful episode of the Build Your Business Podcast, hosts Matt Reynolds and Chris Reynolds delve deep into effective financial management strategies for business owners and startup founders. Titled "Profit First for Founders: How to Take Control of Your Finances," the episode explores the transformative "Profit First" methodology, contrasting it with traditional accounting practices and offering practical steps for implementation. Here's a comprehensive summary capturing all key discussions, insights, and conclusions.

1. Introduction and Context

The episode kicks off with Matt and Chris Reynolds sharing personal updates and setting the stage for a continuation of their previous discussion on bootstrapping and maintaining lean operations. They emphasize the critical period of year-end financial planning as businesses prepare for growth in 2025.

2. The Imperative of Financial Management in Business Growth

Matt highlights the non-negotiable necessity for business owners to have a robust handle on their finances, especially during the early stages. He shares his transition from personally managing finances to hiring a VP of Finance/CFO, enabling weekly detailed financial reviews.

Matt Reynolds [03:00]: "First off, you have to have a great handle on your finances of the business. As an owner, this is a complete non-negotiable."

3. Traditional Accounting vs. Profit First

The hosts dissect traditional accounting methods, explaining key financial metrics such as revenue, cost of goods sold (COGS), gross margin, operating expenses (OPEX), EBITDA, and net profit. They critique the reliance on lagging indicators—metrics evaluated after financial periods—which can delay crucial business decisions.

Chris Reynolds [08:40]: "Lagging indicators are things that you measure after the fact... You want to focus on leading indicators."

4. Understanding the Profit First Methodology

Drawing inspiration from Mike Michalowicz's book "Profit First," Matt and Chris introduce the Profit First system as a paradigm shift from traditional accounting. Instead of calculating profit after expenses, Profit First prioritizes allocating profit first, ensuring businesses remain financially healthy from day one.

Matt Reynolds [15:32]: "Profit first says your revenue or your sales minus your profit, which you assign right early on... That's a massive paradigm shift."

5. Practical Implementation of Profit First

a. Setting Up Separate Accounts

The Reynolds brothers advocate for creating multiple bank accounts to streamline financial management. They recommend using modern banking solutions like Mercury to establish sub-accounts for different financial roles.

Chris Reynolds [17:59]: "You want to create physically separate checking accounts for these different roles."

b. Allocating Percentages

They discuss the importance of determining realistic profit percentages. Starting small, such as allocating 1% of revenue to profit, helps businesses acclimate to the Profit First system without overwhelming financial strain.

Matt Reynolds [21:20]: "We are going to start with 1%. Super low number."

c. Reducing Expenses

A significant portion of the discussion focuses on strategically cutting operating expenses to ensure financial stability. Techniques include negotiating with vendors, eliminating unnecessary subscriptions, and optimizing payroll costs.

Chris Reynolds [39:19]: "Try to create a Persona in your own mind that is like, I'm going to wear my CFO hat now."

6. Real-World Application and Personal Experiences

Matt and Chris share their own experiences implementing Profit First, detailing how it helped them transition from a cash-burning state to financial positivity within a quarter. They emphasize the importance of discipline and regular financial reviews to maintain profitability.

Matt Reynolds [35:27]: "We cut about $750,000 out of the budget from 24 to 25 just by making those calls."

7. Benefits of Adopting Profit First

Adopting the Profit First methodology offers multiple advantages:

• Profit Assurance: Ensures businesses remain profitable, preventing cash burn.
• Financial Clarity: Provides a clear picture of financial health through regular monitoring.
• Stress Reduction: Alleviates financial stress by prioritizing profit and managing expenses effectively.
• Opportunity Creation: Accumulating profits allows businesses to seize growth opportunities, such as strategic acquisitions.

Chris Reynolds [62:28]: "This style of financial management inside of your company creates a certain level of calm because you're dealing with the hard stuff as it's coming up."

8. Final Recommendations

The Reynolds brothers urge listeners to take immediate action in implementing Profit First principles. They highlight the critical nature of the year-end period as an ideal time for financial restructuring and emphasize the importance of discipline and consistent financial monitoring.

Matt Reynolds [66:11]: "There is no better time than right now to get on top of your finances."

Notable Quotes with Timestamps

• Matt Reynolds [03:00]: "First off, you have to have a great handle on your finances of the business. As an owner, this is a complete non-negotiable."

• Chris Reynolds [08:40]: "Lagging indicators are things that you measure after the fact... You want to focus on leading indicators."

• Matt Reynolds [15:32]: "Profit first says your revenue or your sales minus your profit, which you assign right early on... That's a massive paradigm shift."

• Chris Reynolds [17:59]: "You want to create physically separate checking accounts for these different roles."

• Matt Reynolds [21:20]: "We are going to start with 1%. Super low number."

• Chris Reynolds [39:19]: "Try to create a Persona in your own mind that is like, I'm going to wear my CFO hat now."

• Matt Reynolds [35:27]: "We cut about $750,000 out of the budget from 24 to 25 just by making those calls."

• Chris Reynolds [62:28]: "This style of financial management inside of your company creates a certain level of calm because you're dealing with the hard stuff as it's coming up."

• Matt Reynolds [66:11]: "There is no better time than right now to get on top of your finances."

Conclusion

In "Profit First for Founders: How to Take Control of Your Finances," Matt and Chris Reynolds provide a compelling case for rethinking traditional accounting practices. By prioritizing profit allocation and maintaining disciplined financial management, entrepreneurs can ensure their businesses not only survive but thrive. This episode serves as a practical guide for founders aiming to transform financial anxiety into business freedom and sustained success.