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Hey everyone, I'm Brandon Turner, host of the Better Life podcast. And this is episode five of the Seven Figure Business Blueprint. Today, short but critical. We're talking about money and finances and why most businesses like they have no idea what they're actually making and how to fix that. We're talking about how revenue is just vanity and profit is sanity, but cash is reality. And hey, if you want the entire PDF summary of all six episodes of this, I know it's a lot of information, so just DM me the word seven blueprint. The number seven blueprint. No spaces, just seven blueprint and I'll send it over to you over on Instagram, Beardy Brandon. With that said, let's get to the show. All right, so this guy Jake thought he was killing it. 15 grand a month in revenue. His business was growing, money was flowing. He even hired a part time bookkeeper to keep track of the math since he wasn't much of a math guy. And then he got a call from that bookkeeper. Hey Jake, looks like the bank account's down to almost nothing, but I got a few bills that I gotta pay. What do you want me to do? Jake's stomach dropped. His first thought was like, somebody stole from me. But look, after sitting with the bookkeeper and looking at all the numbers, the most painful hour of his week, he realized the simple truth that most entrepreneurs eventually come to, and I've come to many times, revenue is not profit. What Jake saw is that despite 15 grand in revenue last month he made 150 bucks in total. In the words of Napoleon Dynamite, that's like a dollar an hour. What's up everyone? Welcome back to the Seven Figure Business Blueprint series. My name is Brandon Turner. This is pillar number five. Master your business's money. It's shorter than the other videos, but don't skip this one. This is how businesses actually fail. Like this is how I failed with businesses more than once. It's not hard to learn, but it's also really easy to ignore until it is too late. Now if you've been following along, here's where we have been. Pillar number one in this series, make the decision and commit. Pillar number two, choose what to build by solving expensive problems for people with money. Pillar number three, build smart using the Lean Startup method. Pillar number four is master your marketing, sales and funnels so the right people actually can find you. If you haven't watched any of those, go back and watch them links in the description and they're likely all over the screen right now. And today we're, we are talking about the money. And I'm going to tell you something that's going to make a lot of business owners maybe a little uncomfortable. So let's get into it. Here is a dirty secret about entrepreneurship. Most business owners have no idea how much money they're actually making. I mean, they know their revenue. They've got a general sense that money is coming in. But if you ask them exactly how much they're taking home, after expenses, after taxes, after reinvesting money, they get a vague answer or just the wrong number. Number drastically wrong. And this is how people go broke while feeling busy and successful. Revenue is vanity. Profit is sanity, and cash is reality. Revenue is a number that sounds impressive at parties. Profit is the number that tells you if you have a sustainable business or not. Cash is the number that determines whether you can pay your bills. You need to know all three, and you need to know exactly what you're spending on rent, on software, on contractors, supplies, insurance, taxes, and what other expenses your business has. It is easy to bury one's head in the sand. The math is not sexy. The math might not make you feel super fun and happy. The math might tell you you actually don't have a real business. But that's no reason to ignore it. But those are all the reasons to focus on it and now to master it. Now, again, I've made the mistakes of ignoring my finances until it was too late. And one book really changed the game for me. It's called Profit first by Mike Michalowicz, the best book on small business finance I ever read, because it's super easy to read and it's a great system. Let me give you the quick summary of his methods because it'll change how you think about and accounting as well. So traditional accounting says revenue, the money that comes in minus expenses, equals profit. Makes sense, right? The problem is profit comes last and there's never anything left. There's always a new expense. There's always something to invest in. There's always a reason the money disappeared. Profit first. The system just kind of flips that. Revenue minus profit equals expenses. You take your profit first and then you figure out how you're going to run the business on what's left. The method really involves just having separate bank accounts. One for profit that you take right away, take a percentage off the top, one for owners getting paid, one for taxes, one for operating expenses. And every time money comes in, you allocate it immediately into one of those buckets. That forces discipline. You can't find profit at the end because there's always something to spend money on. You got to take the profit first. The small businesses that survive long term are the ones that build this habit from day one. And when you do find you're actually making money, like real money, after all the bills, including taxes have been paid, well then what? Well then the money starts coming in. You're going to be tempted to reward yourself. A new car, a nice watch, fancy vacation. Hey, slow down, champ. Rookie mistake. Your business needs fuel to grow. Every dollar you take out is a dollar not being reinvested into better marketing, better systems, better people. So the Lambo can wait. The longer you delay lifestyle inflation, the faster passive income that pays for the lifestyle anyway. And you can have the nice things without it hurting the business. And again, this goes back to the profit first idea. You take money out for profit for the business, and then you also take money out for your owner's payment. So your money is going there and then you go out taxes and then operating expenses and you pay everything. And if you can't pay everything on operating expenses, then you have no business taking a salary and spending any money. You see that? Look, I've seen this kill so many business owners. They start making money, they buy a truck they don't need, they lease an office they don't need, they hire people they don't need, they think they need it and they have the money to spend, quote, unquote, because they have revenue. And suddenly the business that was profitable is now drowning. You see, most businesses run in cycles. You have good months and then you have mediocre months and then you have bad months. Think of it like a wavy line on a graph, right? It's like a roller coaster, up and down. It stalls out, it goes up, up, up, stalls out, down, down, down, it stabilizes, it goes back up again, and so on. And here's a mistake. Business owners set their lifestyle expenses and their business expenses at the peak level, not at the trough, not at the bottom. So they assume when things are good that they're always going to be good. So they base their lifestyle around the always good. But then when revenue drops, the profit gets squeezed out quick. And sometimes the profit's gone. But the expensive car payment, that's not gone. The monthly credit card bill, that's not gone. The high end wine habit, those are harder to shrink. So you struggle and you struggle and eventually you get through with a bunch more credit card debt and soon the business is actually thriving again. So you repeat the cycle again. And spend even more. How quickly we forget. So save more than you think you should for a rainy day. Reinvest much of your profits. Live at the trough line, not at the peak line. And wait for your rewards later. Now let's check in on Jake real quick. If you didn't watch the previous videos in this seven figure business blueprint series or you just don't remember, that's okay, I'm gonna give you a run real quick. But just, I, I basically I'm putting in every one of these videos a lesson of a guy named Jake who's trying to build a seven figure business so he can retire his wife, increase his income, decrease his work hours and raise some kids while getting rich. Now, over the past few videos, Jake went all in and committed to getting his wife out of her job. He picked a business idea garage organization and he made a functioning lean version of the business to start getting real dollars coming in. And then once he had a good product market fit, he scaled up his sales and marketing funnel. So he's bringing in a lot of revenue, 15 grand a month. And he feels like he's just killing it. He's busier than ever. Money's flowing and he's happy. But as I mentioned at the start of the video, Jake was shocked to learn he wasn't killing it. He was making almost nothing for all his hours and all his hard work. Jake found that in the meeting with the bookkeeper, his total income, yeah, was $15,000. And then of course he had dump fees that was like 400. Spent about 400 on gas. Also his truck payment was $650. Insurance was 200 flyers and marketing. I was on our 2500 supplies and equipment, $200 there taxes, which he had been kind of ignoring like most entrepreneurs. $4000, his first employee was 6500. So all in all, his total expenses $14850. So he's netting 150 bucks for the entire month without paying himself anything. That's a complete wake up call. I mean, he's been running a business without understanding the numbers. He felt successful because money was coming in. But money coming in means nothing if more money is going out. So he reads profit first. So he sets up these separate bank accounts. He pays the profit for the company and his owner draw of $3,000 total. And then he has to figure out how to run the business on just 12,000 including taxes. And then he begins to track his expenses every day. So now he can see exactly where every dollar goes. He dials in his funnel. Better. He cuts some of his marketing costs, he raises his price by a little bit, and only one customer complains and they still pay anyway. And at the end of the month, he actually still has money left in the operating account, even though he set aside money for the profit and for his owner salary and the tax money and he paid all the bills. Now he can work towards his goal of personally profiting 10 grand a month. But for that, he'll need to grow the business even more by focusing on higher dollar per hour tasks and buying back his time. That's the focus for the next video, the final video in the series. So that's pillar five. Master your business's money. So revenue. Remember, it's vanity only. Profit, sanity, you should get some. But cash is reality, so use the profit first method. Take profit now, not last. Take it first. Know your numbers. Not the ones in your head, the real ones on paper, on a spreadsheet. Raise your prices if you can, dial in your funnel if you can, and reinvest before you buy all the fun toys. You're not rich yet, buddy. Now we've covered five of the six pillars. You know how to think, you know what to build, you know how to build it, you know how to market it, and you know how to manage the money. There's one pillar left. And honestly, it's the whole point in the final video, Pillar six, we're gonna cover how to buy back your time. I'm gonna show you actually how Jake went from working 40 hours a week in the business, sometimes more, to working 10 hours or less on the business while dramatically increasing income. And you can do the same thing. Let me show you exactly how to start delegating, even if you think you. You can't afford it. And we're going to see where Jake and Maria end up after three years. This is the payoff for the whole series. You don't want to miss it. If you're not yet, please subscribe and follow me at beardybrandon and I'll see you in the finale.