Ed Gandia explains how to implement quarterly profit distributions in your writing business, inspired by the Profit First system. Instead of letting all revenue sit in one account, you set aside a percentage each quarter to pay yourself, making the business feel more rewarding and sustainable.
Welcome to the High Income Business Writing Podcast, helping you propel your writing business to a whole new level. And now, here's your host, Ed Gandia.
Hey there. Welcome to the High Income Business Writing Podcast. I am your host, Ed Gandia, and this is the podcast for business writers and copywriters who want to earn more and less time doing work they love for better clients. You can find details show notes for this episode@b2b launcher.com episode 200. Those notes include a summary of our discussion as well as links to resources we mentioned during the show. So this episode is a little different and a little shorter than usual. If you've been listening to the show for a while, you know that most of my episodes run about 30 to 45 minutes or so. Many are interviews with practitioners who are doing really cool things, and others are monologues where I personally share an idea or a tip or strategy to help you improve your writing business. But in this episode, I'm just going to share a quick thought with you. And this has been something that I've been doing over the past couple years. It's made a real impactful difference in my business. And this is all about how to make your writing business more fun and rewarding by paying yourself a quarterly profit distribution. So we tend to have, as creative professionals the opposite problem of most entrepreneurs in that when you look at most company founders out there, especially in the early days, the first couple of years of their business, most of them aren't even paying themselves a salary. So they're not taking a salary. They might take a very small draw or small salary in some cases, but they're essentially working 80 hour work weeks, maybe even longer for no pay. They're trying to birth their business, they're trying to get that baby going, and they're putting everything they've got into it. And it's exhausting. When you listen to the stories, it's also inspiring, but it's exhausting. I find that we tend to do the opposite. So because we have a very different kind of business and typically it's just us, whatever cash comes in the door, we take, that's our compensation. And by the way, that's really not the best way of doing it. And we're going to be addressing that in future episodes here. But we're still taking a risk. I really believe, strongly believe, that we are entrepreneurs. If you treat this business like you would if you had a traditional business, if you think of yourself as an entrepreneur, you are going to do better, okay? Everything else being equal you're going to succeed. Your chances of success are much, much higher than if you see yourself as a writer for hire, for example. So that's one quick aside. Very, very important that you think of yourself as an entrepreneur, as a risk taker and talking about risk, you are taking a risk. I mean, that's part of the reason I feel so strongly about it. You are doing something that most of your peers don't have the desire to do in many cases that don't have the courage to do. You went out on your own and you're taking a risk. You could be earning a steady paycheck by being an employee, but you've decided to go out on your own. And I personally believe that that requires or that calls for some kind of reward. So a couple of years ago, I ran into the book Profit first by Mike Michalowicz. It's an absolutely amazing book. I can't recommend it enough. And it changed my thinking about handling business finances and rewarding myself and having better fiscal discipline in my business. Ever since I implemented something that's close to the Profit first methodology, which I basically combined with other things that I was already doing that were working well, I started paying myself a quarterly profit distribution. So here's how it works. Essentially, what you do is you allocate a small percentage of every dollar that comes in the door. Every payment you get from a client, you allocate a small percentage of that into a separate account that you call your profit account in every quarter, what you do is you take out a profit distribution. Now, the recommended amount that Mike Michalowicz talks about or the recommended percentage is 50%. So you basically keep allocating dollars into that account, transferring money, a small percentage of everything that comes in the door. And every quarter, you pay yourself 50% of what? The balance of that account that is not to be plowed back into the business, that is not to be used for anything other than rewarding yourself. Again, you've taken a risk as an entrepreneur to go out on your own, a risk that most people aren't willing to take. This is part of the reward. And I can't tell you how sweet it is to be able to take that and to use it for something that you want. Now what you use it for is completely up to you. What I've decided to do is the two different categories. Essentially every profit distribution I take either goes toward something that I normally wouldn't allow myself to spend money on for whatever reason. There's usually like guilt thing there, or for trips and experiences. So in other words, for fun stuff. So just to give you some examples, last summer I was able to take my family to Yellowstone national park in Wyoming and to the Grand Tetons. This is something that I've dreamt about doing since I was about 22, 23 years old. It's been on my bucket list for a long, long time and for many different reasons, just never made it out there. It's an expensive trip, and profit distributions for my business help pay for a big portion of that trip. There've been some simple things I've wanted. A pair of nice headphones for myself, personal use and business use as well. But I just couldn't justify it to myself. And one time I took a profit distribution and I spent about $150 on a really nice set of headphones. My wife and I will go on a nice fancy dinner. Last profit distribution, I bought myself office furniture. Now you could say, well, wait a minute, that's plowing it back into the business. Yeah, you could look at it that way. But to me, I hadn't bought anything for my office in about 15 years, and I wanted to make my office a really nice place. I finally gave in, realized, you know, I want this to be a comfortable, welcoming environment for me, a place that brings me joy. And I had to be honest with myself and realize that the current setup that I had wasn't bringing me joy. So I decided to buy myself some really nice furniture and basically do a complete remodel here. A total facelift. So did that some things for my kids, because you know what? They don't get to see their dad sometimes, you know, sometimes you have to put in some hours and you have to catch up with certain things. So the way I see it is I wanted to not tell them this is for me not being present, but I wanted them to kind of share in this. So sometimes I'll take them out to dinner. My whole family with profits, bought my youngest a new bike, a really nice new bike. The poor kid had just been riding hand me downs for a long time and decided to go ahead and buy a really nice bike. All straight from business profits. Help my son, my oldest, buy a electric guitar that he wanted. Didn't buy the whole thing, just gave him a check so he could basically complete what he needed. So again, small things sometimes, but small things that mean something to you. You have to ask yourself, what would make that expense, what would make that memorable? What would give me real joy? And start creating a list of things that you would want to spend with those profit distributions. That just takes this to a whole new level. Makes it so much more fun. Now if you're looking for a way to start if you are in a tight spot and you're thinking sounds great Ed, but I'm not there. You know what? Anyone can start small. I can't encourage you enough to start this process today. Start with 1%. Heck, if you have to start with half a percent of everything that's coming in, start with that. It's really about building the habit at first. Something you can start with and build on that. It will make this effort in this business so much better for you. So much more rewarding. So start today. Start small. Start paying yourself a quarterly profit distribution and start taking your business to a whole new level by thinking even more like a real entrepreneur.
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