Episode 164: The Importance of Support with Mike Manning and Shannon Simmons

So here's what mine was. It was when I was 11 years old, I had an Intellivision. You probably too don't even know what that is, do you?

What?

Intellivision? Oh, you know, I don't know. You know what Atari is the old game system.

Yeah, yeah.

Intellivision was the competing game system. Oh, I got that. It was a little bit better, to be quite honest with you. The game I always wanted was called. It wasn't called Frogger. It was called Frog Bog. And you had a little frog and all you would do is you push a button. This frog would jump from one lily pad to the other. And when you push the button in the air, it would shoot its tongue out and. And catch the flying by dots, which were mosquitoes and other insects. Best game ever.

Cool.

Yeah, that was my best gift ever.

What about you, Kelsey?

I don't know what's yours?

So mine I didn't think was the best gift at the time, but my best friend from high school had moved to Georgia. We dated for a little bit. It didn't work. We just realized we were better off as friends. But for my birthday, he sent me a build a bear. And he recorded his voice in it. And he has since passed. So now I have his voice whenever I need to hear it or just like it's just a personal message that he said to me and I like to play it every time I miss him. And it's my most valuable gift, I think.

Wow, that's. That's beautiful. And my condolences. That's. I didn't. Had no idea.

That's okay.

Okay. What about you, Kels?

You're trapped.

You're trapped. Now from the lamest gift ever for me to the most amazing gift ever. You're screwed now. You cannot win.

Sorry.

Anything nice? I would say. My nanny gave me one of her old rings.

Oh my God.

She gave each of us like I have two sisters. So she gave each of us one of her rings and so that we would have something always to think of her with.

Okay. Sweet. That's beautiful. So you two did amazing gifts. I did a lame one. Listener. We want to know your best gifts ever too. Put in the comments. And Christina, that's right.

You are listening to the Profit first podcast, episode 164. Oh, listen to. Listen to that music.

It's better. It's not blowing our ears out.

That's awesome. But having been working, that was perfect. Welcome everyone to the Profit first podcast. I am Christina Bulduk, your co host.

And I'm Mike Michalowicz, the other co host guy and the author of Profit First.

What's that?

I don't know. I don't know. And I got a new book coming out. We just picked the title. I can't share what it is anymore. Penguin approved it last night.

Love it.

And I'm joined in the studio by the co host to the co host, Kelsey Ayers.

Hey, everybody.

And you, my friends, you're listening to the Profit first podcast. This is a show where we explore every single element of profitability. And today, today we're talking about someone who's implemented Profit first and then said, not working. Dropped it and then said, ah, this really isn't working and went back to it.

Oh, I can't wait to hear the story.

Sounds like my ex girlfriend.

Oh, wow.

I'm jumping you. I love you. I hate you.

Well, you can find us on itunes, Stitcher, Tunein radio, Google Play, and of course pr.profit first podcast.com.

Yep. And make sure you go to prop first podcast.com because we have our biggest hits there.

Yeah.

And I got brand new website. Cool. Do you remember this? Do you remember the sound?

Yes.

Did you hear that? Did you hear that? So that was Ruby Tan. That was Ruby Tan. I came up with a rapper name. I don't know if you all know that, of course. So Christine is a professional opera singer. You own your own business. You own a jewelry manufacturing business. I'm like, what do I do? And I'm like, I am. I'm a rapper inside. I'm a rapper. So I came up with my rapper name. Probably the most confrontational, most intense rapper name you've ever heard. Fat Daddy Fatback. That's my name. And it's intimidating. It's intimidating.

It is, it is.

It's because I'm Fat Daddy Fatback. I'm a big fan. I'm a big fan of Fatback, which is bacon.

Okay.

Of course you know that. Did you not know that?

I was thinking of back fat.

Oh, like. Oh, like Muffin Top. That's called Muffin Top. No. Oh, you're funny. No, Fatback is big Bacon. Bacon. I'm a big bacon fan. So Fat Daddy Fatback. Everyone called me that ever since I've been growing up. So there's a website out there. Fat Daddy Fatback now called Fat Daddy Fatback.

Ruby Tan, she started. She started the trend.

Ruby Tan, Daddy Fatback. Yeah, that's me. So my. My rapper names Fat Daddy Fatback. And I said, I'm going to come out with my Website. So now if you go to Fat Daddy Fatback, the two of you have to do this later. Go to fatdaddyfatback.com. it's out there.

It's a big old picture.

Your wraps on there, too.

Yeah. And the best part? Yeah. My 10 greatest hits are on there. You can click them all.

Are you eating bacon?

No. Better. Better. Remember the sites from, like, the early 90s, right, when websites were coming out, they'd have that one graphic of someone, like a flame, but they have it 10 times over, so the flame all moves at the same time. I have the exact same thing, but not with flames. With dancers, it is.

Wait, are you the dance.

You have to go to the website and find out. It is so mini mics, funny. And I'm wearing my bling. I got my tats on. Oh, you gotta go to Fat Dad.

Cool.

Wait, what are your tats?

It's on my knuckles. It says Fat Dad.

That's my name, Fat Dad. Do you only have three fingers?

No, but you can't put Fat Daddy. It would be like, three fingers on one side, and the other one would have to go to my sixth finger.

Oh. Cause you have that.

I don't. That's the problem. So I just went with Fat Daddy.

And I have it. I'm missing one.

I know. She's missing a finger.

So we have a shout out. I'm just gonna mull.

Right.

We have a shout out that I think you should share.

Yes. So this is probably my favorite shout out of all time. Ajax, Gross song. Is it gross on you think, Groshong? Yeah. Sorry. So, Ajax Groschong. Our youngest listener ever. So, Ajax, if you're listening right now, we know you're. I think he's 3. He's a toddler, so he's 2, 3, 4 years old. We don't know his exact age. He didn't want to report that. He felt a little uncomfortable. He loves our music. So, Ajax, thanks for listening to our show. Your mom says you're awesome, and this is for you.

That's right, Ajax, give it another one.

Love having you on the show. That's right. That's for you. So thanks for being a listener, and thanks for all the moms out there who let their toddlers listen to this crap.

Yeah, I'm sorry, but if you have a shout out that you want to give to us or to, you know, make known to the world, call our hotline, 844-876-7221. Record your 22nd profit first testimonial. We want to hear from you.

Boo. Yeah. Yeah. Shout out how you made your business profitable. All right, before we kick in today's show, I do want to thank our corporate partners who make the show a reality. You know we got a new one.

Yeah, yeah, we did.

Oh, do I supposed to talk about that?

That's for next next week.

That's for next week. So we have a brand new one who we're gonna announce next starting next week. It's so getting so complex. Is this. Is this gonna broadcast before ProfitCon?

Yes.

Yeah.

Okay, so ProfitCon is coming up September 27th. 28th. 29th December. This is airing 9th September 4th. Yeah, listen, if you don't have your tickets to ProfitCon now, this is designed for ABCs, accountants, bookkeepers and coaches. So if you fall in that category, get your ticket now. It is going to be an amazing event. We just got all the amazing giveaways.

I'm so excited.

There's one thing that Christina's like, I want like 10 of those.

Can I win them?

What?

Can I win them?

You can have. No, you'll get a few.

I win it.

You're getting it. But Christina is, like, jacked about this thing. I'm not going to share what it is. There's lots of cool stuff going on. We have amazing entertainment. I think every event should have cool breaks with entertainment. We have really cool stuff going on and we're going to teach people how to drive profitability. I think it's the only conference in the world dedicated to profitability. So email Christina, which is with a K K R I S T I n a@profit first professional.com and say, give me a ticket.

I want to hear from you.

Okay. So our corporate sponsors who make that ProfitCon a reality and the show are fund box.

Yes.

Oh, my God.

Love them.

I love them. Do you like them, Ruby Daddy Fatback. That's right. Next. Yeah, she always says that. Who's amazing? They're sending their team over. Fundbox will be there too. And of course, the fabled receipt bank. And we have a couple other people.

We do.

QX will be there.

Hub Doc.

Hub Doc will be there.

That's right.

Oh, my God. And some other surprises too, AKA they didn't send in their check yet, so we can't.

We can't officially make a statement, so.

We can't say anything. Okay. Oh, one last thing before we get into the content. Here is I do want to remind our listeners I teamed up with American Express. This show is called Turning Points. It subsequently has won you know what it is, Kelsey? What have we won?

Yeah. The Grammys.

The Grammys.

The Emmys.

Emmys.

And the Tonys.

The Oscars.

And the Oscars.

And first ever, we're up for country music hit of the year.

Oh, really?

Did you forget?

Yeah, Fat daddy, Fatback. Featured.

That's right. A lot of people don't know my diversity. So this show, it's a podcast. I mean, how many. Listen, you can scour the Internet for every podcast you can find. How many podcasts have won all that acclaim?

Breaking boundaries?

None. Well, one has. It's called Turning Points, by the way, because. So hop on your favorite podcatcher and. And type in Turning Points. And you gotta listen to that show. I did a six series episode or. Yeah, six episode series. Yes, six episode series. Yeah. When you win so many awards, it gets confusing. Listen to it.

Stuff in that brain.

Okay, okay. Anyway, anyhow, his name is Mike Manning and. Okay, and Chan Simmons, we got two people. This is the liberal reverse. So let me talk about Mike Manning. Mike is the owner of HC2 gym. It's based out of Florida. He is a certified strength and conditioning coach, a US weightlifting coach, and CrossFit level 2. Now he's a former US Marine. I already thanked Mike for his service and ironically, as we're talking, I said, well, tell me about your career. He said, I was in the Marines. He served upwards of, I think 10 to 12 years there. Decided to go to the Air Force. He joins the Air Force and gets injured there. Oh, no, he's the Marine. He's the front line, no injury. He joins the Air Force and he gets hurt. So he decided to retire from the military, became a professional firefighter. Thank you for your service there too. And then retired from that and moved on to own his gym, HC2 Gym. He's married to his high school sweetheart, Donna, and they live in Satellite Beach, Florida with their three year old Jack Russell named Capone.

Capone.

Allison Capone. It's a female. That's a joke.

It's a good one.

Yeah, hysterical one, actually. And what we're going to learn about Mike's story is Mike implemented profit first. He saw an opportunity, decided to drop it, so I want to know why. And then brought it back. But we have a special second guest with us, Shannon Simmons. She is a profit first, professional, the authority, my friends, in making gyms profitable. She actually turned Mike onto the show when she heard about his story. So we got to get him on. So she's joining in too, to give some insights. Now a Little background on Shannon, two years in public accounting. She saw the need for small businesses gym, specifically that need to become financially healthy and decided to devote her career to that. She maintains a master of accountancy degree from Manchester University. Is that in England? Manchester. We'll find out. She's giggling. She's giggling so now. And she's also a master level Certified Profit First Professional and Certified QuickBooks Pro Advisor. So, Shannon, welcome to the show. And Mike, welcome to the show.

Welcome, guys.

Hello.

Hello.

Hello. So, Mike, we gotta get right into it. You decided that you needed profit first and then you decided you don't need profit first. Tell us the story.

Well, a little bit of background. My wife helps me with the finances for the gym. She does all the paperwork and she has a business finance degree and an accounting degree and she has her own job. And so I would bug her all the time about stuff. And so I started looking around to try to figure out how I could become, you know, a little bit more accounting and, you know, business money oriented to turn this hobby of mine into an actual business. And so I stumbled across profit first and immediately downloaded it on Kindle, read through it, read through it, printed everything out and then realized, oh, I got some work to do. And so I. So I immediately started implementing it. One of my bad habits, I guess, is, you know, buying a book, business book or something like that, and then not doing anything about it. Right. I read it, sounds great. And then next thing you know, six months have gone by and I haven't actually implemented anything. So I went right ahead and did my analysis and then realized, oh, I don't have any profit, but let's see, what can I do? I'm going to put 1% off the top. And I opened up four accounts and then that was going well, you know, a little bit at a time. I just started with 1% across the board and then we had a two or three bad months and my wife, unbeknownst to me, took some of the money out of those accounts and put it into our other accounts. Right. Well, not unbeknownst to me, she has all authority to do it. And then that was the end of that for a while. And then I'm a member of a business group for gym owners and we started talking Shannon. So I don't know the story. I'm sure she'll tell it. I heard about her and a lot of the other gym owners that I'm aligned with were starting to ask questions about profit first. And it caused me to jump back in and Basically start again at scratch. And that was just a few months ago. And then I met Shannon out in Las Vegas, and here we are.

So just tell me a little more about the story where your wife decided we need to take from that profit account. You said you were taking.1% profit. That seems like such a small amount. Why would she pull from that mean that 1%, right?

Well, yeah. Well, I got into quarter one, quarter two, quarter three, and there were several thousand dollars in all. So I had the tax account, profit owner account, and the operating account. Maybe I too much. And we had, you know, just like in the gym business or your personal service business, you know, you have good months and bad months. And so she. She basically went in there, oh, there's money over here. I'm going to use that. And so without really, you know, her being an accountant, when I. When I told her about profit first, she had some cognitive dissonance with it. Right. It doesn't make sense to her degree. You know, it's backwards. You have to pay the bills first, so. So that it was easy for her to just do that. And then I just kind of rolled with it for a while.

Okay.

If that makes sense.

I totally get it. And that's Shannon. I mean, that's pretty typical, isn't it?

Yeah, actually, it's really typical. There's a lot of. I mean, like Mike said, the gyms especially do have slower months. The summer is a prime time for that. And so, yes, we see a lot of slow months and people somewhat wanting to walk away from profit first. You're not alone there, Mike, for sure.

Tell me about this. Like, you know, we have the money saved up. We have a slow time. It seems that when I work with businesses, they often revert to, oh, I can just borrow from this. This money temporarily. I just use it now.

Yeah.

And this isn't just business. I know. In our personal.

Yeah, right. Guilty, guilty.

So, Shannon, have you seen this in businesses, in this. This kind of feeling that they're just borrowing and then they don't pay it back? And if so, what's the fix, in your opinion, to that?

Yep.

I've seen lots of people borrow and say they're gonna pay it back. And I don't know that any of them have all paid it back yet. So it definitely happens. And every conversation I have with them, they still say they're going to wait and put it. They're waiting to pay it back. They're going to still try to pay it back. But what I really recommend, and to me, this is one of the biggest benefits of having an accountability person that you have to go talk to when you want to take money out of those profit or tax accounts. Just somebody that you have to account to and say, this is why I need to do it, and somebody that can hopefully try to talk you out of that or at least talk some sense into you maybe about why you're going to do that and why you set those accounts up in the first place, that they are for profit and tax. And that profit first is really there as an indicator to tell you that if you can't put all that money into profit or tax, that's okay. We need to figure out what's going on and it's okay to dial back those allocations. So, Mike, I don't know. It sounds like maybe you were a couple different quarters into profit first, and hopefully you were allocating more than just 1% into that.

Yeah, I got. Actually got up to where I was. Three, two, one. Owner, profit, tax.

Oh, okay, nice.

Okay, so you were increasing the profit contribution. But, you know, Mike, what I've seen, and I want to know what your feeling is, is that when we have to take money back out of the profit account, at least feel compelled, that a lot of people say, well, profit first doesn't work. The system's broken. It's not us, it's the system. What was your wife and your feeling when you had to take that money out? Was it that profit first is a failed system?

No, no, quite the opposite. You know, I guess what a lot of people. What I might. One of my first questions was, profit first sounds great, but what if you don't have any profit? So. And then as you read into it and look into it, you say, well, the only way to get profit is to make profit. And so it makes perfect sense to me. So when we did withdraw the money, it was. It was because the system didn't work. It was because the art, you know, whether maybe expending too much on the other end or not earning enough on the other end or, you know, whatever the thing, other things that contribute to your bottom line in business weren't happening. And so not because of the system at all, just because of a shortage of money, if that makes sense.

Oh, no, I get it. That's a great response. Because I feel that a lot of people respond saying, well, profit first is not for me. You know, maybe other businesses can do, but my business is unique. And I can't. But I'm hearing is the opposite. You said, well, something's wrong with the business. So you, you brought profit first back. If it didn't work the first go around, why would you bring profit first back?

Well, because I really have to. The other way isn't working. So you know, going month to month, you know, paying all your bills and then seeing what's left over and then realizing looking through my expenses, I have a lot of fluffy things in there, 999amonth here, $150 a month here, 400 over here. And so the reality was profit first makes perfect sense and I should be paying myself first, right in that, in that way. And if the other things aren't working well, my expenses maybe are too high. So I went back in and cut expenses kind of ruthlessly a little bit and which then gave me the, the confidence to go back into actually putting that money, that same money that I was spending into my profit first account.

Give me a sense for a gym. Like what expenses can you cut that were the fluffy expenses in the past?

Well that's the, just like in the military, there's mission creep, right? So you know, you've got. When I first started, we were the only ones around, I could do whatever I wanted. And now that's not the same. And so when you're talking about technology, the, the industry is selling so much stuff to us right now, it's almost irresistible. Software to track your clients, workouts, you know, heart rate monitors in the gym, you know, point of sale systems.

You.

Know, electronic sign up stuff, just all kinds of stuff. Coaching, you know, workouts and stuff that you can, programming that you could buy, online business groups that you can join. So at the end of the day, you know, every day I'm getting bombarded by things to buy that'll help my business and sometimes you get sucked into them. I didn't even, I wasn't even using a hootsuite for the longest time. I was paying $19 a month for hootsuite, not even using it. So if you guys know what hootsuite is, it manages your social media. But yeah, so I just went in and cut expenses and that, that allowed me to go back to profit first, which the only way that I can see, and I've been doing this 10 years, so the only way it started as a hobby, but the only way I could see it as being a business is if I actually use profit first and eke out a profit and then increase that over time.

And how many, how much in expenses were you able to cut? Would you estimate percentage wise? And what's your profit count at now? Percentage?

I probably. I probably cut over 10. And I'm back to three, two, one.

Oh, you got. You got a nice head knock from Kelsey. The old. The old lip came up and they be like the Sherlock Holmes. Yes, yes. You should have had a pipe in your mouth there, Kels.

I look just like Sherlock Holmes.

No, what you can't do with the cape over you right now, just put your hands behind your back and kind of lean forward. So, Mike, okay, so you cut 10% cost, and did that all just translate into your profit account?

Well, no, I mean, with that, I cut 10% and then some things that had to be done, I spent some of that money on. But by cutting that 10, those were all monthly things, right? Recurring expenses, things that I had signed up for that are basically more or less fluff. Useful, probably, but when you need the extra money, they're fluff. So it didn't all go right into the profit first account. I went back to 1, 1, 1 across the board and then increased to 3, 2, 1 in quarter two.

Nice.

So, yeah. So, you know, but then again, I'm back a little bit of creep on the expense side.

Okay.

I actually have my P and L in front of me. I'm going. And my. My transaction reports end up going back to what I still pay for that. I'm getting rid of this.

Okay. Have you become more cognizant of it? Do you feel this go around? You're actually going to start cutting those costs again? Or do you think you might dip back into a profit account?

That. That's a great insight. Because if I could put the number one value on profit first for like a small business owner is whether you implement it or not, whether you're successful with it or not, you know, that's up to you. But what it definitely will do is make you become more cognizant of where your money's going, what you're spending your money on, as opposed to just looking at your, you know, your balance. You're looking to see what's going out and what's coming in. And it made me, like I said, my wife was the accountant. She took all the money. And my. My whole business approach was, hey, honey, how much money do we have? Right. So it got me into the game, and it's much more clear to me now. Exactly. You know, what you need to do. So if anything, it made me a better accounting type, you know, finance type, business owner.

So. Nice. So, hey, Shannon, I mean, you work with countless gyms CrossFit centers. What are the common expenses that you see? Mike was just saying, like, you know, you can get all the software, this training software, the heart monitors. Are there expenses that you see gyms typically expending but not benefiting from? Perhaps the obvious ones that maybe should be reconsidered as an expense and cut?

Yeah, I think Mike hit the nail on the head with those. It really is a lot of just subscriptions that seem really good in the moment that they're purchased and they are beneficial, but they're not being used. They're not gaining the most efficiency from those subscriptions. And then that becomes, like Mike said, fluff. So it is usually it's a lot of $20 to $150 subscriptions that we just really hit that account hard. And look at. Are you really gaining everything that you should from this expense? And if so, great. But if not, can we cut it or can we go get everything that we can from that to really benefit the business?

But, Shannon, don't I lose the competitive advantage if I don't have my heart rate monitors? The guy down the street has it. I'm not as cutting edge as a gym. Am I done? Stick a fork in me or stick a dumbbell on my head? You know, it's more of a gym.

No, I think there's lots of other ways that you can be competitively competitive in the market, and maybe that is one that you can't cut, but there's always another one then that you're not using whatsoever. Like, Mike's fun.

So there's a gym down the street that I go to. Oh, our recorder just stopped cold, so. Oh, there it goes again. That was scary. So there's a gym I go down the street called Retro Workouts or something, and they Retro Fitness. And they. They. Everything's so retro there. But that's their whole angle. They say, you know, we haven't changed since the 70s. Or if they've cleaned the place since the 70s. It feels. And you had to go in, like, wearing your awkwardly short shorts, really, to fit in there. You know, I'm saying, like from the 70s, the Bruce shirt.

You have to. You have to.

No, you have to. Everyone does have.

You get with the tie.

You don't know what you're talking about. You have to wear your 70s, brown, orange, green stripe.

They actually hand them to you at the door.

They do. Bruce Jenner is there or whatever his name is now. But I think, Mike, when you cut these costs, did you find that your gym took On a new personality. Did your members complain and say, what's happening here? What was the response of your customer base and your own thoughts?

None at all. They don't. That's not something they really notice, I think, you know, as an owner, you know, we're always, you know, trying to, how do we get more clients? How do. How do I keep up with the competition? How do I keep up with the technology? But in the end, the people that come to the gym, they just want to get in shape and have a good time and learn something and feel better. And whether you write the workouts on a whiteboard or you put them up on a 50 inch TV with some cool software, you know, they're just as happy for the most part.

I think that's true.

I wonder, Shannon, can you exploit that? If I decide to do the whiteboard, can that actually become an advantage? That perceived weakness becomes an advantage over the competition?

Sure. I think anything can become an advantage. If you market it that way and you really exploit it, like you said, then it can be a personalized workout rather than one that's there for everybody or there's lots of different ways.

That's juicy. I like it. So, Mike, give me some examples of things you did that are kind of working out, which was a cost cutter. The whiteboard is a great example. Do you have any other examples of where you cut costs and it's actually working in your favor?

Well, yeah. For instance, I have gym management software, which. So in the beginning there was none. In 2007, when I started, basically everything was done on paper. So I have gym management software. Then I had workout tracking software where the clients could come in and they see the workout and they could put their results in. And then I had programming software where, you know, these are the workouts that we're going to do for the next six weeks. And I program them all out. So we're a coaching type, Jim. It's not a, you know, do it yourself. So next thing you know, I have three different software systems. And so what I did was I'm in the process of getting back to just one software system that does all of that. And so I got in a little bit early on that. So kind of like the grandfather price or the early adopter price. And so I was able to get rid of some of the other programs that I used and put it all into one. Now, you know, all in one is not as good as the experts at one thing, but it's good enough for me. So I think that really helped Out a lot.

Tell me about the percentages. How did you select those percentages?

Yeah, so just like reading through the book. Right. Not being a finance person, it was pretty simple to me. That was actually the first thing I was like, I can't do this. By this analysis, I don't have enough money for that. But how I stumbled across the 1% was, that's the least amount I can do. Right. And so I kind of dipped my toes in the water with that. And then obviously reading more into it and kind of thinking about it, it became obvious, oh, well, just start here. And then a little bit over time as you feel comfortable. And so that's exactly what I did. And that's kind of my approach anyway.

Okay, so you start off the lowest point and the lowest denominator. You start building your way up, and I assume you start finding what your ceiling is, what your capability is for your business, and that's where you settle in for at least for now.

Right, exactly. And so, you know, all the other stuff still has to go on. Right. I have to decide what software I'm going to use. Like we talked about, what time are my classes going to be, you know, where am I going to spend money on Facebook marketing. And, you know, what kind of things am I going to do to increase our gross revenue so that those other numbers can increase? But it gives me even. The minute you go from not seeing any profit to just cutting some expenses, taking that money and putting it into an account that says profit on it, then now you're profitable. Right. And so, I mean, it's just a mind shift that kind of gives you, like, it keeps it in your face that, hey, I'm a profitable business. I may not be very profitable, but at least I'm not losing money. Or I'm definitely. I have a place, I have a path that I can follow now. And it kind of keeps you in the game.

Yeah. Then you're part of the. I call it the Super 17. Only 17% of businesses, small businesses are profitable. So it's a rarity. Sadly, it's a rarity. And that's what our mission is, to eradicate that so that all businesses are profitable. But, yeah, a small profit is a profit. Most people have a loss. You know, another thing that's a In.

The gym business, I think that's. That's more. The percentage of profitable is probably low in the. In the. The CrossFit or the garage gym type of business. That's not a franchise or a chain. I think the mom and pop Top Gym is probably less than 17% are actually profitable.

Yeah, I believe it. One thing gets me fired up, like, upset is they call an income statement. The alternative name is a profit and loss statement.

Loss is in the title.

I held it back because Ajax is listening. I didn't swear. I didn't swear, but it really upsets me. You're setting the thing saying, well, you may have a profit, you may have a loss. That's like going into relationships saying, you know, maybe we'll date, maybe we won't. Like, no, you either in or you're out. You don't have an. I don't know. That just disappoints me. And now I totally forgot the great question I had. Oh, I guess. Shannon. Shannon. Mike gave us the core accounts. He set up the profit account, tax account. He's paying himself owner's comp. But for Jim's, when you and I are talking offline, you said, you know what, Jim should actually have additional accounts. Can you give me a sense of what you were talking about?

Sure.

There's several different accounts that we always talk about when we're implementing and personalizing profit first for any gym, but some of those. I always think a gym needs an equipment account. You don't know when something's going to go wrong, but you know something's going to go wrong at some point. You're going to have to replace something at some point. And so it's just saving up for that specific expense whenever it happens. And it can be done in tiny little increments. $50 every allocation, but that amount adds up quickly. And then you, like I said, just have that prepared for an emergency. Then there's always the payroll account, sales tax account, if you're having. If you're selling product and have to pay sales tax. And annual expense account is another big one that I really recommend. Mike's talking about CrossFit gyms. They have really high affiliation fees, some of them, and that can hit really hard in one month. And so if you're again, saving for that all year long, you don't feel it in that one month. You feel it all year like you're supposed to, and just smooths out that cash flow. So those are the four that we really hit on. There are definitely others, though.

Hey, Shannon. Also, Mike, between the lines, was talking about Donna, his wife, and said, you know, unbeknownst to him, she took money out. And that's very common. There's this concept of removing temptation. Would you suggest this, you know, right about in the Book is Mike's gym. Could. They could have another account at another bank hidden away. The money gets transferred in there, but they have no ATM access, no online access, no checks. The only way to withdraw money would be by going over there and getting a certified banker's check. And maybe Mike's the only one that can sign for it. Is that too coercive? Is that a good idea? What's your sense, Shannon? First on the practicality of that. Then I want to hear from Mike on the emotional kind of component.

It's totally practical. And I talked about at the beginning having an accountability partner. That kind of makes the bank be an accountability partner, too. I know that I'm always. If I have to run to the bank, that's just an errand that I don't really necessarily want to do. And so I really need to have that money. I really need to need that money before I'm going to run to the bank. So I think that's definitely something we suggest all the time.

Mike, how would that fly with Donna? If you say, hey, you know, I'm going to transfer this money elsewhere, you're not going to know where it is. That doesn't sound like a good move with my wife. What do you think about it?

Well, I mean, you know, if there's other money available, that wouldn't be a problem. The minute there was any kind of financial stress, it would be like, hey, you know, you're looking through the couch cushions, right? So, yes, but we had it set up to, you know, there was no ATM card or anything, but, you know, it's 2017. All it takes is an online check in, close the account. And that's what, you know, that's what she did. She basically, in order to get the money out, she had to close the account. And so there we are. And so let me step further.

Once the account closed, I assume, you know, you got the best in the moment, but it wasn't a miraculous fix. There may have been another challenging financial time where the money wasn't there, of.

Course, and there were absolutely so. And that's what solidified my resolve to go back to it and stick with it. Even like you said, even if it's like Shannon mentioned, even if it's 50 bucks, right. Or, you know, 1%, you know, you could scale those back, but I think the necessity to actually have that and keep it there and then, you know, not rate it when things go wrong, because they're going to go wrong and you're going to have bad months and good Months. But I think if you modulate it to where it's very doable at first. And that's why I went with the 1%. You know, I think I could do that because, you know, I spend money on things, I could cut expenses to always meet that 1%.

So, Mike, I wish you were in our studio right now because the Hawaiian lumberjack, he's one of our guides here. Have you heard that nickname by chance, Mike?

I have.

Okay.

You're famous, Mike.

Get close to the microphone.

What can I say?

Yeah, so he's in here and I'll tell you, I guess it's in the theme of the retro throwback of the 70s. You look like right out of the 70s, unshaven, these glasses that are the size of your head, a Fundera T shirt, mopped up hair.

Yeah, I need a haircut.

Yeah, you decided to.

He should go to Retro Gym.

What was that, Mike?

He should go to Retro Fitness.

Yeah, yeah. With his awkwardly short shorts. What'd you pop in for? You have something to share?

Yes, I do, actually.

Is it is regarding this or is it something you want to share at the end? What is it?

Well, it's something. It's my Hawaiian lumberjack fact.

Okay, so we're hop to that. Then right at the end, finish my. Okay, but if you have a question for Mike too, I want you to ask. So, Mike, before we wrap things up, what's the future look like for your gym? I mean, with profit first, can you grow it, or is this going to restrict your growth? What do you see the future looking like? And how are you going to play it out? Did I stomp you?

Are we still there?

We may have lost Mike. Let me.

I have a question too.

There can only be so many mics in a room at one time.

I know, right?

Can you hear me? Okay, I'm here.

Okay.

Can you hear me?

All right, Mike, you're back. Did you hear my question?

Yeah. Yes, I did. So the future for me, and I think other gym owners too, is, is that in, you know, growing a crowded space, you're gonna have to find your niche and be really good at that and not try to be everything for everybo. And from there, you know, using profit first and paying attention to, you know, where the money's going and having a plan, then you could actually execute that plan instead of, you know, chasing the newest fad. So for me, the future looks like narrow down my focus, my niche, do a little bit better job at marketing, and then stay focused on what the outcome should be. And always have the money in there, you know, a little. At least a little bit, so that I don't. When an emergency happens, I'm prepared for it. So that's the idea.

Bazinga.

Yeah. So, Mike, before, you said at the very beginning of the podcast that you had a bad habit of reading these books and thinking it's a great idea, but not following through in the concept. Have you realized now that you've gone through all this and have started implementing a solid system that your habits have changed in that direction as well?

Yeah, I recognize a lot of fluff a lot quicker, but when I scroll through my. My Kindle account, I'm full, so. And I know I can't do all of that, but, yeah, things that just resonate with me that make perfect sense and are simple. Right. The KISS rule, which profit first is. That's why it drew me back, among other other actual books and stuff. But having the actual wherewithal to implement it and just take the first step and do something. I mean, you could read books all day long. Someday you're going to have to go out and do something about it. So opening an account and putting money in there, I mean, that ultimately was the first step. And that's very sustainable. Especially in my case, if you just do it a little bit at a time and, you know, you just make your mind up that this has to just like brushing your teeth, this has to get done every day.

Awesome. We gotta start wrapping things up. So, Mike, first, I want to give you the opportunity, the floor for the folks listening in, that they need to go to a gym. There's a beautiful one in Florida. I heard of yours. How do people learn more about HC2?

Well, they can find us@hc2gymn.com also on Facebook. I put up articles sometimes about nutrition and fitness and things like that and healthy meals that you can eat on our website. And if you're ever in Florida, we're on the east coast, just south of Cocoa beach, due east of Orlando in Melbourne, Florida. So it's a nice vacation spot. If you're up north in the wintertime, come on down.

You know what's so confusing about this entire episode is Melbourne, I think is in Australia. It's in Florida.

She's like, no.

So, Mike, thanks for coming on the show. It's been a joy. And Shannon, before we let you go, tell us where people can learn more about you and how you help Jims out. Yeah.

So I'm the owner of Netbooks Accounting Services and the website is netbooksaccounting.com okay.

So we'll have both in the show notes. Mike and Shannon, thanks so much for joining us today.

Thank you guys.

Thank you guys.

Oh, and by the way, I got a. I don't know if anyone here has gone to Mike's gym. I snuck in one day and Mike does some of the personal coaching with Jim's. So I actually recorded him. Mike, I don't know if you knew this. When I walked in, you were talking to one of your customers and they were saying, I'm thinking about becoming a member. And here's your response. And the members like, I'm not sure though, should I do it today?

Do it.

Just do it. And they're like, but how much does the membership cost? What's the fee?

Do it.

Just do it. So that was interesting. We caught that on tape.

So I wish you guys could see.

His face right now.

I'm so proud of that audio. All right, you two, thanks again for joining us.

Thank you guys. Bye bye.

Mike is like, what the hell did I sign up for? He's like, probably suing Shannon right now. That was ridiculous. All right, so what we're gonna do in just a minute is we're gonna summarize what we learned. We have a walk in tip from the Hawaiian lumberjack himself. Yes. And we have a. I guess that's basically. But first I do want to thank our corporate partners. Make the show a reality.

Of course.

Who are they? Christina?

Fundbox.

Oh my God. Let me put on the appropriate music for Funbox.

There we go.

So Funbox is a cash flow accelerator. You know, gyms can use this. Anyone can do it. If a client you've appropriately invoiced them, but they're not paying you on time. Cash flow accelerators like Fundbox, Fun Box, quite frankly, the only choice will release the funds to you for that Invoice on the spot 100 so you can have that money today when you need it. Do I bore you?

Do I bore you?

Well, Receipt bank won't bore you. So Receipt. Receipt bank is a. Quite frankly, it's a. It's probably the ultimate productivity tool. You know all those receipts you've piled up that you have in your shoebox, it scans it in. It syncs up with QBO or Xero or any kind of software you have and submits it in there. So you don't need a bookkeeper to do it. You can just do it on your own in seconds. I use it regularly.

Nextiva.

Oh my God. Whoopset. The music didn't play loud. There it is. So Nextiva VoiceOver IP phone system. We just bought another one of those phones for Billy. Oh, I can't say billion. I can say billion because this is in September. September.

The beginning of September, but that's okay.

Oh, but then she starts. She starts next week.

Yeah, yeah, we're fine.

So can I announce it on air?

Yeah, we're gonna announce that Profcon too.

But we will. Oh, I won't say anything.

It's okay.

Now it's totally. There's total confusion here in the studio. I messed up, so I will not say anything. We did buy a phone for Billy. For Billy. For Billy Bob.

For Billy Bob, yeah.

So from Next tv. Next TV is a voiceover IP phone system. It's probably the best out there. No, it's not probably. It is the best out there. Get your Nextiva phone system by going to nextiva.com.

Nice.

All right, Mike, you got the floor. When the Hawaiian lumberjack walks in, people listen. Get on top of that microphone though, okay? And tell us what your tip is.

Can you hear me okay?

Yeah.

Cause this is a good tip.

Oh, God.

So I just want to start off, this is actually appropriate music and it's also appropriate that the guest is from Florida because the. The director of the University of Florida's International Shark attack file. Yes, his name is George Burgess. Burgess. Burgess.

Important information.

Of course.

I need to cite my sources.

Carry on.

I love it.

So I can be fact checked. He says that the Falling coconuts kill 150 people worldwide each year.

Oh, hell no.

15 times the number of deaths attributed to shark attacks.

Oh, hell no. Really? So more people. Yeah, more people die in the Hawaiian lumberjack industry than with shark attacks.

Well, more people die just, you know, walking under coconut trees. Which is why I've dedicated my. My business to cutting down coconut trees, saving lives.

Oh, you're really doing that to prevent coconut? Not for the wood that you're taking or capturing. You're just destroying the environment so no one gets hit by coconut.

You know, palm trees don't provide the best building wood out there.

Oh, I did not do that either.

So you're just destroying them.

So you just destroy them. How many lives do you estimate that you've saved through your coconut tree cutting?

Well, I estimate for every 300 coconut trees I cut down, I'm saving approximately four lives per year.

I love your estimate. Okay, so you must be doing very populated areas where there's millions of people.

You might want to learn about that statistic.

I could see Like a restaurant in Hawaii just moves in. They buy these coconut trees for a thousand dollars each. They plant them so it's beautiful. And there's a large population there. You start panicking and you run in there and you start cutting down their brand new print.

Wouldn't it be more efficient to just kind of knock the coconuts off rather than cutting down the whole tree?

Yeah, but then they grow back. Then the keeps me in business.

Coconuts.

It's kind of a. Yeah, you are. You are killing by earth.

He's killing the earth.

My grandfather actually does live in Florida and he's. There's news in the papers all the time.

Yeah.

Someone, they were just like mowing their lawn and they had a coconut tree on their. On their lawn, and they just died.

The more, you know, there you go. Interesting fact. We got to roll on though, here. So thank you for that public service announcement. We want to do. We want to talk about what you learned today. So Christine, you want to go first?

Okay. I love that there is always an expense that you can cut. No matter what situation you think they're in is there's always something that you can adjust to make better. And also just the mind shift motivator I wrote down, which just taking an account and relabeling it profit completely changes your mindset versus just having it labeled as, like, bank account. It's such a simple move to get you motivated to keep going.

Yeah. Yeah. Kal, what'd you learn today?

So a couple things really warmed my heart. The first, he said when you asked him why he's doing prava first again, he said he has to do it. There's no other way. The other way doesn't work. This is the only option. I love that. It's so true, But I feel like when you don't have exposure to it, you don't even realize it. And the second thing was just like Christina said, the fact that just having account and having some amount of profit in it makes you profitable, and that gives you confidence and momentum to completely change your business operates.

Oh, I love that. The 1%. My takeaways were first the fluff factor. He says he cut 10% of costs, and from what I heard, not a single customer misses it, nor does he. Yeah, and I think we all kind of have that creep he calls that scope creep. Right. From the military mission creep. So that was fascinating. And now it sounds like he's catching himself. The second go around it's starting to happen again. But now he's like, oh, I'm Wise to it because he feels the pressure right away because money's gone to profit. The second thing I learned from him was that just because the system didn't work the first go around, that it doesn't mean the system didn't work. He evaluated himself and said, oh, we weren't following the process to a key.

Right.

Yeah. And then what I learned from Shannon, too, is is a have someone else holding you accountable that can coach you through it. There's other strategies. She was sharing that that Jim's could do. And she also mentioned between the lines, she goes, you know what? All gyms experience this. There's called seasonality. And so everyone wants to get the beach bod in the spring. But then the summer comes, they're like, I don't need to work out now. I'm going on vacation.

Right.

So she goes, there's this natural dip. And I wonder if he could reserve money in another account like a drip or a retainer to prepare for the inevitable.

Right, right.

That was great stuff today. That's right. That was loud.

I love how you said the number one value of profit first, if nothing else, or I should say, upon not a pun. What the hell am I trying to say? Among everything else, it makes you become more cognizant of where you're putting your money, of where you're spending it.

Yes.

That's the number one value that he took away, which I think is fantastic.

Yeah, I love it. All right, we gotta start wrapping things up here.

Wrap it up.

So we're gonna. People learn about us, hear about us. Christina, come on.

Go toProfit First Professionals.com. but first, check out iTunes, radio, Google Play, anywhere else you listen to podcasts and leave us a comment. I love reading all our little comments that we get.

Yeah. Please rate, review, share, and something rhymes with share. Blair Flair, declare care. Share. If you care, you share. If you share, you care. Sharing is caring. Okay, there is one more thing you gotta do. Go to profit first Professionals, as Christina was alluding to. So it's profitfirstprofessionals.com. why do I want you to go there? Well, because you can find a Shannon Simmons. Simmons. Maybe you're in the gym industry. Shannon Simmons does it. John Briggs, another expert in the. In the gym industry. But what about what if you're a knitter in the knitting industry? Knitting supply. We have an expert in that. What if you. You own a dentistry? We have an expert in that. What if. What if you're a own a bicycle shop? We have an expert all these different categories. People that know your industry and how to drive profitability. You just gotta take the first step.

Which is step one.

Go to profit first Professional. Professionals.

Step one.

No step. Now you got step two. Oh, my God. For God's sake, Ruby, let's stop the music. Fat daddy, fat back. Yeah, I know. I hear you, Ruby. Okay, let's try one more time. Step one, go to profit first. Professionals.

Professionals.com.

Yep. Then step two. There we go. Click on find a profit first professional.

Step three.

Yep. Fill out the form. It's real simple. Step four, we'll hook you up.

Up.

We'll hook you up. So that's it. So. Thanks for walking me through that, Kels. Step one through four, it's so simple, it'll probably take you less than 20 seconds. Well, probably take you less than 20 minutes. Less than 20 minutes. Like three minutes. Three minutes. Three minutes. Three minutes. Fill it out. We'll hook you up with a profit first professional who drives profitability in an industry like yours, in a business like yours. And then you're off to the races. Oh, talking about off to the races next week. We got something juicy coming. Dan Kushel will be here. You know what we'll be talking about?

What?

What?

How to create an easy, lucrative and fun business.

Love it.

And he actually has two acronyms. He calls it the ELF Easy, Lucrative and fun. And the half versus half is hard, annoying, lame and frustrating Half elf. So, Bill Nelf, not a half. Yeah, you'll learn all about that next week. Guys, he's got to be here. See you later.

Bye.

Sa.