Episode 70: Loss Aversion and Profitability with Nick Muzzatti

Five point seatbelt on.

Again.

Again. He brings it.

We're back. And you're back listening to Guess what. The Profit first podcast.

And you want to make a big guess. Guess which episode it is. No. Not one. Nope. Not 17. Nope. Not 28. It's episode 70. Yes. The big one. Wow. This is the one we've been waiting for.

I grunted so hard, I'm coughing, man. Wow.

Welcome. I dislodged something in my neck. I dislodged something and I think it was actually part of my body. It wasn't like there was food. And I think part of my neck just topped. I broke my neck. Grunting.

Well, that's a fine welcome for these listeners to the Profit first podcast. I'm Chris Curran. I'm the founder of Fractal Recording.

And I'm Mike Michalowicz, the author of Profit first, joined in studio by my colleague Christina Bola.

Hello. Hello.

And you are listening to the Profit first podcast where we talk about all perspectives of profitability, how to grow your business, and in particular, how to grow the bottom line of your business.

Right? Yeah. I mean, revenue is great, but profit is the bomb.

Oh, I see. Give me the rhymes. You gotta throw dad.

He screwed it up.

Try one more time.

All right, revenue, you better say great.

Because now I'm ready for great. So you have to end on great fate.

Revenue is great, but profit is.

Is fate. Yes.

Oh, boom.

All right, start working on your rhymes for awesome. By the way, our show is available in itunes and Stitcher and on tunein radio as well, and the website Profit first podcast dot com. All of our previous episodes are there. There's been some doozies. Really. Just flip through these man.

Doozies. Here's actually some feedback I have from one of our audience members. Now there's been some doozies. Definitely listen through it. And don't forget, Google Play is coming any day now. They solicited us. They're so pumped about this show, Mr. Google. So, dude, what have you been up to, Mr. Mr. Kern?

You know, we did a vision board workshop recently, and we looked out the window and a bobcat just walked by.

I saw that on Facebook.

I saw the picture, dude.

It like, it looked like a cat, but, like bigger. It wasn't that big. Like 30, 40 pounds. It wasn't like a, you know, a tiger or a lion, but, man, it was so cool.

And when I saw a picture, I never seen one before. They are big. It's less cat and more bob. Oh. You know what I'm saying? It is big.

Yeah, it's pretty big, but. And it's a rare sighting. I asked some people who have lived here in Colorado Springs for their whole lives, and they said they've never seen one. So it was kind of like this blessing. What have you been up to, Mike and Christina.

So do you wanna go first, Christina?

So I have this giant bump on my head.

Oh.

I went to my dad. Pull a skull on top of the other bump? No. So I went to my dad. Dad's is there. My washer's broken in my apartment, so I had to do some laundry over there. And I went to close the garage door, and I was like, I can beat that. And I went to run under it, and it hit the top of my head. So I have this, like, long horizontal ridge on my skull.

Well, you cannot see it. That's hysterical.

Like, extra volume for my.

That was like. You know, they had the Pinterest fails where you see.

Yes, exactly.

Like a Pinterest.

My Funniest Home Videos.

Yeah, like, where you see that movie of Indiana Jones rolling under the closing garage.

I wasn't that slick, unfortunately.

That's awesome.

So for me, as you can see, Christine can see, I'm starting to collect Virginia Tech paraphernalia. Yeah, I might have gone over the top. Now, like, I have a stream of stuff. I just got the sweatshirt. The reason I'm so excited is that's my alma mater. But they hired a new football coach, and there's potential, but merely potential to come back and be reigning champions, or at least authorities in football again. So I'm collecting paraphernalia. Here's the funny thing. When the season starts and we. We fail to achieve any success, I will be destroying all this paraphernalia on video. On video. I get so upset. I'm too vested in their success. Chris. You know what we're talking about today?

I do. Profit.

You nailed it. Well, we're gonna be bringing on a guest. I'll do a full intro in a minute. His name's Nick. Oh, my gosh. I didn't ask. Nick's proper pronunciation. I think it's Mazadi.

You can ask him now.

Yeah. Nick, is it Mosatti?

Yeah. I was waiting for that.

That was dumb of me not to ask. Well, is it Mosatti?

That's right.

Oh, we got it.

Okay, Chris, quickly mute him again. All right, so Nick's not here yet, fans, but Nick Muzatti's gonna be joining us. He is an operator of a business called Carnival Day. We'll talk about in a minute implementing Profit First. They're going through the challenges and also the some early successes with it. So we're gonna explore all that and see what he can do. And I don't know, listener, if you've noticed, we are kind of changing up the format here. Profit First. It used to be all these experts coming in to share perspectives of profitability. We're gonna keep doing that, but we also want to bring in real world entrepreneurs just like you, just like me, who are going through the process of growing a business and the challenges are facing the moment. So we hope you like this perspective. I think it's pretty cool. So we're gonna keep doing it. But before we go into the meat of our show, I want to thank our corporate partners. They keep on stepping up every episode. Christina, do you mind sharing their names real quick?

I absolutely do not mind. It's Fundbox Fund, Dara Tsheets and nextiva.

Yeah, and a big shout out and thank you to them for all their wonderful support. Okay, so. Oh, and the feedback, by the way, the show's coming in. You know what? Shame, honey, it's right there. Christine, if you turn your head, you can look, see that we're going to do it. You don't have to pull it up, but in our huddle, we're going to pull it up. Or maybe for next episode we record. But emails are coming in. Chris, with such regularity now about Profit first and this podcast specifically, that I thought instead of me just leaving my inbox, I start printing them out and putting on the wall. That literally only is what came in this morning.

That's awesome. And it says how we change the world today, which I think is.

Yeah, that's the thing. Yeah. So we have a metrics board in the office here that we meet. We do a daily huddle. Our entire team, there's five of us, stand around the huddle. And it has different things that we're setting out as goals and metrics and KPIs. But one new section I said now says how we change the world today. Because that's our mission. And I thought we'd start now. Pasting these testimonials every day looks awesome, dude.

Guess what? There's a coyote right in my backyard. Like, he's. There's rabbits out there. I think he's hunting rabbit right in my backyard.

Oh, my God. Dude, my wife wants to move out to Colorado. Oh, yeah? Yeah. I mean, not for probably 20 years, but we were just talking about that yesterday. Anyway, dude, that's awesome. But here's one thing that's more awesome.

Yeah.

His name is Nick Muzatti. He is the operator of an entertainment rental business in Rockville, Maryland. It's called Carnival Today. Carnival Day Today. Because it may change it. They're. They're looking at changing the name. I wonder if a lawsuit came in from Carnival. The cruise line?

The cruise line. I don't know.

Well, we're gonna explore the journey that Nick has had. They've gone from an inflatable rental business into serving backyard parties and so forth to other types of entertainment, and it's just expanded. What's so fascinating is Nick is not an owner in this business. He operates the business. He's the guy who's running the show over there. So I thought his perspective on profit first and what they're doing there would be radically different. Nick, it's with our absolute honor and pleasure to invite you to the show. Welcome aboard.

Hey, Nick.

Yeah.

Hi. Hi. Thank you so much, guys, for having me. I really appreciate it. I'm good.

Yeah, Good. Hey, Ben, why is a guy like you, the guy who runs the business, so cared about how much the owners are going to take home? At the end of the day, that's what profit is.

That's a good point. And what it comes down to is a couple of things. The first being that being an entrepreneur, I think, is more of a mindset than an actual explanation of what you do. You don't have to be an owner to be an entrepreneur. And so I have that entrepreneurial spirit. And then the other part is loyalty. And the owner of the business took a chance on me many years ago, believe that I could take this small side business of his and turn it into something. And so I want to give back and give him a profit. And there's always. And also an opportunity for me to benefit from that as well.

I always thought that if someone has the entrepreneurial spirit in them, I mean, that's the dream of all business owners, to get someone working in the business that has that same entrepreneurial thirst. And that inevitably, that means you are an entrepreneur and may go out on your own to start your own business. Is that something you see for your future?

Absolutely. And we had that discussion right up front. You know, we. He saw it in me. He believed in it and helped me develop it. He's a mentor. And so I was, you know, out of respect, I came back early on and said, you know, I'm going to want to own something of my own one day, and it may Be this business or, you know, it may. Regardless, I want to build a sellable business, whether it's to me or to someone else. And, you know, he benefits from that. So it's a. It's a mutually beneficial relationship. And a lot of it has to do with just being honest from the get go.

Yeah. I love the candor you had with each other. That seems pretty remarkable. Tell us about the history of this business and particularly your involvement.

So I actually started working in this business when I was about 19 years old. I'm 30 now, just doing events, you know, taking moon bounces out to people's houses on the weekends and earning some money that way. And I worked my way into being the warehouse manager and had a good relationship with the owner. But eventually I wanted to move on. I thought I was going to kind of just chasing the money. And after that, I got tired of working. I spent about five years working at a desk, and it just wasn't fulfilling. I had started a family, so I wanted to do something, and I proposed coming back to this business. And it had kind of fallen off at that point and pretty much almost been dissolved completely. There was really no one leading it. The owner had another business that he was operating, so took a. Took the leap and came back. And I've been there for three years. And we started again as backyard inflatable rentals, school carnivals, you know, not really big carnivals. Some people mistake it for that, but. And we've grown into doing all types of different things now. And we're at a. We're at a crossroads now.

Oh, well, we're going to. Oh, you just said the buzzword. I don't know where my buzz button is here. That's typically the sound of a. Of the crossroads. But before we explore. Before we explore that, tell me your kind of positioning this business. You're back. Are you. You don't have equity, but do you have a percentage of success? Like, how's that work?

We have tried. We have tried a lot of different things, some of them more successful than others. You know, when I came back, I had a family at this point, and we. He took a chance, and I started with a good salary that could support my family. So there was a lot of hard work involved there to kind of build my value. And then we wanted to try out. We tried out a commission in combination with that, and that was fairly successful. But it's really hard to track costs. I'll get to that later. But then we tried a little bit of profit sharing, and that Seemed even better. Except that the reason I'm on your podcast now, there was no profit, so.

But now profit's a moving definition. Right? So if, if say, say you and I work together, but I own the business 100%, you get commission. It's to my interest. It sounds like to actually reduce profitability, just take as a owner's pay and therefore you wouldn't get a percentage of it. Plus there's maybe some tax benefits. Is that what you're suggesting maybe happening? Or is this just the business is hurting?

No. So to put it in perspective, they're the owners pay. And this is part of what interests me so much about Profit first is I essentially take what would be all of the owners pay as a salary, percentage wise. And. But there's no. So there's no profit beyond. I'm, I'm absorbing any, you know, potential profits because I'm taking pretty much the bulk of a business owner. So according to, you know, the profit first numbers, owners pay.

Yeah. Does the other. The owner, the actual equity owner, what's his or her name First?

His name's Bob.

Bob. Of course.

Yeah.

We're talking about Bob Cat. Yeah, yeah. And I have this whole thing.

He's a whole lot of Bob. He's, he's a whole.

Okay, okay, okay. I.

Through and through.

Okay. I have a new book coming out called Serge and there's a whole section I dedicate to the name Bob. So I'll explain that at some future point.

Fantastic.

Yeah, yeah. So does Bob have any active participation in the business? Does he deliver the goods, the products, anything?

That's a good question. No, that's. I operate the business pretty much through and through, except for a few things. We have an accountant that handles all the books. Okay.

He.

It started with more involvement, but as I built my network and my connections and my customers, it developed more into a mentor, coach relationship where he would step in and say. And redirect me if he thought I was going down the wrong path. And it's helpful because it's basically someone who has made all the mistakes, guiding you through saying, you don't have to make this mistake again or I already did that. At the same time, I've been allowed to make so many mistakes which I think are necessary to grow as an entrepreneur, business owner. So it's worked out very well.

Very well, except for potentially the profitability. So let's start exploring. Let's start exploring those numbers. Could you share with us the actual kind of revenue, the size of the business is it just You. Is there how many employees you have?

Sure. So I've been there for three years now. Just over three years, maybe three and a half. And in the first year that I came back, we did a hundred thousand in revenue. In the second year we did 200,000. And in the third year we did 425,000. And actually, so it's been almost four years. Calendar years. In the last year we did 550,000. Just it.

Wow, that's from the top line. That is really solid growth, especially for an early stage.

Yeah.

How's the bottom line feeling?

There are. There are so many variables that come into play because this business, he, he. Bob has another business that is his main business, which is a. I don't know how much I can put out there, but it's a before and after school, daycare provider and summer camp. So this started and now maybe this makes a little more sense. This business started as something to provide. Basically he was buying up, you know, games and inflatables and things for his daycares and summer camps. And then it tied into a rental business. So there's so many variables that go into the bottom line. But in growing, we had to get a warehouse, we got a truck, we got, you know, we pay more employees.

We.

You essentially have to pay these guys pretty well because it can be a tough job moving around, moon bounces and things like that. So the expenses have just been rising and rising and it seems like we. The cash flow is. It's. As you can see, Mike, I'm. This is the part that's been very difficult for us. Yeah. You know, improving the bottom line.

Yeah, yeah, yeah. It's interesting. So I hear your business growing, but the fixed costs, what they call fixed costs, you know, there's like the warehouse that. That a fixed cost is something that there has some degree of permanence to it. And it's a recurring cost. Meaning I assume that warehouse, you have to pay whatever it is, $1,000 a month every single month, if you have a good month or bad.

Right, right, right. And the main thing that we think happened over the last few years is we spent money as if we were this larger, more established company that the Bob owns. Because we didn't have the mindset of a small business just starting out again. He's been in business for 25 years. So we made some decisions that, you know, like a brand new truck or maybe a warehouse that was much larger than we needed. So it's. Whereas now I'm looking back saying, man, I could have just bought a used truck or not spent money here, things like that. So I think we're. We've grown past, you know, some of those past mistakes, and hopefully we won't make them again. But treating this business, what, like what it is, a very small, growing, rapidly growing business.

Yeah. Do you still have that big brand new truck? Maybe it's a couple years old now, but do you still have that truck?

Well, no, it's. It's still very brand new, about six months old. So. Okay, still have that.

So I want to start going into your questions because I want to help you. Gross business. But one thing I want to share with you, because I think this is important to our audience too, is that once we possess something, there is a behavioral response. I'm big into behavioral stuff. I'm studying a lot. Christina's. I'm working on a new book. There's a behavioral response called loss aversion. Have you heard this before, Christina?

No, I haven't.

Loss aversion is once we possess something like my Virginia Tech paraphernalia, we become much more link to it, and we will do take extraordinary action to prevent the loss of it. So before I owned my Virginia Tech mug. I care less it's at a store someone else may buy. If that breaks, what do I care? But the second it's my possession now, I'll go to extraordinary measures to keep it.

Oh, sounds like me with my clothes in my closet.

Right, Exactly. But. And we'll go to a logical means now to keep it, which often means a justification. So. Nick, I'm not suggesting. Well, actually, I am suggesting. I'm not stating for fact that you're experiencing this, but one bold decision, I would argue, is to sell off that truck. Get rid of it. And. And now here's the reason not to do it. You know, the. The. How much is depreciated already? We'd lose so much money on that. We made the decision. That's final. But what we're telling ourselves is that a wrong decision is acceptable. And I don't know enough about your business yet, but you're already kind of indicated. Why do we buy this brand new truck if we keep it? We are saying that that decision was acceptable as opposed to making the bold decision. I hope Bob's listening to this. The bold decision to say we made a mistake. We're gonna man up to it. I get it. We're gonna sell this truck, we're gonna take the loss, but now we're get that clunker down the street. And clean up as best we can to put this business in the right position. It's loss aversion, our mind game that prevents us, prevents us from going back and rewinding to where we should be.

Weird.

Yeah. I don't know. What do you think? Does that resonate with you?

Yeah, absolutely. There's, there's quite a bit of that. It actually, I believe it just comes down to habits. We've developed these really poor habits in the last three years of spending. You know, that's some of what I wanted to talk to you about. And yeah, you know, modes of spending, things like credit cards. We've just developed some really poor habits and it's, it's a matter of reversing those or, you know, just trying to change them a little bit at a time. But a bold move would be to sell that truck. And you know, losing the money would, would hurt. But I'm not opposed to it. Yeah.

And, and I was not losing. You're, you, you'd actually save money. Right. So you'd lose money in the short term, but you're, you're better habit and you, it would avail money to buy a cheapo truck. So, so tell me about the spending habits. I want to hear about what you're doing and, and what your question is.

So basically I, early on I wasn't spending much, but when I was given the company credit card and roughly a budget every month, it just seemed that I was, you know, kind of maxing out that budget everywhere I turned. I felt like I needed this thing or that thing or this widget or this thing to for example, a product might be a photo booth and, and I need to add this piece to it and the it. So it seemed like I had no control over it. There was no, I wasn't really keeping track of it except at the end of the month when I'd have to reconcile the credit card statement. So one of my feelings is. And you know, when I read profit first or actually I listened to it. I know you mentioned Dave Ramsey and I enjoy his stuff as well. And I was thinking, should I even be using a credit card in business or should we try and work to do all this from our main business checking account?

Great question. A couple thoughts for you. We run into this thing called opm, which stands for other people's money. And it's easy to spend because there is no loss aversion. Right. So if I get a credit card and use it, it's not my money I'm using. I'm using A third party's money, so we don't feel that pain. As opposed to, if I pull the cash out of my pocket, which is my money there, I feel loss, aversion. I'm less likely to spend it. So. And Dave Ramsey is an authority on the kind of personal use of funds. But this applies to business, too, and I give you a little technique. We actually want to invoke things that cause pain when we spend, to really put thought into it. You see, when we use other people's money and spend it, we don't have to put much thought into it. Who cares? It's Bob's money, or it's the credit card's money, or the pain is deferred. So what I do, I call it the 5% rule. Anything I'm purchasing, I must first put 5% out of my. Literally, my own personal pocket. I'm making a business purchase. Say it's a $100 purchase. I have to pull five bucks out at the store, pay for it, give them cash, and say, put the rest on the credit card. That causes a pain reflex. Even though it's a nominal amount of money, I have to put some money into this, and I really, truly reconsider it. So when you're buying that truck, can you imagine, I don't know, say it's a $50,000 truck. That means you personally out of your pocket, your family's money. You got to take 2,500 bucks and put it down. Now it's like, oh, yeah, thank you. And I'm saying, you don't get this money back, you will get the money back. By running a profitable business, you're getting a percentage of the owner's pay. But if you take the 5% personal responsibility, the pain will become very acute, and it brings logic to our decisions. So a little kind of behavioral technique.

And that speaks to a good point about my position. It's. You mentioned spending Bob's money, not being the owner. It's been hard to get that perspective of feeling that pain of spend. I'm spending my own money. So. So that's. That's another kind of difficult thing if you are not the business owner. But in my position, I do care about profitability, but I don't have that same pain that you would feel from spending the money yourself. I'm spending the owner's money.

So congratulations, you are human. Like, that's my. One of my favorite lines. That's so normal. It's so normal. And I think the key is not to try to make ourselves Feel a way we don't feel you aren't the owner. But if you associate doing that little trick I told you put a pain into purchases, it will change your perspective. The other thing is it sounds like how you have it structured. You do get a percentage of the profits you just take out as a pay as opposed to a year end or a quarterly distribution.

Yeah, I would say the way I saw it was it looked like I was taking the owner's pay percentage wise of revenues. Now as the revenues have grown, I wouldn't say we did 550 last year. Well, there's still a ceiling on. I would say when we were at about between 3 and 400, I was right in line with what the profit first percentages of owners pay would be.

Gotcha.

Yeah.

And then as you grew bigger, that started to drop.

Well, it's more that it stays the same. And it's not as if that grew with the size of revenue. Beyond that, maybe there would have been a percentage of profit that could have come available to me. But there is no profit. Even at 550, we're just not showing a profit.

Let's look at your profit first structure. So I understand with your business profit first in the book, I say you have the five accounts, an income account and your four core accounts. Some people do a modified or a smaller version. What's your setup like at your business?

Well, that's, that's what I'm currently working on is I proposed profit first to our accountant a few months back and she seemed excited about it. I said, you know, this is not, it's not revolutionary or new. Sorry Mike, but it's a great.

Son of a bitch. Now, now I got push this button for. Okay, so I hear you, but you're.

Right system, it's a great system. So I proposed it. But I'll tell you who's not on board yet is Bob.

Why is Bob's on board? He's not making any money.

Well, he has, you know, he's run a profitable business and he believes in his system, which isn't wrong. He comes out from a good perspective, which is you can't take money until everybody else and every. Well, everything else is paid. It's nothing, you know, wrong. It's just. How do I put this? I'm sorry? The other business has become profitable using that system. This one doesn't. We seem to be spending all the money that comes in. And so I wanted to try a new system. So we haven't implemented it yet. Right now, you know, just like any business, the money comes in and goes out through one main checking account. There would be like a side savings account, but that, that's just for you know, sales tax and things like that.

And I wonder for Bob, who maybe is listening and I wonder if this is just a side hobby and not a commitment. And I'm bet you and I wonder if his skin's not in the game, meaning he doesn't, if it doesn't succeed, that it won't affect him negatively. Is that, well, fair?

Well, I, I think it's my job to or I take it upon myself to one prove my own. There's a little bit of self preservation that I have value and worth at this business. So by making it profitable I can continue to grow with it. But it goes in and out. His other business demands a lot of his time. So when he's not able to focus on this one, you know, it can go in and out of, of his attention, but it's understandably so. The other business is quite a bit larger and it demands a lot of his time. So that's why I've taken it upon myself to act as the owner or the entrepreneur because I do want to see this business grow and be profitable.

Here's what I would do in your circumstance. I call it lower the bar. This is a term I borrowed or actually was coined by Dan and Chip Heath. They wrote a book called Decisive and what they Found in Human Nature that if we take smaller steps toward a goal as opposed to a giant leap to achieve the goal, we're more successful in the smaller steps. I would suggest going to Bob and saying, listen, I want this business to be profitable because I'm selfishly interested in the health and success of this business. Plus it's appropriate reward for you. Do you agree that we commit to making this business profitable? I assume he says yes, maybe no. And if he says no, that's a revealing answer, right? But if he says yes, then I say here's my plan I'm going to implement. We're going to start allocating 1% of revenues starting today to our profit every single day. And you set up account called profit. And as revenue comes in, you start allocating that money to profit. Likewise with your pay, you start allocating a predetermined percentage. What's going to happen is a business just from the, the pieces of overhead you shared, staff, warehouse, brand new truck, it's going to instantly put pressure. You're not going to have enough money, I suspect to pay all those bills and that's the first kind of slap in the face and a hard conversation with Bob saying, now that we've committed to being profitable, we're finding ways that we're not profitable and have to make the hard big boy decision of getting rid of certain things. There's, there's two ways to get profitable ones. Cut costs. Second is to increase margin. That's the only two ways. So that truck is gotta go.

Yeah.

To me it's this bad mojo. I wish, I wish you could see the office we're working out of right now. Our company, revenue wise, is larger than your company at this stage. And I'm not saying that for anything just to give you comparison. We're working in a basement with five of us. You can probably hear Ron in the background. It's noisy, it's packed up and, and the game has become, can we get to double our level and still be in this space? And it's uncomfortable and gross. But man, there's great stories coming out of this. So the other little thing here is to associate success and happiness, to get more emotional thrill and out of conservation of capital as opposed to the expenditure to be more excited about the money you save than the money you spend. And when I hear a new truck, because I've been there, I'm thinking, okay, perhaps you, but definitely Bob. But maybe both of you are more excited about the perception of spending and what it looks like in your business of growth as opposed to the thrill of saving.

Sure. Yeah, I could see that for sure. Yeah.

So, okay, so what do you think about that first step? Does that make sense? And by the way, we have an accountability component. We will get you back on the show and we will check in on you.

Good, good.

In the whole world, like there's like literally a million people listening to this. Oh, that's a little. Maybe 500, but whatever. Somewhere between a million and 500 people are going to hear this. Is it fair to set up that profit account within a week of today and get that going or at least have that conversation with Bob?

Absolutely. And there's. There's no reason not to. It's really hard to make an argument why not to. And I'm basically going to ask him. I've proposed this in the past, but I'm asking him to take a chance on this system and let me implement it because I believe in it. And if I'm operating the business, I believe in this and I believe that it will put the correct pressure on me to make do with what I have at 1% and then hopefully down the line, you know, 3%, 5%, 10%, to put the pressure on me to make do with what I have. It's this, you know, and so I believe in the system, and. And I don't see any reason why we couldn't implement 1% right away. We won't miss it, you know.

Good. Small. Exactly. You won't miss it, but you'll start changing your financial perspective. You know, unfortunately, we got to run. I want to give you one little last piece of advice, because I know you asked off air about selling a business. You know, ultimately, one day, I think there's a vision to sell your company. At least that's what I think you were saying.

Yeah.

There is no more attractive company than a profitable company. So as you set up this habit, when an acquirer is looking at you, they will ask you, what's your profitability? And when you're very profitable compared to your peers, other companies that do the same thing, you become so much more valuable. You. You'll sell for so much more. But if nothing else, you're going to be your own entrepreneur someday in the future. Let's master it right now and then take this to the next business.

Absolutely. Thank you. I really appreciate it.

Hey, I appreciate your courage for coming on and sharing the real numbers. Hey, Nick, if people want to learn more about you and people learn more about Nick, and for God's sake, use his product. He needs the money. Nick, where can they find out more about Carnival day?

Well, I just wanted to say I hope that some of my story is helpful to other people in my position or young entrepreneurs. So seriously, just connect with me. That's how I built this business so far. Just connect with me. I'm Nick Arnivalday.com it's okay. Flood the email inbox. I'll do my best. But Also, we're@carnivalday.com and we'll be doing a rebranding soon. And also Twitter and Instagram, carnivaldaymd. You can see some really fun stuff. We do.

Wonderful. Nick, thank you so much for coming on the show.

Absolutely. Thank you so much, guys.

Thanks, Nick.

Absolutely. Thanks, Chris.

So.

Wow.

Yeah. Christine, what do you think about that?

Wow. I just. I don't. I've learned stuff about myself.

Right, because your father's in the same industry. Not within Flails, but when he said photo booth, I was like, that's what your dad's doing. All right, we got to talk a lot about the summaries, but first, I want to thank our sponsors for Hosting partners, corporate partners. Yeah. If I say sponsors, we should put a little electrical, like electrical fly swatter.

Yeah, yeah, yeah.

You know what? Actually we haven't. Hold on.

Oh, God.

Here's the fly swire smackdown. If I say sponsors, just swat me on the hand. Okay?

Take a picture of that, Christina. Thank you.

I will.

Christina, you name two and I'll describe. And I'll name two and you describe them.

Okay? Fundera.

Fundera. Love them. They are a one stop shop for funding any business loan. If you do need legitimately a new truck or a used truck, Fundera. You go on their website, they will seek out funding sources to get that equipment or whatever you need.

How about nextiva?

That's our phone provider. I actually just. You know what? They're sponsoring our Mastery Meetup for our profit first professional members.

They are?

Yeah, they just. It's a wonderful company. They provide voiceover IP phone systems, very high end phone functionality at the cost of a home phone system. And, and there's flexibility too. We have eight where now we're looking to bring on another person. Right. Maybe 10. Everyone. You have a phone at your house and here every employee has one at their house or at the office and they simultaneously ring in all these different functions. That's what nextiva does.

Awesome.

All right, I'm gonna throw you the other two. Fund box.

Fund box. You need money in a pinch because your client hasn't paid. You call them, they'll give you the money up front, and then when you get paid, you send it back to them.

Yeah, yeah. They release those funds to you. That's perfect. Last one's T sheets.

T sheets, time tracking. I don't even know what else to say.

Well, here's one thing. I, I forgot to do payroll. This last pay period, I send an email to you and then you had all the numbers together.

Yeah, they had everything. I just sign in, I clicked two buttons and it was like, here you go.

Yeah.

Awesome.

Yeah. So amazing the flexibility it offers. And then by the way, I found out I have an app, the T sheets app that I could have downloaded. I don't have it. I could have downloaded and just done it myself, which, yeah, I was a little foolish. All right, Chris, I want to hear your takeaways, brother.

Oh, well, I really like the openness and the candor that Nick has with Bob. As far as you know, they've tried different pay structures and, and they're able to talk about these things. That's why I think his, his, his discussion about profit with Bob is Going to go very well. I really think so. That. That's just key. And I. And I almost hope that Nick could own the business. I don't know, maybe. Is that a wrong thing to hope for?

No, no, that's a natural transition. He could buy it from Bob and I'm sure they could work out an equitable deal. Yeah. What'd you learn, Christina?

As soon as he brought up whether a small business or if any business should be using a credit card. I mean, I know most. Most businesses probably do, but you have to have that pain factor that you were talking about, because if you don't, it's so easy to spend money. I know. Especially for me planning events. I know before I worked here, they'd be like, oh, okay, here's your budget. I'm like, awesome. And you just have no problem going to the store, buying whatever you want, but as soon as it affects you personally, you think twice about it.

Yeah. Yeah. You know what blew me away about Nick is. God, I wish I knew him when he was 19 and we could have hired him here. To find an entrepreneur inside an employee is so hard. He really has ownership in this business. And what triggered it to me, the lesson I learned was about loyalty. He said, bob's loyal to me and therefore he's loyal to Bob. I love that, that power of reciprocity. Powerful stuff.

Love it.

All right, man.

Can't wait to hear back the update in maybe three or six months.

Yeah, we do like three month or six months check ins. You know, we got some pressure on him. Let's do a three month check in if you and make sure he's got it going and hopefully have his first profit distribution. Nick, if you're still listening by that point. All right, Chris, we got to start rocking and rolling getting out of here.

We got to head out. But you can find our show on itunes and Stitcher and Tunein Radio, whatever your favorite podcasting app is. We are there. Podcast addict. That's another cool one. And of course, our website, profit first podcast.com. check out all our previous episodes. Binge listen on the weekends, you know, listen while you work out and learn how to become more profitable while you're building up your. Your muscles.

Yeah, you build yourself physically and fiscally all at the same time. Boom. Hey, and you know what? And email us here. Christina does all our show bookings. Christina at Profit First Professionals. We want you on our show. What's your story? We want to help you out.

There you go.

Yeah. And by the way, if you want to Learn more about our organization where Christina and I work. Ron, Jackie, Aaron. We work@profitfirstprofessionals.com.

Yeah.

Boom. And we are on a mission as a company. We are here to eradicate entrepreneurial poverty. We want to fix businesses like Nick. Not just for Nick's sake, but also for all the people that work for him. Everybody. Nick is leading the charge. Now. Here's the thing. We can't do it alone. We are a congregation of accountants and bookkeepers that are spreading the word and advising our clients for free. Of course, we need to be profitable too, on this process. So if you're an accountant or bookkeeper, come to our site and we'd love you to register to help out an entrepreneur. If you are an entrepreneur and you need some financial guidance. Yeah, come on the show. Or if you want really tactful hand holding, go to profitfirstprofessionals.com click on find. We'll hook you up with one of our members.

There you go. Think about that. A business owner or an entrepreneur can. Can start a relationship with an accountant or a bookkeeper who. Whose main focus is to make sure you're profitable.

You know, I feel like stretching is all the way to that terrible bridge that's coming up. I just feel it.

No, let's end it. Let's not.

Yeah, let's get out of here before we kill someone.

If you have questions about podcasting, contact me. Fractal recording dot com. Thanks for listening, everybody. Thanks, Nick. Thanks, Mike. Thanks, Ron. Thanks, Christina.

Thanks.

Thanks the world. And by the way, come to episode 71 next week. Carol Rains will be joining us. You can learn more insights on growing a profitable business.

That's it.

See ya.