Episode 77: Transitioning From Check-by-Check to Profitability with Keith Fear

Gigi, what's that from?

I have no idea.

GG Hey, I wanted to ask you, Mike, do you play chess?

Oh, I do.

Oh, really? Well, we're gonna talk about how to play chess on this episode of the Profit first podcast.

It's gonna blow your mind. Episode 77. It's here. Yes. Oh, boom. Go.

You know what happened? I left my headphones turned up from before, so the music came in really loud. Man, that's pretty inspiring.

It's. It really is inspiring music.

You just crank it. So welcome, everyone, to the Profit first podcast. What are you gonna say?

Well, I'm just thinking, if anyone wants to buy the download of this to get inspired or acquired, just drop us an email. We'll tell you where we got it. I think it cost us, like, a dollar. So it was. It's like one of those. It's one of those buy the music things.

Yeah, well, we. I think we paid 30, 40 bucks, but. But you can.

Okay, we'll charge you 50.

There you go. But don't steal our theme. This is our theme song, not yours.

It's our theme song. Do not use it for your podcast.

So this is the Profit first podcast. I'm Chris Curran, the founder of Fractal Recording.

And I'm Mike Michalowicz, the author of Profit First. I'm accompanied in studio by my colleague, Christina Bulda.

Hello. Hello.

You are listening to the Profit first podcast. It's the episode where we explore all angles of profitability. Today's no exception. You're going to learn from an entrepreneur who went pre profit first to post profit first in his business and had a radical, explosive growth in profitability. So you can do the same thing in your business.

That's right. Let's try the rhyme game, Mike. Revenue is green, but profit is always.

Seen in your pocket.

Very cool. By the way, our show is in itunes and Stitcher and Tunein Radio and whatever podcatcher you use to listen to podcasts. A website? Have you been there yet? I mean, you got to check out this website. Profit first podcast.com. you can actually comment on any and every episode. And I thought of something cool, Mike. You know how we give our take? Like, on this show, we interview a guest and then. You mean Christina. We give our takeaways what we learned from the guest.

Yeah, yeah.

Each listener should type their. Make a comment on the post. What is your takeaway? Because, trust me, you probably know more than us three.

Yeah, that would be amazing. And, you know, it's the experience when you voice something that you learned it, reaffirms it, and you learn it more, so to speak. It entrenches. So why not do that? Go to profitfirstpodcast.com, go to the episode you're listening to and just type in the one big thing you learned. And if nothing else, it'll kind of embroil it on your mind.

Totally. I need more of this.

Yes. For that. That's right. So you know what we're talking about today? We're gonna have a very special guest on. His name is Keith Fear. And what. What better, more appropriate last name than owning a hot air balloon business? So we're gonna tell you how Keith Fear grew a hot air balloon business and some of the trials and tribulations behind that, and how he's employed profit first to make it a wildly profitable business.

I hope his sales pitch isn't full of hot air.

Ho ho.

He's never heard that one before. Keith, did you just hang up already? He' that was good.

That was good.

Yeah. Have you heard that before, though?

A time or two.

Yeah, yeah. This week.

That every now and then.

Yeah, yeah. Well, hopefully profits are.

How about this one? Embrace fear.

Oh, there you have. My wife gets mad with that one, though.

Sorry.

Oh, that's a good point. Touche. All right, so we're off the tracks. Ready? Let's get back on here. We. I just want to thank our corporate partners who make the show possible. Well, after they hearing this episode, they may cancel, but Fundbox, Fundera, Nextiva and Tsheets are all back to support us. We'll give you more details on who and what they are in just a little bit, but what I want to do first is read instead of Keith's bio. We're going to learn about his story in a little bit. I want to read what inspired this episode. Keith was kind enough to write a typed up letter and mail it here to the office. Keith, I don't know if you know this. We have a daily meeting. It's a morning huddle. Our entire team circles around the first time ever we sat down and I read the entire letter to the team here. And what's significant about it is every meeting we end with a profit cheer. And we, we always regularly discuss our mission. Actually, I can see it right above my desk right now where it's on our metric board and it says we exist to eradicate entrepreneurial poverty. And whenever we get an email in of someone sharing how they're experiencing it, we share it. It's the first time we Got a written two page letter. Not going to read the whole thing. Fans, I'm just gonna read a little bits of it. But here's what Keith said. Mike and team, when I read your book Profit first for the first time, I thought you had lost your mind. No way could this work. So for the last few months of 2014, I did nothing. I kept doing it, doing things the way I was before. Finally, at the beginning of this year, now this is 2016, the beginning of this year, I read the book again and started trying it. I now have three separate accounts, plus my general payments account, plus two other banks. To give you an idea of what this has done for us, at one point early in 2015, our net profit, year over year, from year to date, 2014, 2015 was up 17, 21%. By the way, listeners, I kind of lied to you when I said the beginning of this year wasn't the beginning of 2016, it was the beginning of 2015. He implemented this. He went up on a year to year comparative in profit 1721.4%. He says, Nope, that's not a typo. I am truly not kidding. We ended 2015 with net profit up 335%. 335% overall. On top of that, we ran about 22% net profit percentage. That's massive. But this is my favorite part. The side effect of focusing on the right thing is that we actually increased our sales in the process. Shocking, he says. See, it's all caps there. Shocking how that works. The funny part of that is, though we've increased gross profit, we've also increased profitability and profit itself. Yeah, that's how this system works. When you focus on profit, you reverse engineer your way to get there and you maximize your revenue also. Well, Keith, it's an absolute pleasure to have you on the show and we want to learn all about the story. Welcome, welcome.

Thank you. Great to be here.

Yeah. Hey. What? You know, how often do you write a letter to an author or someone like this? I was just floored to get this. I rarely get written letters.

Never done it before. First time.

And now after this, now that you got forced to be put on the show, you'll probably never do it again.

You know what if somebody, if somebody else has that kind of a profound impact on our business, why not?

Oh, well, I appreciate it. I appreciate it. And I want you to know how profound of an impact has on me. Your words inspired me, inspires me, and I promise to keep delivering everything I can to support you. So now tell us a little about your business. How did you get started in the hot air balloon business?

So, 26, 27 years ago, long time ago, I actually dated a girl whose sister dated a pilot. And I made a joke someday that someday that person would teach me how to fly. And he invited me for a ride the next day. And I took my first flight and I was hooked. About a year later, I had my private pilot's license. And about a year after that I had my commercial license. And obviously marriage and kids and everything came along in that time frame. In about 2005, I'd been flying rides for other folks and I, I looked at what they were doing. I also had about 30 years of business experience in IT and in technology. And I basically figured out that what these guys were doing was great from a ballooning perspective, but not great for, from a business perspective. So I, I decided I could do it better and went out and started Balloons over the Rainbow. And our first year, we flew 90 people and I think we did about $50,000 in revenue and we flew almost 6,000 last year. So, wow, six. Quite an people.

All right. So we're going to have to learn how you got there. What were the other folks getting wrong? You said you notice that the other ballooners weren't getting it right in some regard. What were they getting wrong?

Well, they had the ballooning side of it, right. They were, they were obviously taking good, safe care of their passengers. That wasn't an issue. It was the business side. They weren't managing their, their revenue so that when money came in, they set aside money for equipment so they could replace it as it, as it aged out or as, you know, hours warranted. They were, they were just great pilots. They just weren't business owners and they didn't run their teams effectively and they didn't manage their resources effectively. So that's the part of it. I figured out pretty quickly that I could do better. And obviously we, I mean, we did great, but we ran into the same trap that, that a lot of businesses do. You know, you got to have more revenue, grow the revenue, grow the revenue. The bottom line will come along if you just grow the revenue. And that's. It's not true. It's just not.

Is it a capital intensive business?

It's extremely capital intensive. The balloons we fly that we use for passenger rides, they typically carry between 10 and 12 passengers and they can be $100,000 a piece of.

Oh, my gosh.

Yeah, it's very capital intensive. So it's Something you're going to just get into at the spur of the moment.

Yeah. So how did you afford your first balloon or two?

Well, I did the same thing everybody else does. I smart. I started with smaller balloons and worked my way up, but then I borrowed money to buy them. You know, it's, it's when you're, when you're profitable. And we've never not been profitable. We've just never until recently been as profitable as we should be. But when you're profitable, you know, especially prior to the economy tanking, all the banks would loan you money. So they were happy to loan us money to go buy equipment and we were happy to take advantage of it.

Now you're saying you were profitable Always. But you know, people have their own definition of profit means. Does profit mean you were making a reasonable or better income for the line of work you were doing or were you sacrificing yourself?

Oh, I was absolutely sacrificing myself. Profit at that point to me meant that I was basically at the end of the year, if I looked at a P L, I had a little bit of profit left below the bottom line. Okay, you know, maybe 8 to 10% net. But I managed, I didn't manage cash flow. And it was, you know, there were months where you're biting your fingernails off wondering if you're going to make payroll, but you're still showing a profit on paper.

Yeah, that's, that's the crazy thing. It's common and it's, it's crazy because you see on the, the paper you're doing well, but the money's not come in yet.

Right.

So, but, but also sounds like you were sacrificing yourself. So you had, you replaced your income at, to the point you had a professional career before that in it. Were you making that kind of money as you were growing this business?

No, I was still working a full time job in it and doing this.

Oh, how long did you do that for? To what, you.

I'm still doing that. Actually I quit doing that about four years ago, five years ago and flew full time until about three years ago. And then a friend of mine kind of twisted my arm and got me back into it for a while and I'm still doing that. But that's not going to be able to continue for very long.

Well, I assume, and maybe, maybe it's not appropriate to share numbers. I always love to get the numbers to give our audience a sense. You said you did 50,000 the first year with 60 rides. Can you give us a Sense of the revenue figures. Is that fair to ask for this when you did the 6,000 rides?

We're north of a million dollars a year in revenue.

Wow. And you can still run a million dollar business and have a full time it job?

Yes. Now I'll tell you though, what really makes that possible is the team. I have probably the best bunch of pilots in the industry working for me. I have the best crew working for me. I have the best office staff. You know, everything we do is geared towards making sure that experience the customer has is, you know, making memories that last them a lifetime. And you only do that if you surround yourself with the best people. So that's what we do.

Okay. Yeah. And so that makes sense. So you so. And I, I have no doubt, you the best team, best crew, best staff, best offices, but all the best. That sounds expensive. I mean, you can't be profitable with all that.

Well, it doesn't have to be expensive. To be honest. We run most of this out of my house. We fly out of locations where, you know, they're public parks, their schools, obviously we have permission or they're even, you know, national monuments. One of the locations we fly is in the. In the Rio Grande Gorge in Taos, New Mexico. So we're actually flying in a national monument. So you don't actually have to rent or buy the real estate or anything to be able to do that, which allows it to be more, obviously, more cost effective.

So, so tell me, right before private first, you sent me this letter. And what blew me away, you said, you know, Mike, I read your book. I thought you'd lost your mind, which kind of sound like my wife a little bit. But you say you thought you lost my mind. You sat on the book for about a year. Why? Why did you even read Profit first in the first place? And then why were you resistant to doing it?

Honestly, I read the Toilet Paper Entrepreneur. I loved it. I read the Pumpkin Plan and I loved it. So next book came out. Got to read that too. And I like the book. I just didn't think, you know, being highly regulated by the FAA and everything that we are, I didn't think it would work for us. But I had fallen into the same trap. And you even talk about it in some of your books. We'd rented a store in St. Louis. We had a storefront. We had all this inventory. We were trying to sell stuff. All our passengers met there for rides. You know, we were burning through cash like crazy keeping that store operating. And, you know, I tried to be conservative and not, you know, not pay for real estate. That was tier one. Well, the disadvantages then, you don't get any walk in traffic.

Right.

So trying to manage that, I was. I was just spending money in areas I shouldn't have been. And when I finally figured out, it just kind of clicked what I had read in the book versus what I was doing and how I was kind of repeating some of the same things that you mentioned that you had done. So then I kind of decided I had to go back and read it again. So that's. That's when I sat down again and said, I got to fix this.

And with. With the excessive spending, at least from when I was doing the same thing, I didn't realize I was doing it during the time. It was only in retrospect, when I finally said, nope, enough's enough, and I started taking my profit first, did I look back and say, ooh, I'm spending money in the wrong spots. Did you notice? Did you. Were you aware that you were spending money ineffectively on this retail space while it was happening? Or was that something you realized at a certain point after the fact?

Yeah, I didn't realize it while I was doing it. I guarantee you don't notice that at the time. But when I started realizing that expenses were way higher than I thought they should have been, and I kind of looked at it at the macro level and then started going back through the book and looking at it micro, that's when it just kind of slapped me in the face. And we started getting rid of a lot of those things. We got rid of the store. That was a huge savings. And we just started redoing everything to get expenses in line with where they needed to be.

So what did things look like the number wise in 2014? This is, this is right before we do profit first, can you give us a sense of maybe some percentages? What was the profitability? How many rides were you doing that year, roughly?

So 2014, we did. We did 3,700 rides, which is still very good. No doubt about it. We did about $600,000 in revenue, 610 in revenue, and then probably about 10% net, 8 to 10% net, which is not bad. There's nothing wrong with that. But at 8 to 10% net profit, you have to manage your cash flow like to the penny. And if you're already spending more than you should, it gets really tough to manage that cash flow that way.

Yeah, because if you do the math, say, say it was even 10%, that represents one month of revenue, roughly. I mean, you know, give or take. So I can see if people hold on to their cash even for, you know, 30 days. You're gonna feel a massive pinch even in that scenario. So, okay, so 2014, I got the numbers. And again, thanks for this candor. This is when we do these shows, the emails I get and this comments are always like, holy cow. Yeah, I'm getting insights. Such a better assessment of their business. Okay, so now I know what happened in 2014. You implement profit first in the beginning of 2015.

Well, November, December of 14, which is kind of our slow season into the beginning of 2015. We took that slow season to start put. To start making all those changes and putting everything into effect to get ready for the busy season.

Okay, so now tell me what 2015 the numbers are like, and then I want to dissect what you did exactly to get there. What were the 2015 numbers?

So 2015 was almost 6,000 passengers. It was just north of a million in revenue and about $210,000 in net profit. So about 22%.

Okay, so now you're talking 21%. So instead of 10%, 21%. So you implemented profit first. I know that was the catalyst to get here, but what were the specific actions you took? You got rid of the store, right? So you cut that expense. What else did you do?

So the other thing we did is we started looking at where we were spending our money, and a lot of it was debt service on equipment. So we stopped doing that. We started setting money aside. You may not remember this, but right after I read it the first time, I emailed you about a capital account and what to do with that. So we actually set up a capital account and started taking a percentage of each passenger's revenue from the flight and putting it aside to buy equipment, which was very difficult to do at the time, but we grew that percentage, just like you would grow a profit account or a distribution account to where it is now. But then we also looked at, like, advertising. Did it work? Are we, you know, are we spending $5000 on this ad and only getting $1500 in revenue out of it? And we found a lot of advertising that just didn't work.

Were you being critical of the advertising pre profit first, or was that kind of invisible to you at that time?

I thought I was being critical of it. But when. When you go back and look at it with an eye towards profitability, you get a very different perspective on whether or not it's working.

That's fascinating. So what was the. What was the advertising that you thought was working, that wasn't? And what was the advertising that was working?

Almost all of what we got rid of was print. You know, we got rid of all the Yellow Pages ads. They never seem to work. They were originally just kind of a cost of doing business. We just assumed you had to have a Yellow Pages ad. We were in, I don't know, 12, 12 different yellow pages at one point. So we got rid of all of those. We got rid of a lot of the magazine ads that we did and newspaper ads because they simply never paid for themselves and invested more heavily in online advertising, which does seem to work better. That seems to pay for itself very well.

And then the biggest thing is your revenue increased. And maybe this parlays right into advertising. But in your letter to me like that, the final paragraph, you're like, this is the most shocking part. You make your business more profitable. As a result, revenue starts skyrocketing. How is that. How can that be?

Well, you know, that's honestly a really good question. I think for us, because we were focusing on the right things, we actually improve the quality of the experience, and we focused more on word of mouth. So we got a lot more people advertising for us than we had to pay for, and we had a lot more referrals than we had ever had before. So we actually ended up with. With more people flying with us at less cost to acquire that customer. So I think that helped on the revenue side and helped control expenses and increase profit.

So here's what, what seems so counterintuitive. You take an action specifically to increase your profit, you start allocating profit first and the quality of the experience improved. That seems so counterintuitive. How can you improve quality service with less money going into the business?

Well, to be honest, in our case, we made some changes internally so that we had the right people focused on the right things. So we weren't. We didn't have folks that were on the phones answering calls for customers whose abilities didn't lie in that area, who weren't very good at it. We had. We have folks on the phones now that are talking to customers that are extremely knowledgeable about our experience, but they're also very good people, people pleasers. So they're. They're helping folks out. And that, you know, from our perspective, from the moment the phone rings the first time, till the time that customer is done and on their way home from the ride, it needs to be seamless. It needs to be just the best quality experience. We can give them. So we've kind of changed who we have in what positions and what they're doing for those customers.

Right. People in the right seats. I love that. What about, what about margins? You know, when it comes to increasing profitability, the obvious thing is cut costs. But you go cut so much before it hurts the business. Were you able to increase margins?

We were. And I guess if anything, what we did was we were able to increase revenue without increasing cost as much. So our costs, actually, our expenses, I should say, went down. The cost to deliver the ride doesn't necessarily go down because that cost is the same, fuel's the same, insurance is the same. None of that really changes. So. And I never, I've never been one that was willing to compromise safety. So we're not going to do anything that we think would, would jeopardize anybody's safety. So that part didn't go down, but it stayed in line with what we were doing before. It, you know, it's, it scaled linearly with the, with the revenue. What we did though, is we increased that revenue without increasing the costs, the expenses associated with it.

Yeah, because they're essentially there, what they call fixed costs, meaning as you get more volume, you don't. You can use the same piece of equipment. So the, the per use cost drops, but the overall cost stays the same. Yeah, that's fascinating. Tell me, what's the future looking like now for Balloons over the Rainbow?

Well, we're in four cities now. We expect to continue to grow substantially. We have some, some plans I can't talk about yet because who knows if they're actually going to happen. But if they happen, we're going to probably quadruple over the next year or two. So it's, it's going to be substantial growth if, if we can make it happen. But we would expect even if that doesn't happen, we're probably going to add one more city this year. And I would expect that either end of this year or maybe middle of 2017 will be debt free and growing like a weed.

Oh, I love death.

In what ways? For your future plans, in what ways are you taking into account profitability? Like, are you, you're planning on being profitable? Of course.

Oh, yeah. So we're continuing to do what we've already done. So we have a capital account that's set aside where, you know, every time a passenger's flown, we put a certain dollar amount in that account. We also have the profit account and the distribution account set aside for this year. We're also adding to that a tax account. I'm an S corp. So my approach, my thought always was, you know, I'm paying the taxes through withholdings on my real job, on my IT job, so I didn't have to worry about that too much. Well, as you can imagine, if you add that much profit which shows up on a, on an S corp shows up, yeah, surprise, surprise. So that's going to have to change for this coming year and we're also going to try and do a lot of that growth without adding staff any more than we have to at least back office staff and without adding, you know, debt or anything else. So everything we do we're paying cash for.

Nice.

We got an email, Chris, from one an entrepreneur out in Germany who, their tax bill came due and they set up the tax account as I prescribe and Profit first. And they said this is the, they had a massive tax bill due and they got so angry about their tax bill and then they looked at their tax account and the exact amount was saved and ready for them and they felt total relief. And it's, it's a, it's a bizarre game. I mean the more profit you make, I'm sorry, it's the law, the government's going to take more. And this is not just in the US this is a worldwide phenomena. But when the company has proactively reserved the funds on your behalf, the damage doesn't come along with it. The emotional damage. And that's my last question for you, Keith. What about your emotional confidence in your business? What about your emotional feelings around profit? How's that changed since you implemented Profit First?

I don't know that the emotion of it has changed much other than to say we're much more conscientious of it. And when we start looking at something new that we want to do or something we want to buy or something we want to do differently, we ask different questions. Is this going to pay for itself? Is it going to. When it's, when is it going to return the capital that we invest in it? And if the answers aren't right, we just don't do it. That simple.

I love it. I love that discipline and that growth. You're, you're looking at one city on the small side to quadrupling your growth. Is that all going to be potentially self funded?

Now that one, if we do that, that may not be able to be self funded. So that's one of the decisions we have to make though is if we want that growth at the risk of Taking on debt to do it. And honestly, we haven't made that decision yet. But if we do it, the paper says that we're able to do it and still maintain our profitability levels the way they are, still maintain our growth the way they are and have that debt paid off very, very quickly. So it may be worth the risk. We just don't know yet.

Beautiful. You know, I think you've achieved the ultimate definition of profit first. People come to me and say, mike, profit first means never have debt. And I say, no, no, that's not what it is. Profit first is eradicating bad debt. When you take a loan on and it's no benefit to your business, that's bad debt. But when you take on debt specifically to facilitate something you define and know is going to be successful, if something's going to bring a bigger return, that's good debt. So I'm thrilled that you're at that level. Keith, I actually got more questions for you, but we're. We're out of time again. Three weeks in a row. Keith, everyone listening? And listen, Head over to Missouri, one of my favorite states besides New Jersey. New Jersey, because I go out there once a quarter. You know, I'm out in Kirkwood every so often drinking a good huge margarita at El Maguay's, which is a great restaurant. Right. Have you been those fishbowl margaritas? There's nothing better.

Yes.

But Keith, when people are out in Missouri or what other states, where can they go to find you physically? What states can they visit you at and where can they find you on the web?

So we have operations in St. Louis, Missouri. We also have them in Albuquerque, New Mexico, Taos, New Mexico, and Cottonwood, Arizona. And on the Internet, the main sites, balloonsovertherainbow.com we also have worldballoon.com pueblo balloon.com and verdevalleyballoons.com in Arizona.

Fantastic. Keith, thanks so much for coming on the show.

Thank you.

Thank you.

Awesome.

Oh, man.

You got your dose.

I got my dose. I got eyes. Love it. Because to me, we're serving a mission here. And Chris, I think I've told you this before, when we formed this company, when we interviewed Christina and Jackie and Aaron and Ron, every person here has gone through a financial challenge ourselves. And it's emotional. I can start feeling it right now. I start talking about it. But every person here, it brings tears sometimes when we start sharing our personal stories. And by the way, when Josh comes, that new guy, we have to have a sit down and share our stories. Probably the most embarrassing moments. But we'll share our stories. And he's experienced financial difficulties. And you know, we exist as a business to eradicate entrepreneurial poverty. And when I hear a story like Keith's and then we get a letter like this, it's like we are living our purpose. We are serving these people. We are. Yeah. And Keith, right. And Keith is serving like, listen, you're listening to the story. Your business. You. You may have gone what Keith has gone through and trying to work a part time job and do this. And you're working. You can do it. You can do it. He did it. I hope he inspired you. Totally inspired me.

It's about me for sure.

Yeah.

So we're going to talk about our takeaways after.

After this word from our sponsor. So nextiva is a voiceover IP phone system. They're a wonderful group of people. They are trying to change the space in the phone arenas. That's simply the way they're doing it. But they're good people that are trying to help small businesses get ahead. They're trying to give you a tool that makes you as competitive as a big business, but a small business price. That's why these guys exist. I know them personally. I've been to their offices multiple times. I played tennis against the owner and he kicked my ass. I actually had to get a trophy. I sent him a trophy, but he's a sponsor so I kind of let him know. I didn't let him. He kicked my ass. I tried so hard. He kicked my ass. That's what nextiva is Fundera. Good people. I met with the owner, I've met with Meredith is who we meet with most often. They want to serve small business in getting ahead. And when you need a loan for your business, like Keith is looking at where you've defined something that will move your business forward. You know, it'll work. You just need to get access to money to facilitate that growth. That's when you go to Fundera and they'll shop it for you. Fundbox. We know Rachel over there, but David Tolkien's a kind of our regular guy actually have a new person now we're working with too. But David's gonna be coming out to visit with us again. Wonderful people.

Great.

What do they do if you have invoices that are due to you and you're having a cash flow issue, kind of like Keith was talking about in his story, they release the funds to you. They finance that invoice basically. And then when the funds come in, that's when you repay the monies to Fundbox and then T sheets wonderful people again. And party animals, by the way. Those folks can party. Every event I've gone to that, they're there, they're hosting a party, and everyone's flocking to it. But that's not their core business, secondary business. Their core business is time tracking software. And they do it for a good purpose. Entrepreneurs overpay on time typically, and it's usually due to an honest mistake. People don't track their time effectively. It's on paper. What did I do? There's confusion, there's miscalculations, and they. They found about 10% of payrolls overpaid by entrepreneurs that that money could be in your. Your bottom line. And then the business struggles and then the business collapses and everyone's out of business. So Matt Rissel over there started the business specifically to address that problem he had in his own business. He's helping businesses become more profitable and people be treated fairly.

Thank you.

Love it. And I think Obi Ron Kenobi, who is one of your all star team members, I think it's his personal job to verify often that the quality of parties that T sheets throws are of the utmost, utmost.

He ensures that. He's like, I will be back. He goes, if you see me anytime before 3:00am in the morning, it's a failed party.

Such an animal.

Yeah, he is now. I. I've only once in my life seen Obi Ron not be able to handle it. I outlasted him. We were in New Orleans, tishi. It was TC's party.

Oh, I think I remember that.

And he's like, I'm done. It was like 10 o' clock at night. He's like, I'm done. I'm like, dude, there's the party now. The networking happens now. This is when we got to be there. He's like, I'm done. He goes, I give you the force, Mike. Just go with it. And so I had to go, but I felt the force cover me. So I went and networked for about three hours, came back to Snoring Ron.

Well, you know, even Superman needs to take a nap sometimes.

Yeah, that's true. That's true. So, Christina, why don't you start us out? What was your takeaway for today?

I think one of my favorite things that Keith said was after he started implementing profit first, he says that everything that we do, we pay cash for. And that hit home with me. That's something that my grandfather actually taught me when I was little. And he would say, christina, if you don't have the money, the cash in your pocket, you can't buy it. And that discipline is important. Even if you're implementing profit first, wait until your quarterly distribution. Set yourself a goal instead of spending it right now. Because if you just spend it like it's burning a hole in your pocket, it'll be gone before you know it.

Yeah, wait. Wait until you have it.

Yep.

Yeah, that's exactly the way to do it. What I liked was the right people doing the right thing. You know, it's. It's a shame. So many businesses have the right people doing the wrong thing, and then they think they're the wrong people. That's not usually the case. Usually you have the right people, but they're on the wrong part of the business, and that's where it's not working. You got to adjust. And we've done that here, too. It's like, what don't you like doing? What do you like doing? If you can move people to what they're naturally talented and like doing, inevitably they excel. So I love that he did that. And that's a profit principle. Just by shifting people around, the business is more profitably. Why? Because they've people answering the phone that. Who love to answer phones and do customer service. They have raving fans now. They move people over to just committed to the flying of the balloons, make sure it's a safe, fun experience. They have people raving about it and getting repeat business. So shift your people around. What'd you learn, Chris?

I was very inspired by his overall story about basically once he started looking at all aspects of his business in terms of profit, boosting profits, he kind of reorganized everything. He kind of went through the people and reorganized the people. He went through his, you know, marketing and expenses, reorganize them. And that's the present. Well, now it's the past, but he's looking at the present. But. And now he's mentioning the future. He wants to do all this stuff again. He's looking at every little part. How does this fit into profitability? Is he asked the question, if the answer is not right, he's not moving forward. I mean, that is some serious power, right?

Power. Profit first is a manufacturing principle of reverse engineering. Once you start taking profit first. So what that means is Keith was taking 20% or 21% of the money and allocating to profit immediately. Now you have to reverse engineer the steps that will support that. So the question is, how do you run the business even better than you have before with now less money available and you start looking at all the little elements and finding ways to do it. You start shifting people around. It forces smart decisions. Now, how it comes from manufacturing. Manufacturers don't just open the doors and say, hey, let's make something. Let's see what comes out the other side. No, they have a prototype, the end product. They say, this is what we want to make. Now what are the most efficient steps to get this product to this degree of quality over and over again? He reverse engineer profit and look at his business.

And by the way, you don't have to start at 15% of taking profit if you haven't started implementing it and you're scared to or you don't think you have the money. You start at 1%, start at 2%. Build it slowly.

I love it. I love it.

He really loves you, Christina. He really does.

Yeah, she's right. She's right. She's my right brain.

I love you.

All right, so we gotta get rock. Get rock and roll.

Yeah, we gotta roll. So thanks for listening. And by the way, if you have any questions about podcasting, you know who to call. Fractal recording dot com.

Yeah, I was like, who do you call? Yeah, of course you go Practical Recording dot com.

I was gonna say Ghostbusters, but that's an old joke. So.

Yeah, can I give you a quick testimonial? You know, we've done 77 episodes and this show is heralded by so many folks. There's a reason Keith listened to every single episode because, yeah, we like to joke around, like to have fun, because that's my and our true nature. But there's some good stuff that goes on here. But the quality of the shows are just killer. That's a fractal recording does. So I encourage everyone.

That's what inspired our wall of how we changed the world today is because of this podcast. Testimonials in and we get emails and it's kind of a feel good moment. And see, Chris, you inspired our inspiration.

Yeah, we have an inspiration wall because the podcast, you know, it's interesting. You know, I write as, you know, I write books and so forth. I've, knock on wood, been fortunate enough to sell hundreds of thousands of books. Cumulatively, a podcast, this podcast alone has reached more people. It's gotten people more engaged. I got more feedback from the podcast we're doing than the books. And that shows the power of a quality podcast. So thank you, Chris, for that.

That's awesome. And by the way, you can find all the episodes on the website for the show, Profit first podcast dot com. All our previous episodes. If you're one of these maniacs who wants to go mow the lawn and do your gardening for eight hours straight, you can bring your Sony Walkman from 1987 and listen to. Listen to all our episodes.

CD4 in CD for.

Yeah. Oh, the old disc man. But you can't move. You gotta stand like a. Like a tree. Like your hands. A tree limb sticking out. Yeah, yeah. Otherwise.

And Profit First Professionals, Mike, is something that we love to end the show with, Profit First Professionals. Because it's like, we talk all about profit and business and revenue and all this good stuff, but then it's like, all right, if you need help implementing it, what do you do?

Yeah, I mean, could you imagine a scenario that Keith goes to his accountant now and says, hey, look, here's what I'm doing. The property is increasing. The accountant looks at him and goes, I. How do you do that? You're on your own. No, you want now a competent person that can take this to the next level. Now that you've started Profit from first on your own, why not work with an accountant or bookkeeper or business coach that can see your business to this next level? He wants to go to level four. I mean, he wants to go four times his size. This is where a Profit first professional can guide him on this. That's what everyone should be using. They're available and they're ready to work with you. And here's the great thing you need an accountant, a business coach, a bookkeeper. Anyway, why not get a profit advisor, someone that knows how to drive profit in your business. Go to profitfirstprofessionals.com right now. Click on the find button. It's right in the top. It says, find a Profit first professional. Fill out the quick form. We'll hook you up with someone. They can give you a few insights to see if Profit first is ready for you and you're ready for it, and then get you started and then take your business to the levels that Keith's experiencing or even greater.

It's time. It really is time. Boom. Thank you. And by the way, you can also, like I said, comment on the post for this episode with your takeaway from the show. We'd love to hear your takeaway and any questions you may have as well. So thanks for listening, everybody. Thank you, Mike. Thank you, Christina. Thank you, Ob Ron Bros. And thanks, Keith. Great job, brother.

Sister from a different mister. Thanks, brother from another mother.

See you next week, everybody.

Bye, guys.

Peace.

I like that. I heard that sister from another mister once before.

Yeah, that's awesome.

Let's go. It's really woman's a woman, but.