Shannon Karn Simmons- Profit First Healthy Habits

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Done redirecting. Okay, um, well, Shannon, I appreciate you taking the time to be with me on the day after New Year's. Uh, For you and I, this is a busy time of year where our clients want information really quickly. Just figured for me personally, we took the last week off, so kind of get my muscles flowing again, thinking about business by doing this quick Facebook Live with you. Why don't you tell those who may not be familiar with you just a little bit about your business and the clients you work with and how you got into the fitness space?

Yeah, awesome. So I own Netbooks Accounting Services. We specialize in bookkeeping and Profit First for fitness business owners. So helping fitness business owners implement Profit First, keep more of their money. That's our big thing, helping them keep more of the money that they earn in their business for their personal lifestyle to fund whatever their dreams are, why they started this business. And I would say why I got into fitness businesses, I have a significant number of people in my family who really could use a fitness business, and I have benefited from fitness businesses in my life. And more than my family, society, I feel like, needs more fitness businesses, right? I just think that that's something we're missing in society. But fitness businesses have to be financially healthy to stick around for as long as possible to help those people, and they're struggling. And so that's why. That's why it's just, it's near and dear to my heart to help fitness businesses be better business owners.

Very cool. Yeah. So those of you who don't know, Shannon and I, we are both mastery-level Profit First professionals. That's where we met quite a few years ago at this point. Both of us specialize with fitness gyms. I know you have a great relationship with Mad Lab and stuff they do. And we work a lot with 2Brain and some other business coaches. So, um, we are going to keep this short for you guys because that's how I like my content, short and sweet. The first thing that we wanted to talk about were maybe just if you're considering a change, which most people are at this time of year, um, what are some tips that we can give you when it relates to Profit First? So we're going to look for maybe 3 tips. Shannon can share some tips with us about, uh, If you have never implemented Profit First yet as a gym owner, maybe some tips that she sees will help you have the most success. And then I'll share a few ideas as well.

Yeah, so I think it doesn't really matter if you've heard of Profit First before or not. I think this is true for almost anything in business. Start small. It's true for people in the fitness world, and you guys understand that in the fitness world, and it's true for Profit First too. People hear about it and read it and they want to go whole hog and implement every single piece of it. And I find that they just get hung up really quick on how many bank accounts and how many percentages. And so my first tip would be start small. Get your profit account opened and start depositing 1% of your revenue in that account first. And once you get just a tiny bit of momentum going, then you can start adding in some other accounts. But that would be my first tip. You agree?

Totally. It's funny, especially with gym owners, one of the things I talk about in my book is I feel like they actually have an advantage over other business owners because, I mean, literally in the first book, in Mike's original, he uses fitness and dieting and health as examples to teach his principles. So, I mean, how often has a gym owner seen a client come in like, I'm going to lose 50 pounds and I'm going to track all my food now and I'm never going to eat sugar again and I'm cutting back on all beverages consumption, I'm just going to drink water. It's like, hold on, buddy. What have you done in the past? Maybe let's take an incremental step first before we jump to trying to implement 100 different habits. Before you have maybe a foundational thing set up. So, um, yeah, I think setting up at least the one profit account, let's get in the habit of setting aside the money. For me, I would say another tip I would add is schedule the day in your calendar when you know you're not going to have a conflict so that twice a month you're sitting down to actually look at the money and transfer the 1% of your revenue. For me, I think the bread and butter of the Profit First system is literally taking the time. And I know, you know, we're business owners, we get busy, right? So, so easy to let that get pushed off because like, I'll get to it later. No, you won't. You will not get to it later. Just take the time. And as you set it up, you'll notice like, oh, look, this is actually a lot easier to do twice a month than it is to do Once a year, right?

Yeah, for sure. And confession, I've skipped a time or two and it sucks to catch up later. So definitely schedule that day in and make sure that it's top priority that day, the first thing you do rather than the last thing, because you can run out of time pretty easy. I think my other tip too would be just grab your last month's bank statements, credit card statements, and look for an expense that you can cut. You don't have to go whole hog again and try to cut everything and go back to, you know, operating without a facility and all of that kind of thing. You're not going to do that, right? Like, let's just start small and find those expenses that you can cut. I think people get overwhelmed pretty easily with Oh my God, I have hundreds of expenses on my credit card statement, or they want to look at QuickBooks to figure out what their expenses are. And I find it's easier to just pull out your last month's bank statements, credit card statements, whichever it is, and find your expenses that you're not using that you didn't even know you had most of the time.

Yeah, again, back to the theme of just start small, start somewhere, like do something, take an action, but not crazy. I remember Um, when I got back into fitness after I played sports in high school, tried out for some teams in college, and then life got in the way and I had a lot of extra weight added because life got in the way. And so when I got back into fitness, um, I remember the first workout had pull-ups in it and I couldn't even hang from the bar for 5 seconds. And so the coach was like, okay, that's fine. You know, like I can see you can't do a pull-up. I can see you can't hang. Let's do the ring rows. Let's modify it. And I think modifying so that you're at least taking an action is always going to be the best method. And yeah, so yeah, if you don't— if looking at 12 months of statements seems overwhelming, freaking look at last week. Was there a transaction you had last week that you're like, you know what, I don't think I need that expense anymore? And start there and then keep adding to it. Yeah. What about Any gym owners you've come across who've either tried to implement it or have it kind of implemented, but like, what kind of tips would you have for those people?

Hmm, good question. I think a lot of them are the same. Sometimes it's back to basics, you know, and they again have gotten overwhelmed and set up all the accounts and then didn't schedule time, didn't start allocating 1%, and got out of control for them, right? And then they try to— I don't know about you, but I've seen people who try to go back and catch up on all their allocations.

Yeah.

I'm like, no, screw that. Let's just start where we are. Pretend we didn't really even have it implemented. Great, you have the accounts opened. What do you have sitting in your income account today? Maybe that might be the first step. A lot of people come to us and don't even have their income separated from their operating expenses. They're all still going in the same place. So get your income separated first. And then what do you have in there? And let's just allocate it and not worry about catching up with past allocations.

Yeah, definitely. I wholeheartedly agree a lot. 'Cause if you think about the reason, if someone's running Profit First and then they got behind and missed the allocation or had to use the allocation for operating expenses, The chances of you being able to go back and reallocate that percentage is impossible. The step should be, okay, like I made a commitment to these bills, so I'm going to pay them, but it's affecting my profitability still, which is why I liked Profit First. Okay. I'm not going to try to go back and catch up. Let's just go forward and let me maybe identify what some of those expenses were That caused the— was the cause as to why I couldn't allocate and figure out what you should cut. So yeah, I love that. Um, obviously I think one tip I might add, I know of a book coming out on January 7th in 5 days, Profit First for Microgyms. Um, it's, uh, it's specific to the gym owner. It's how, um, we've kind of tweaked the system so gym owners it works for them. I don't know, you probably see this when you're talking to your clients, they're like, well, I read the book and I kind of like it, but I don't think it'll quite work for me. And you're like, yeah, that's fine. That's why we tweak it. And here's how we're going to tweak it.

Right.

Yeah.

Yeah.

What about—

I have a question for you actually on your book. If people have already read Profit First, I think you just answered that, but why should they read Profit First for Microgems?

Yeah. It's because it is so specific to the gym owner. In fact, if they've read the book, then they're familiar that Mike did a study on a ton of different companies across multiple industries. And he created his Profit First table, basically saying, here are elite businesses and here are the percentages that they are allocating to these different categories. Well, the struggle with that is that construction worker, a hairstylist, the industries, they vary quite a bit. And so, as part of the book, I went in and started looking at financially fit gyms. And so, we redid the table so that the only data in the table are gym owners. So, now gym owners can't use the excuse like, well, those percentages would never work for me. And it's because it's not related to gym. It's like, no, there are real human beings accomplishing these numbers in this fitness industry. That's one of the best benefits. The other one is we did change some of the accounts. I mean, I know you do this as well, like the equipment account. It's not something that the original book talks about, but it's super critical for gym owners to have that account where they're slowly setting aside money every month so that Because the wear and tear is happening every day when your members come in, but you don't necessarily have to pay out. Yeah. So it's specific to gym owners. And I think all the examples, the case studies that we share, the stories, they're all gym owners. So it's just so much more focused and there's no more, well, how do I tweak this to me? Well, it is tweaked to you. That's why the book was written. Yeah. What about roadblocks when you have your clients come in and you have them set up in the system? What are some of the things that get in their way?

Why is it so hard to open bank accounts? I don't know, but so many people have problems just getting to the bank. And, you know, I talk to obviously fitness business owners all the time and I say, don't you wish you could go home with all of your clients and prepare their meals for them, right? And make sure that they're only eating what you Prescribe, right? But you can't do it. Opening bank accounts is the one thing I cannot do for you. Like, everything else I can really help you do. I cannot go to the bank and open a bank account for you. It has to be done with you there or online, whatever. So I feel like that's the biggest thing, um, that really holds a lot of people back. And then you get into partnerships and you have to have multiple people there and all of that fun stuff. But it really is the physical action of opening bank accounts. Isn't that funny?

It's the same. Yeah, totally. I recommend people actually to make that easier. I mean, you and I both had the opportunity to listen to Roger Dooley talk about friction.

Yep.

And the concept is so amazing. I love the concept so much. Like, one way to reduce the friction of setting up bank accounts is just email your local bank, go to the support us on the website, I know you're in front of a computer more than you are than wanting to drive in and say, can you have a bank representative contact me? There are employees that banks hire and their job is to be the client relationship manager. And once you have that person, you just say, I'd like to set up some bank accounts and here's the information on it so that they set up all the paperwork. You just have to— you do have to physically go in and sign. But the process goes from what feels like an hour to 5 minutes. Yeah. Yeah. I think every business owner, even gym owners, you are business owners. You just have a business banking relationship with someone at your bank. Totally.

And I know it can take an hour. You know, it really does feel like it can take an hour and some businesses bank way too far away from their businesses. So it does take an hour. It's totally worth it to have all of those accounts. It's just proven that it works to have the accounts. So view it as an investment of your time rather than an expense of your time. It does pay off in the end to make it work. Go do it.

Totally. And I think, I know a lot of the international Profit First professionals have some problems because some countries have crazy banking rules. And they found online banking. That could be an option too. If you feel like you're just, you just know yourself and going into a bank, just like for me, walking into a grocery store or a clothing store to go shopping is just not me. I'm not going to do that. If you know you're not going to walk into a bank, try an online bank because then they have to do things remote and they have ways to get you to sign papers and send it back to them.

Yeah.

But yeah, it's amazing how Hard that is. And because they don't take the time, all the other stuff that follows, right? I mean, it's super foundational. You have to have the separate accounts set up in order for the system to work.

Yeah.

Otherwise we, we do get some clients who are like, well, I'm tracking it in Excel, so it's fine. Like, oh no, Parkinson's law, man. You are looking at that bank balance and not thinking about what it is actually already committed to. That's why the separate bank accounts are necessary. Cool. So I think last question, because we do want to keep this short. Other than Profit First, because obviously it's the greatest financial tool gym owners can use to be profitable, what other successful habits, financial habits, do you see your clients have that we can share with people listening?

I would say make it a regular practice. To look at your profit and loss statement. Profit First is great for cash flow management. It's the only way to do cash flow management, right? No questions asked there. There are things that show up on your profit and loss statement differently than what you will see it in your bank account. And when you can see a huge percentage of your money going to something that you— it just doesn't add up the same in your operating expense account. You see it on your profit and loss statement as one number going to marketing or one number going to, I don't know, payroll, whatever your big number is, it hits you differently. And then to also be able to see month to month what those numbers are doing, it's priceless. You have to do that just to understand the cash— the financial story.

Yeah.

Not just the cash flow.

Yeah, actually, profit and loss by month is my favorite statement to look at.

Yep.

Because not only does it tell the story, but it also allows you to catch, like, oh, why is— I have, like, 11 months at the same amount, I have 1 month that's different. It helps you find the inconsistencies. Because look, even as an accounting firm, I review our books and I'll look at them like, okay, we inputted that incorrectly. It's going to happen. So you have to have something in process to allow you to review that. For me, I would add to the profit and loss thing and just say, find a couple KPIs, maybe 3 key performance indicators that your GM, or if you're playing the GM role for your gym, is sending you every week, whether that's how many new leads did we get, how many new clients did we sign up, Did we lose any clients? Or what was our average sale price this week? Whatever metric is going to help you hit the goal you're working on, I think looking at that once a week, that really helps the gym owners identify, kind of really puts their goal in a tangible way that they can track it. And just so you guys know, if you've ever looked into key performance indicators, You're allowed to switch them based on the goal that you're working on. You can stop looking at average revenue per member if that doesn't make sense for the current goals you're trying to accomplish, and that's totally fine. So nothing's ever written in stone. You can, you can change and be, be fluid with that.

So maybe the first step there is to know what goals you're working on, right?

Yeah, sure. And with the beginning of the year, it's a good time to think about that, right?

Absolutely.

Yeah. Well, Shannon, I appreciate you taking the time.

Yeah, thanks for having me.

Yeah. And, uh, thanks guys for listening, and hopefully we'll see you around.

Awesome. Thanks, John. Take care. Yep.