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Nov. 23, 2021

133. How Entrepreneurs & Startups Can Take Profit First with Susanne Mariga

Proven strategy to help business owners make & keep more money in less time.


Proven strategy to help business owners make & keep more money in less time.

 

ABOUT SUSANNE

  • Susanne Mariga left the corporate world of accounting to found her own firm, Mariga CPA PLLC in 2008.
  • She is a Certified Profit First Professional at the Mastery Level and is passionate about helping small business owners and entrepreneurs maximize their revenue and grow their businesses.
  • Susanne is the host of the Profit Talk Podcast and the author of the book, Profit First for Minority Business Enterprises.

 

CONNECT WITH SUSANNE & HER WORK

Profit First for Minority Business Book

The Profit Talk Podcast with Susanne Mariga

 

 

 

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Transcript

Most service based businesses should be and can be profitable from the start, right? Because at the end of the day, profit is intentional, right? When we put in actions that result in profit, like paying ourselves first, taking your money in one account and making sure we find our profit account and our owners account first, right. We're going to be profitable.

 

Welcome, everybody. I'm so excited today to have with us, Susanne Mariga. She is a Profit First professional, an accountant, and she's going to talk to us about how to maximize your profit without working harder. Thanks so much for joining us today. Suzanne, Hi, Wade.

 

I'm so excited to be here with you today.

 

Thank you real quick. A little bit about Suzanne. She left the corporate world of accounting to found her own firm in 2008. She's a certified Profit First professional at the mastery level and is passionate about helping small business owners and entrepreneurs maximize their revenue and grow their businesses. She's the host of the Profit Talk Podfest and author of the book Profit First for Minority Enterprises. So I wonder if you could just start out, share a little bit about what inspired you to move from the corporate world of accounting to start your own business.

 

And then what specifically led to your inspiration to write the book.

 

It's an interesting way. I started my own business when I left the corporate world. I was actually transitioning having a life transition. I was becoming a first time mom. And it was interesting because my career, I had done the big four public accounting firms and was now working in big corporate, and I was actually responsible for the Canadian operations. So I'm down here in Houston. I'm responsible for the Canadian operations. I was flying just about every single week back and forth from Houston to Toronto. And it was interesting because one day I was on the plane and it was this teeny Leania.

 

Compeller jazz, those ones that have the two seats on one side and the one seat on the other. And I was like, oh, my goodness, six months pregnant. I think it was at that point at third trimester where you're not supposed to be on the plane anymore. But nobody ever asked you how pregnant you are. You just get on the plane and it hit me. I could barely get into the seat because I was wide pregnant. I couldn't get the bar down. And it just really helped me that my life was going to change, that I wasn't going to be able to do what I used to do and be able to travel and be gone half of the year.

 

And so I was on maternity leave. I said, what can I do? What can I do? Because I love the world of accounting and tax, and I didn't want to leave it behind. And so hence, Mariega CPA was born. It was born to really create that work life balance between myself be able to be present for my daughter. And as a mom.

 

That'S awesome. I started my business kind of not quite accidentally, but I thought I was going to do a ended up doing B. But it was a spin off at what I had done. And I know a lot of people today want to sometimes make a huge pivot, and sometimes there's some sort of impatience. And I think there's sometimes a lack of pragmatism or practicality or realistic expectations around how quickly you can pivot and how quickly you can make things happen. One of the things I love about anchoring with fundamentals, like making sure you're making a profit is that it provides a safer path.

 

How did your background, even before you got introduced to the profit first work, how did your background help you to start a business? And maybe what are some of the things that you did, perhaps? Well or not so well that entrepreneurs often run into for that person that's listing, let's say that they're wanting to start a sidehustle. They're thinking about leaving. What was that like and what fundamentals kept you on track?

 

My journey. Entrepreneurship was a very Rocky one. That initial start, like many entrepreneurs, I did absolutely what I love to do. I love that world of accounting taxes. People would call me that were supposed to be friends just to ask me tax questions. And I was just so excited I would just talk to them for, like, hours on different tax strategies. And like most entrepreneurs that do absolutely what they love, what I found was I did absolutely what I love. But at the end of the day, I was doing it for free.

 

And the problem is when you love all your prices and you're the least expensive person in town, right? What happens is you end up absolutely doing what you love absolutely for free. And it was interesting because when my daughter was really young, probably about three years into the business, it was a Sunday night, and my husband literally sat me down to the dinner table. And I remember he had Florence, who's my daughter on one leg. And he's like, we need to have a serious talk. And when your spouse weight says you need to have a serious talk, something really bad, it's about to happen, right.

 

And he literally looked at me and he said, you know what he's saying? I think you're going to be better off if you just get Hao B. Now, this absolutely broke my heart, because if you're not just like your listeners entrepreneurs, we will work 80 hours a week just so we don't have to clock in and work 40. Right? Have a boss. He just absolutely broke my heart. And it broke my heart because he was absolutely right. He was absolutely right. You see, at my corporate job, I had a paycheck.

 

I got paid every other week, like clockwork. I was a manager, so only had to work 40 hours a week. I could do something called delegation, right. And frankly, they were giving to my 401K account. Right. So I was boiling up for retirement. And frankly, they still wanted me, right. Corporate America was still calling. We still had the recruiters that were calling because we're in a profession where there's always a demand for accountants. And it absolutely broke my heart because he was absolutely right. And what it did for me is it put me on a journey of really trying to figure out, how do we make this business more profitable?

 

How do I not have to go back to corporate America and get a job? Right. And really, that's where I found the profit first. Methodology by Mike Michalowicz that really pivoted my business significantly.

 

Yeah. I remember one of the coaches I had we were talking and she asked, what are some things that help you feel confident? And this was in Dan Sullivan Strategic Coach program and one of the associate coaches, awesome person, Mary Miller. She was asking, what makes you feel confident as we go around the room? Just about everybody said, Well, cash flow money in the bank, this really simple thing because as entrepreneurs, we have this experience sometimes a feast or famine. And sometimes maybe you've already allocated that money that you haven't made yet, or maybe at least mentally, whether you've spent it or not.

 

You know where it's going. And so there can almost be this sense of not addiction, but almost a sense of like, there's not enough because, well, I could hire more people. And I could scale more usually if we've done any research so aware of what we would do with more money. And it's not that we'd buy ourselves stuff, we'd grow our baby, our business. And I know at times when I've made some of my biggest mistakes, they've not been mistakes of the fundamentals of okay being mean to your clients or not serving your clients.

 

I mean, if anything over serving my clients, like you said, not making sure enough that I needed to pay myself first. But losing sight of again, just something that sounds so boring and making sure you're profitable. Okay. It just seems so commonplace or so boring. And yet at the same time, it can be such a big deal when people are starting their business. Very often they think that if they sacrifice profit or if I Ping my credit card for a certain amount, invest in this course or this program or this just called shortcut, any type of shortcut buying a business that maybe they don't have the money to afford, they haven't put set aside, what would you tell that person that's thinking, okay, I'm going to take a shortcut.

 

And, yeah, it's going to just sacrifice my profit in the short run. But see, you don't understand, Suzanne, in order to get where I need to get to build a business in my dreams, I have to make these shortcuts. We got to take risks, right? What would you tell that person?

 

It's interesting. I was doing a project for a client, and I was doing something I call optimal pricing when you try to find the optimal price. I was looking at her pricing, and she was very adamant about not wanting to go for her prices. She had some government contracts and contracts. You have to do an RFP process. You have to bid. And I was trying to figure out how much can she charge where she makes profit. Right. And it was interesting because she was fighting me on this margin.

 

She was fighting me on this Mark up. And I kept running this through this tool that we have, which is kind of like a goal seek type of formula in Excel. Where you go? Okay. How do we make a profit? What do we need to charge? And I was using her pricing. And every time I ran a number through this whole, I kept getting it cannot compute. It cannot compute. It cannot compute. And then when I realized because she kept telling me, she goes, and you don't understand, I have a volume based business, meaning that the more I sell, I'm going to eventually make a profit.

 

Right? Like that. Maybe that first job I'm going to run a loss. That second, one, third, one fourth one by the 101. I'm going to make a come on. These are million dollar contracts. You're not seeing what I'm saying. And I kept running this home like, okay, so how many millions do we need to make in order to make a profit on this at this point? And finally it hit me because I kept getting these errors on Excel that I can't compete. You know what? You can't make a profit because negative margins plus negative margins just begets more negative margins.

 

It doesn't turn around. And so when entrepreneurs try to shortcut their prices, trying to get that deal right, because they believe they have a volume based business because let's say they're going after those government contracts. It just yields more negative margins. Right. And if you don't have enough margins in your services or your products, one of the things that's going to happen. One of the lessons that I learned in my business, too, was right after that point that my husband said, we need to talk. It was a Saturday morning, and it was very close to April 15.

 

And I was working on a Saturday. And I remember I was doing a free return a favor for a friend at that point. And I remember sitting down and I stood up and my back literally went snap. And that week when I was in bed on muscle relaxers that were prescribed to me and 500 Mg IV program, I remember thinking, oh, my gosh, I really wish I could hire somebody to do these tax returns while I'm in bed and sick this week. But the problem was I couldn't because nobody else soul work for free.

 

And I couldn't hire anybody because there wasn't any margins. So at the end of the day, you're just cutting your ankles and prohibiting your growth by cutting your prices and trying to take a shortcut.

 

Yeah, I think that's the thing. The basics of most businesses. And I now have seen enough Internet businesses to say that again, for most people, there's all the exceptions. But most businesses still take three to five to seven years to build a business, a real business, not something not a pet rock, not something that's a one hit wonder, but something that you can build upon. And then there's still, as we know, so many things that can go wrong as far as staffing recruiting, hiring, pricing, compliance, legal, all these different things.

 

But this idea that I'm going to get there quicker, as opposed to look, you're going to have to put in three years or four years, or at the very least, if you're starting something. And I know a lot of people get caught up on this idea, but wait, I don't want to trade my hours. My hours for dollars. I said, well, okay, so hold on. Let's do a couple of things here. First of all, Leonel Messi, LeBron James trade their hours for dollars. Matthew McConaughey, Jennifer Lopez hours for dollars.

 

They do. Okay, so just because somebody is an employee doesn't mean it's a bad thing if you're getting paid really well to do something you love and everybody's taking care of all the details. That's what we try as entrepreneurs to set up is to have to do what we want to do and set up everything around it. So first of all, that's not necessarily a bad thing. But also if you're making money while you're doing this. So if you are able to do some of your work and still get paid by somebody, and now these days, it's a lot easier than it was 20 years ago to do a side hustler to slowly reduce your hours with an employer and then start your own business.

 

There's so many more things you can do. And yet going back to those pricing strategies, it's just basic thing. I just think of the couple that has one child and they're not happy. We'll have two and then they'll play with each other and they'll be happier. We have three or four. Like, look, children can be awesome, but having more children does not make your life easier. And if your first real estate property is losing money, buying another one is not going to make you more money unless you're doing something fundamentally different.

 

Tell me if you don't mind sharing a little bit about you. And I were talking about this idea of when you have a business, you have some sort of intention as far as when it's going to become profitable. How it's going to become profitable when you look back at the fundamentals or what you've learned in the profit first system or what you've seen in businesses, what are realistic expectations for somebody? So let's say somebody starting a consulting, a billable business, whether it's accounting or coaching or whatever it might be.

 

Let's say they're making almost many case type. Let's say the person is used to making 50,000 a year. And you've probably heard this concept. I was making 50,000 a year, but now I'm going to make $50 an hour. And so now I'm going to make 100,000 because 2000 hours times 50 is 100, and you're fine. We both know this because you don't get the bill for 2000 hours. Maybe you'll get to bill for 800. If you're really good, which puts you at 40,000, then you have your expenses.

 

How can a person starter what's a realistic way for them to start to even have an idea?

 

It's interesting. And it really depends on the type of business. Right. Because certain businesses have more capital infusion they have to have that seed money to get started. Like a manufacturing company that has a lot of equipment construction where there's a big initial investment there's that ramp up period, that opportunity, you have to count that seed money and that initial investment. But for service based business, most service based businesses should be and can be profitable from the start. Right. Because at the end of the day, profit is intentional.

 

Right. When we put in actions that result in profit, like paying ourselves first, taking your money in one account and making sure we fund our profit account and our owners paying out first. Right. We're going to be profitable and specifically for service based business. It's about understanding. Let's say that you want to make that $100,000 and it's going to be a factor of revenue. Right. Like, how many clients can you serve? How many clients will you serve that first year and then also the costs involved with it.

 

Right. And so again, I love the profit first model because we teach them that literally. We have five bank accounts, and it's very similar to Dave Ramsay's envelope system. And what happens is all the money is collected in this revenue account. It's collected in this revenue account, and then twice a month on the 10th and 25th, we literally transfer money into bank accounts that really are based upon their designated predetermined purpose. So we're going to fund our profit account first because we're going to be profitable.

 

Day one, we're going to fund our owner's pay account. Right. Because as an owner, you are your MVP. When you step out of your business, most businesses with your Titan under your business stops running without you. If you step out of your business, we got to make sure that you're compensated for that. There's a price of profitability. Right. You can have the best account in the world, but at the end of the day, Uncle Sam's going to take something if you're profitable. And so we want to reserve for taxes.

 

And then the final account that we want to have is your operating expense account. That's everything that's left over. That's going to be where you're going to make decisions about. Do I get this fancy office space downtown, or am I going to work from home? Right. And just hire people who are going to be more in a virtual environment and hire the best and brightest versus spending my money in that fancy office based downtown and in profit. First, we have these predetermined percentages and these predetermined percentages that are based upon the size of your company.

 

So if you're a teeny weeny startup company right under $250,000, what I'm expecting is it's probably a one man show. You might have an assistant, but for the most part, it's a one man shift, meaning that you are doing the sales, and then you're quickly turned around doing the fulfillment. You're doing your own accounting. In some cases, if you're not outsourcing it and then you're taking out your trash, you're cleaning your bathrooms, too. It's literally a one man show. And so as a result, I need you to be compensated as such.

 

And so I'm expecting 60% of your revenue to go towards somehow the owner's benefit, meaning that it's going to be allocated between your profit, your owners pay and your tax account, and then 40% will go to your account. And then as your company grows, what you're going to find as by the time it reaches that $10 million Mark, now your operating expenses gets a larger portion, right? And it's getting a larger portion because now you're stealing your business, right? You're relying on the power of a team, meaning that if you probably stepped out, nobody probably would notice, right?

 

Because you're more of an investor at that point. And so those percentages change, too. So it really depends on where you are from a revenue standpoint and how much team you have that you're allocated. But again, if you're a service based business, you should be profitable on day one. And again, profitability is all about being intentional.

 

Thank you. I think that's something that I remember. I'd read a book. This is like 20 years ago when I started, and it was a consultant's book. And one of the first things they said was that idea of, okay, you're not going to bill out for 2000 hours. So that was just that one piece of information. After I read it, it was obvious, but it wasn't obvious until I read it. And when I look at people that are starting businesses, and I think that's how I started.

 

I first paid myself like, an employee, like, okay, great. If I made, I was making 61 left. So if I made 70, I was like, great. I made 70 minus my expenses because I knew, okay, I'll have expenses. So if I had made 72 minus $1,000 a month, that's 72 minus twelve that are 60. And of course, that's paying yourself like an employee. There was no research and development budget, there was no future profits. There was no setting aside the business profit. I was just paying me.

 

It took me a while to realize, well, I'm never going to be able to hire up that team. Like you said, if you're taking out the trash or if you're doing all these responsibilities, well, at some point, if you want somebody to do that, you've got to have that in the budget while you're doing it. Yes. And then realistically, it makes sense to do a lot of those things. And even just a quick thought that came to my mind was the idea that right now it might not even be the best recruiting strategy to get the fancy office space downtown.

 

It used to be. And now you might say that some of the best talent is saying, well, they don't want to work from the downtown place. They want to work from home. And so I think there's so many ideas we need to get past. And then there's that last part. And I'm curious what your experience is doing with this. It seems to me a lot of people still struggle with. And I did struggle with this at times the idea of, well, what if I'm not billing enough?

 

And now I'm trying to stay in this entrepreneurial game. And so now I'm making less. And there's a point where we can cut our personal expenses. Or some people never change their personal expenses. In your experience, is that something most people are aware of? Or is that something that kind of sneaks up on them? The idea that, well, okay. I was used to making X amount. And don't you know who I am in your own business? Everybody knows who you are, you're everything. But nobody cares because you're the business owner.

 

What do you see happens with people? And maybe what can people do to prepare for that if they're thinking of launching something or starting something and they're wondering, am I ready to launch my new business?

 

Right. And there's a couple of things I want to just chime into going back to about pricing. Typically, if I see someone that's in a service based business and they want to make an income equivalent to what they made in the corporate world, one of the things that I like to see is a forex. So, like, let's say you made $50 an hour, you're $100,000 employee. And so you would at minimum, be billing at $200 an hour type of. Right now, we can get into value billing at some point.

 

And the reason why is just like you said, you're going to have your salary, which can be like when you hire somebody, you got to pay their salary, right? You've also got to pay payroll taxes and when you hire somebody, you got to pay their payroll taxes. So that billable rate has to be covered in that. And then you've got to pay overhead. And so really, we want to be able to not at least making a four X. We're going to have a hard time making those profit allocations, right.

 

And making those percentage of target allocation percentages as I call them. And then I know from a profit first standpoint, we like to see, on average, at least $150,000 of real revenue being generated per employee. And I'm going to say it can even be higher than that. So if you got a professional position, like an engineer or physician, you're going to need to definitely lean more towards the forex than 150,000, because that 150,000 probably all goes towards payroll if you're going with that metrics. So really, just definitely make sure you're getting that forex on payroll.

 

And definitely with at least 150,000 per employee from a profit for standpoint. So that's one of the things I would say. And then wait. I know you asked me a question, and I completely like.

 

All good the person then that might or might not have to adjust their personal expenses if they're not yet earning what they want to earn.

 

Got it. That's an interesting question. I think that when you're getting ready to start your business, there are things that you have to take into account. One of the best things that I did when I started my business was literally I said, you know what? Before I go on attorney leave, let's pay off all our debt, let's pay off all of our debt, make sure our cars are completely owned free and clear. We had a mortgage at that point. But in terms of, like, those random debts that come in and hug your cash, we at least got rid of those.

 

So there's a lot of forefront pre planning that went on that. And if you're in a service based business again, it's looking at realistically. How many clients can I really serve? Right? What's the lifestyle that I need to maintain, and then your billable rate needs to command. It needs to be able to provide those margins so that you can have the lifestyle that you want. Right. And you're going to have to make sure that the value that you're offering your market is in line with what that billable rate, too.

 

If you're going to come and say, I'm going to charge $200 an hour, you better bring that to the table. Right. And that's for any entrepreneur, you have to be able to bring your best because we are in a competitive environment and we have to bring that value. But definitely, I would say I would hold off on adjusting the lifestyle. I would look more at the billing before I just see the lifestyle got you.

 

Thank you. So I'm going to continue. Actually, this is actually going to be I think of the people who are friends might have asked me about starting a business. And again, I've got a sample of the one business that I've started for me, and I help my clients, insurance agency owners. So I know their model well. But usually that's a very proven model. And so as long as you'll follow the model, not that it's hard to mess up, but your chances of success are pretty high. Let's go back to this.

 

So again, this person that says, okay, I was making 100,000, and you and I both understood what you said. So you're making 100,000. You are technically rounding off 50 weeks times 40 hours is 2000 hours. So you're making $50 an hour. And Suzanne, you're saying, okay. Yeah. That person would want to bill $200 an hour. It's not because they're going to make $200 times 2000 and $400,000 gross income. They're going to build somewhere between maybe 500 to 1000 hours. Is that kind of your experience, in other words, that they're going to be then, in essence, grossing?

 

Well, actually, hopefully they'd be billing. Let's say maybe 750 hours, like $150,000 gross or 200 just for themselves before we bring on somebody else. And then separately from that, let's say they bill that $200,000. So you're billing 1000 hours. They're grossing 200 and they're able to without getting too deep. And you might know the numbers better than me at the percentages. But let's say they're able to kind of get where they want to get. Then we still need another $150 from what you're sharing to then bring on that next employee for it to be wise and comfortable as opposed to something you might have to pull the plug on.

 

Does that sound inaccurate?

 

Exactly. And you don't want to be stretchy, then, right. We want that three hour work week. Right. Wait. We want that three hour week. That's our goal here. And so as a business owner, if your neck high in fulfillment, you're not going to be able to take on new clients. When your phone rings, you're going to be like, I can't believe they want another tax return done. So you don't want yourself maxed out. Right. And so you want yourself to be maybe at a 50% chargeable rate, right before you start to look to bring somebody else in with that.

 

Another thing is I like to do projections, right? I like to look at projections, looking at what is my schedule. How fast are we growing? And when do I anticipate the next hire needs to be Wade? Because reality is when you start looking for somebody yesterday and you needed somebody yesterday, that's where those bad decisions get made. Right? That's where we end up with the person that they breathe. And so they got the job. You know what I mean? So there's also that component of how do I let me start my search early, right.

 

And a lot of times you can find that perfect candidate, and they're like, it's Christmas time. I'm okay. Starting in January. If it's November, I'll start in January, but at least you solidify finding your candidate. You've got your contract out there, and you've given yourself enough leeway to make sure that you get the best candidate. There's also putting people in positions and building up their hours. So maybe it's summertime, your kids are home. Maybe you want to work part time, and then come September, we're going to bring you up to full time once our book of business is there.

 

So there's a lot of things that you can do in terms of transitioning that key employee, that next employee into your business while you build up that revenue in order to support them.

 

Yeah. I think one of the things that has helped me is the clarity of do I want to be primarily a lifestyle entrepreneur where my lifestyle is. First, I'm content to be a solopreneur and I'll do my own fulfillment. I'll take down the trash. I'm less worried about delegation, and that's not an absolute strategy. But there are times like during the summer, I don't want to have to hustle more to sell more so I can pay my bills in the summer. And as somebody who's worked with employees and without employees, I've gotten to experience the good and bad of both.

 

I've had a business growing awesomely where I absolutely like you said, I needed to hire somebody yesterday, and I was blessed. I found an awesome person, and I thought it was the greatest hiring person ever because I went one for one, and I was like, okay, this is easy. And then, of course, the next three or four brought my averages right back down to reality. But that idea of not having enough for somebody because I experienced this. And this is again, it's 15 years ago or so where was harder to find, let's say, on up work or fiver or places where you could easily outsource help and people are comfortable working.

 

Oh, yeah. I'll work 10 hours of tech support for your software company wait or something. It was kind of all or nothing. And so, yeah, without that cushion at one point, we were going really well. And so the cushion was inherently there. And then when it kind of came back because it was a market forces and some other reasons, I found myself hustling to sell so that I could pay for my employees salary and awesome person not doing anything wrong, doing what she's supposed to do.

 

But it was still not the experience that I had envisioned for myself as an entrepreneur. I think that's the part that when a lot of people again, you mentioned the idea and this is gosh, this is so true that entrepreneurs will work 80 hours a week to not have to work for somebody as opposed to taking the job. And if you explain that to an entrepreneurial will get if you explain that to somebody else, the math doesn't make sense. But I think that's the part where when we're starting, if you have that steady, high paying job, I found more and more people, not necessarily a majority.

 

Yet I can't say I've not taken enough data to know, but more and more people are communicating. Sometimes their boss is saying, hey, you know what? Can I dial back from five days a week? That's from 40 hours a week to 32. And it's okay if you scale me back 20%. In other words, I'm starting to build this business. And I find more smaller business entrepreneurs. If there's a healthy relationship, they'll say, look, as long as you're helping us and you're doing a great job with us, we still so don't want to lose you.

 

That no problem. It might not be what we had hoped for, but we'll do that. And so again, it's usually still anchored in results, and it's anchored in profit. So one of the things I'm curious to know about you and I talked a little bit about this, and if you could share is we talked about this idea of the stories we tell ourselves about how profit is supposed to work or how business is supposed to work or how things are supposed to be and whether those stories service or not?

 

What do you see with people that are either ideas or beliefs? Or again, you and I, as coaches, know this concept of stories, this idea that we believe and the idea of telling yourself a story is that you're telling yourself that this is true, that this is so and it might not be. So what do you see in that area?

 

It's very interesting. And that statement goes for so many things. I know that when we were talking about that topically, we were talking the context of my book and particularly about minority business enterprises. And one of the things that minority business enterprises struggle with. And I think other entrepreneurs struggle with it, too. They grow up with stories, right? They grow up with stories of television shows where there's been discrimination or where they've been told they've had to work twice as hard as someone else in order to sit at a table, there's an insurance of retention or feeling like they're not good enough, right?

 

It's interesting because how that manifests itself in business is a lot of times we'll cut our prices, right? We'll commoditise ourselves. What happens is literally at the end of the day, we don't get the results that we want because, like I was telling you the example of my client, she wanted to be the lowest cost provider. She wanted to win the RFP. And the problem was I couldn't make the math for it because negative margins plus negative margins just equals negative margins. This is not modifications.

 

This is addition. And that's exactly what happens why a lot of businesses end up being that statistic, right? That the SBA says we're 70% of businesses go out of business because literally, that's what happens when we marginalize ourselves when we adopt the stories that we tell ourselves. And so really it's about looking at the value that you bring to the market. I meet very rarely entrepreneurs that start businesses in areas that they are terrible at that. In fact, most of them are starting business in areas that they're gifted at, where they're probably better than anybody else in that world.

 

And that's the reason why they're starting their business because it's almost an art for them. You know what I mean? Even being a plumber, I can't believe that person fixed the drain that way. You know what I mean? It's just an art to them, and they're probably bringing it to the market better than anybody else. And so take pride in that and make sure that you are pricing accordingly to that, because that is your gift to the world. And for you to continue to serve in that matter, you have to price in that way.

 

Now, entrepreneurship and business, whenever something can go wrong, it will go wrong. That's what I find. Things will always take twice as long as what you budgeted for it to take to see when you're dealing with employees and they're learning the job awesome. And there's potential for miscommunication and finding out that isn't quite that person's ingenious in there. And I think the key is really learning from your mistakes. Learning from your SaaS, continue to Hone in on making sure that doesn't happen again and building those processes and systematizing.

 

It so that those mistakes don't continue to happen for you and learning from that. But definitely one of the best things that you can do as an entrepreneur is Besides take profit first, right. Because I'm a big fan of taking profit first, as you're taking profit first, make sure you're building those retainer earnings, build those retainer earnings. One of the things that we do in profit first is at the end of each quarter because we have been funding this profit account all along is we take half of the earnings that has a Kingdom in our profit account, and we put it in the bank far, far away.

 

So I'm on the north side of town and put it way way on the south side of town, and I'm going to put it in this bank that they don't have Internet banking. It's like one of those community banks that really did well on PPP loans that I'm going to go to, and I'm going to take half of my profit and I'm going to put it in that community bank, right? Because I don't want to touch it. I don't want to touch it. I don't want to spend it.

 

And if it's that hard to access, I'm not going to touch it. And what's going to happen, it's going to build over time. And when things happen like COVID, right. Or you've got to weather that storm. And you're really lucky if you're not affected by that. And then you have the opportunity to invest in equipment. And also you have the opportunity to even bring on employees. Right. Because now you've got a cushion, right that you can cover their salary in the event that maybe one of your clients are paying a little bit slower, or you're still building that book of business aggressively.

 

So definitely one of the best things you can do as an entrepreneur is have that foresight to know that things are going to go wrong, and so build the retainer needs to be able to cover that.

 

Yeah, definitely. And to your thing about the pricing, we both know if you don't price well enough, you just won't stay in business. And so that doesn't help anybody. You won't be able to pay abundantly to people. I know so many people that are Interestingly to catch 22. I think a lot of people, especially if they believe it's their art. Or sometimes, as you know, when we do something really well, it's in our area, our zone of genius. We don't think it's that big of a deal because it's kind of a blind spot to us and be like, wow, that's amazing.

 

And on one hand, there's the sense of, okay, well, this is my gift. I want to make sure everybody has access to it. And yet there are seven and a half billion people on the planet. So you can maybe in a book or an audio or something that's scalable. Sure. But as far as actual services, you can't do that. And then what starts as a good intention of okay. I want to make my services accessible to people, then makes it to where you can't be accessible to people, because then you can't hire people, because while you're charging too little.

 

And these are things that would be one of those things I would even tell myself 20 years ago say, look, it's great if that person starting new business, but they too, if they want a certain level of help and for me to be able to continue to deliver and to deliver the way you would dream of delivery. Not just okay. I got by whatever it is. If it's a brochure, that it's on the best paper that you want, it's printed really well, and it looks really nice.

 

Or you can hire a designer to do it all those things initially. Sometimes it ends up feeling to some people like, oh, you're overcharging. Yeah, but what sort of experiences the client wants. And as you and I both know, there are clients at all levels. This is one of the probably the most important things I've learned, and it still takes me a while to get through is there are clients at all income levels. There are clients at all price point levels. You can simply and there's ways to serve each of them.

 

But at the end of the day, if you don't serve the person who wants the premium service, somebody's going to serve them. It's not like your price. Gouging them. They want a certain level. And of course, there's a certain for anything. There's different levels of service and delivery, and you have to be able to be worth that. But ultimately and maybe this is maybe different. But it's not like a $250 hours rate is better than or holier than $1,000 an hour rate. What are you delivering?

 

What are you doing? 250 an hour might be horrible if you're supposed to be charging 1000 to give a certain level. And I just love that idea. And I think so much of the math. I just encourage people. If you're looking at starting a business, there are so many things that can go wrong, but then also so many of them. If you do the research and prepare can be avoided by simply just altering expectations or easing your way into it. When you look at those challenges for minority entrepreneurs, you also shared something in our pre interview, which you said was also common for any first time entrepreneurs.

 

Just the idea of when you have people who are second or third retention entrepreneurs. I'm a second generation. Actually, I'm a third generation entrepreneur. Now I think about it. I already kind of knew some of the rules to the game or some of the expectations, and some of those have hurt me because I expected also things to just go smoothly in certain areas, and I needed to do certain things. But for the most part, in my case, that's been an advantage to kind of know what it's supposed to look like.

 

Even just the basic idea of my dad always saying it's going to take three to five years to build a business. So if you hate doing something and you only do it for two to three months, not a good idea for a business. It might be a hobby. It might be a flash in the pan thing. What do you find are some of the challenges for entrepreneurs who are not familiar with the entrepreneur world. And how can they do due diligence to prepare? And of course, we'd all say we'll read and study.

 

But how or what or where? Because now before, in our age, when I was growing up, I was like, we'll read something. Now there's so many books, so most people are doing due diligence other than profit. What do you find are some of the things that helped you get started with your business.

 

That new entrepreneurs should be looking at some of the things that really helped me with my business. I think I was a little bit lucky too. Like you wait, my dad owned a CPA firm for, like, 30 years, and he hired me when I was 14. By the way, it's a great tax write off, guys it's a great tax write off to hire your kids to know your bracket. I mean, that's, like, $12,400 that you're saving on deductions. And depending on the bracket, that could be a few thousand dollars from a tax savings standpoint.

 

Just hiring your kids. I think my dad, he hired me. I think he was paying me, like, $5 an hour. How much he was showing on the W two, though, but maybe I was paying for the trips to Disney World. I don't know how that really worked out. That math, but I digressed, but it's interesting. I felt like I was really fortunate. But a lot of entrepreneurs out there, they're first Gen. They're Gen one entrepreneurs. And so they don't have that privilege of actually coming in being their dad's bookkeeper, seeing how businesses are run, answering the phone like, Hello, this is Mr.

 

Gins office. This is my dad. They don't have that experience. They're learning it along the way. Right. And one of the biggest game changers for me that really propelled my business to the next level was one just stopped trying to figure it out on my own. Right? Stop trying to figure out on my own. And that for me, meant making the investment. And that making an investment in mentors like Wade, in order to take their years of knowledge, their mistakes that they have made so that I don't have to do that.

 

Right. So that when something is a bump in a row where things don't feel right, where I might need that little push, right. In order to take that next step, increase my price or get rid of that slacker, right? That's on my payroll. I might need that support system. And so by having that mentor that's there that can push you. And it may be an investment, right. But think of it. I'll tell you, every time I've invested in a mentor, I have made my money back, at least quadruple on it.

 

But it literally saves years of mistakes off of you. Just having that coach just like having a sports coach, he's going to tell you, you need to run faster and you need to catch the ball. Having that business coach really takes you farther and faster and gives you a different force fight than you would have ever had. So I would honestly say that's probably one of the biggest secret weapons that I've had in my business. That Jas Takhar my business to a different level has been the investment in mentors and coaches.

 

Absolutely. Yeah. My father once said, just tell me, look, you can do just about anything you want, find out who's done it and learn from them and what I tell people when they say, well, how do I know if a coach is overcharging? Because there are some people that get so into this. Well, theoretically, you could make a million dollars off of what I tell you. So I'm going to charge you $100,000 of course, the person might not have that. What I found is if a coach tells you, they can guarantee that you're going to sell a lot and make a lot of money in a short period of time.

 

That's usually a bad sign, because if they could, they do it themselves. But usually what I tell people when they'll ask me, you tell me I should invest this. And I said, here's what I can help you with. Either I or my clients have made the 1520, 3100 thousand dollars mistakes. I can help you avoid the ones that you're going to later say, oh, my gosh, it was right there. It's kind of like I tell people like fishing. I can tell you where the fish usually show up.

 

I can't promise you they'll bite today. So there's certain things you can do and definitely learning from mentors and people who've done it. And I heard one person say, Forget what show was on and where I heard this. But they were asked, like a lightning round, maybe on a podcast, what's the best thing you can do to increase profit? The persons that cut expenses. And it wasn't those of us who've been around long enough have the visions of the CEOs that come in or the consultant that comes in the nineties 90s and catch everybody's jobs.

 

Not that, like, really nasty. We almost have things where you don't cut expenses. Well, sometimes. Yeah. There's just stuff that you didn't need. Tell me a little bit about if you would your book. I'm so excited about what you're doing with your book. I know you're inspired by Mike's work, and then you've put in a different or taking a different angle on it. And then also you have it benefiting a cause I think is really awesome. Would you share a little bit about that?

 

Yeah, definitely. Profit first is a game changer for me. It really heavied my business around before profit first, I wasn't taking a salary. Most of us, we had the ability to hire somebody else because I couldn't even pay myself and profit first really put in that framework to allow me to be able to pay myself and be able to hire others. Right. Have the margins in there to be able to invest another employees. And I really wanted to get the message out there, right to the other communities that were not getting that message.

 

And it's always been something that's on my heart. I started my career in Chicago, working for Arthur Anderson, and I remember when I asked my coworkers, I'm like, Where should I live? Where should I live? They all said, Lincoln Park, Lakeview. That's where you need to live. And so as soon as I moved out there, I moved to Lincoln Park in Lakeview, and it was a very safe neighborhood. And I remember getting out my elevator. I'm like, Man, everybody looks like Barbie and Ken, and they drive each other and so what happened was I would be born.

 

I was in this new city, and I would get on the bus. And I would take this bus from Sheraton Road all the way down Michigan Avenue to a gatsavout. Roosevelt. And Roosevelt is a pretty important street in Chicago, because that's really where the north and south, that's the divine of the city. And I would take the next bus. And I was like, Wherever the good Lord takes me, I'm going to go there. And it was interesting because as of the bus crossed the line, it was almost like instantaneously, like you were going into a science fiction movie, like, the neighborhood just completely changed.

 

There were less retail, more boarded up windows and more people walking around the street pushing the cards. And my mind would instantly go to instead of avoiding a side of town, how do we change it? How do we change that set of town? How do we up level this community? And the answer that kept coming to my mind was, we do that new job creation. We do that through job creation. And we do that by creating jobs within those communities. Because when I see my neighbor become a doctor and start a practice or start a store, then I create vision for myself.

 

And I said, that's the reason why this book needs to happen because we really need to create a new expectation in our communities and create not just expectation but a way of profile entrepreneurship, because at the end of the day, I don't just change my legacy. I changed my neighbor's legacy, too, when I changed my legacy, because I hire my neighbors and give them a new skill set to do that. And so the book covers definitely the profit first strategy. We also cover some things that are specific to minority businesses, like the government contracting the set aside because not all contracts are good contracts, right?

 

And even though you're entering into a million dollar contract, that just means that now you can play with a million dollar losses is what it means. And that happens frequently. We deal with the mindset issues like we talked about earlier today, Wade, about you have to really understand the value that you bring and know your worth. We have examples of clients who have literally pivoted their own legacies, become genuine millionaires and their families. We give the examples of those. And the thing that makes me most proud about the book is I said, you know what?

 

Let's not just stop here. Let's not just stop with an impact in our communities. Let's have a worldwide impact. And I said, you know, what we're going to do is for every book that's sold. We're going to give one dollars for every book that's sold. And we're going to donate this to help worldwide. And we're going to have them contribute to a scholarship fund to send girls from Zimbagwe to primary school and secondary school. And this is important because the Zimbabwe government has traditionally paid for girls to go to College.

 

But the thing is, most people don't get to go to College, right? Because their parents can't afford primary education or secondary school. And so let's create scholarships to send these girls for elementary and secondary school. And I was so happy because the month after the book launched, we literally funded 22 girls to go to school. So I was Super Super excited about that.

 

That is awesome. Congratulations for that.

 

Thank you.

 

There's so much that whether you believe that, do you believe in God or spirituality, universe or this or that even if you just believe in economics, when we all do better, it's a good thing when people and parts of the world don't do as well, especially as the world's becoming so much more connected. That's awesome. All right. So we have some of our some people use to call these lightning round questions. I've not figured out what I'm going to call these questions. So right now, I guess they're the lightning round questions.

 

So your first sort of mini answers, but they can be longer if you like. If you could give your entire target audience the people that are following your work that look to do what you're doing. If you give them one skill, what would that skill be?

 

That one skill would be in terms of I could give them one scale. It would be to really be able to understand their numbers. So many people make decisions based upon gut and stink. Or I feel that this is right. But be able to look at your numbers and go, wait a minute. This is in proportion to each other. This is what this flex means. I would give them the ability to, like, be genies in the bottle about filling out their numbers and knowing what they really mean.

 

Awesome. What is the costliest business mistake you've ever made? And what did you learn?

 

This is so embarrassing. Higher, fast and fired, really, really slow. That was my biggest mistake. Kept the road on the bus too long.

 

Yes. For those of you that are saying higher, slow, fire fast is what we eventually want to do. You hear people say because sometimes when we're desperate or as you mentioned, we don't get prepared enough. And then all of a sudden it's emergency is like, I just need a body. The minute you hear those words, enter even your inner voice, like, hopefully we'll be better prepared next time. What's the best business decision you've ever made? And how did you execute it?

 

This one is a hard one. It was learning to say no. It was learning to say no to the wrong opportunities. As our business was growing, we had a large private practice where we serve private clients like entrepreneurs in their accounting and taxation. But we also had a large government practice, and they were very different. Right? They were very different. The accounting was very different. It was very complex, very hard for our staff to really understand the two sets of accounting and how that works. And the hardest decision I ever Wade, which was the best decision, was letting that government practice go because it was large dollars.

 

But it was really creating an opportunity cost because it made everything hard. It made it hard to recruit, hard to train. And at the end of the day, it impacted profitability and our ability to grow.

 

Yeah. I told my son that a couple of times when he was asking about different incomes of different professions, he said, look, the short version is, for the most part, when you get more money, it's a harder result to get. And when they're giving you millions of dollars, it's not because they want you to just go out and have a party. There's more at stake. So yeah, absolutely. More complexity. Okay. Cool. What are you, number four? What are you most excited about in your business right now?

 

I am so excited about really being able to have more impact on entrepreneurs and helping them achieve their profitability goals. I mean, just with the book that launched and just also, just the fact that four years ago, literally, our market was Houston, right? It was our backyard and particularly four blocks down the street from us. And in this day and age, one of the things that Kobe did was it created a nationwide, even global opportunity.

 

Absolutely. And what are you most excited about in your life right now?

 

I am so excited about I can't wait until my ten year old gets his shot and we're going to be able to go out to a year and a half.

 

That's great. Okay. And just to let you know, we're going to put all the links for this in here. But where can people connect with you and learn more about your work and even perhaps the foundation you're supporting?

 

Yeah. Well, if you go to Amazon, you can find our book at Properties for Minority Business Enterprises by Susanne Mariga. And definitely we teach profit first profit first. You can find this right on Facebook. Profit first master class with Susanne Mariga.

 

Awesome. Thank you so much for sharing your work. I think this is going to be so helpful. I really love, as I told you, sometimes we just kind of make things up as we go. But I think specifically the case study and I hadn't yet talked about that with somebody. But again, the case, even just what people would need to make and how much they need to make before they can leave their job or before they can hire somebody else. Even those numbers are so important. So I encourage people to look deeper into Suzanne's work also, if you want, of course, also looking into Mike's work.

 

Thank you so much for joining us. Thank you for your wisdom and thanks so much for sharing.

 

Thank you, Wade, for having me.

 

Yes. Absolutely always. And thank you, everybody, for listening. As always, look forward to helping you impact more people and make more money in less time. Doing what you do best so you can better enjoy your family, your friends and your life. Thanks for listening.

 

Susanne Mariga

CPA | Certified Profit First Professional | Helping Entrepreneurs Grow Their Profit| Host of The Profit Talk Podcast

Susanne Mariga left the corporate world of accounting to found her own firm in 2008.
She is a Certified Profit First Professional at the Mastery Level and is passionate about helping small business owners and entrepreneurs maximize their revenue and grow their businesses.
She is the host of the Profit Talk Podcast and the author of the book, Profit First for Minority Business Enterprises.