When you first decided to become a dog trainer, did you realize that you would also become a web designer, marketing expert, social media personality, sales person, secretary AND accountant?
Chances are, you didn’t realize how many different job titles you would have to grow into as your business grew. BUT, given all the hats you wear, we’re sure you pay yourself well and promptly, right? Riiiiiiight.
As small business owners ourselves, we know that dog trainers can be pretty terrible at paying themselves. Our surveys have shown that while some dog trainers are earning over 6 figures, most dog trainers are not earning as much as they would like. That’s why we love to share the book “Profit First” by Mike Michalowicz. Not only do we share it, but almost every year we work through it with our Trainers Growth Group (“TGG”) members.
The Profit First formula flips the script on how business owners typically think about accounting and budgets. Traditionally, business owners deduct expenses from sales and consider the remaining amount profit. Using that traditional method, what you as the sole practitioner get is whatever is left over after everything else is paid. Which can be not very much.
Instead, using the Profit First system, you take a percentage from sales as profit and budget the rest for your expenses.
Let’s spell it out: traditionally, most business owners structure their budgets as follows:
- Income – Expenses = Profit
In other words, you simply take your income and subtract your expenses, and whatever is left—which, for many business owners starting out, may not be that much—gets chalked up as profit.
The Profit First business model shakes things up a bit, changing the formula to:
- Income – Profit = Expenses
In other words, instead of immediately trying to account for your business expenses, you set aside a designated amount of cash to serve as profit.
For example, you might commit to setting aside 10% of revenue and designating it as profit, before your expenses have a chance to take a bite out of their earnings. This method may take a little getting used to, but over time, it starts to change how you think about the money coming into your business. Specifically, it encourages you as a business owner to prioritize your own pay (something which often gets overlooked) and being more thoughtful about the expenses you’re accounting for.
Our TGG members have found that by going through the exercise of figuring out their expenses and forecasting their income, they are able to create a budget (including putting aside a percentage as profit) and stick to it every week, month, etc. Even if you need to start very small, seeing those little bits of profit build up is very reinforcing. As a result most people are able to continue using their system and gradually increase their income while controlling their expenses.
If you are interested in hearing more about the Profit First method, check out the book. Or, join Dog Trainers Umbrella in August 11, 2022 for a live discussion!