Q1 2024 A PUBLICATION OF Go Figure Accounting
Village Airport Van’s Dan McCarthy is
Driven to serve his community and to succeed
A PODCAST THAT MAKES SENSE OF THE THINGS PEOPLE DO TO MAKE CENTS.
Scan the QR codes at right to listen to Rachel on the Making Cents Of It All Podcast
10
Driven Dan McCarthy is making changes to his transit business to prepare for what comes next
6
6 Points of Interest MONEY vs MAKER: Accounting tips
for the Creative economy.
TRENDS: The rise of wind farming, my
16
16 Taken into Account
A Better Business is in Sight An excerpt from Profit First for Optometrists by Rachel Siegel.
dog ate my bankroll, and accounting challenges for the adult industry.
Employee Spotlight Making connections with Wendy Reed.
HAYLEY’S LIGHT: Brook Stealy is
CPA Q&A Rachel answers your pressing business questions.
saving lives—one light a time.
15
15 Goal Getters
Em-powered Jamie Mark of Em Agency on plugging his creative firm into a money management power source. . Exclusive Content All In: How Great Leaders Build Unstoppable Teams with Mike Michalowicz.
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FIRST QUARTER 2024
A P U B L I C AT I O N O F
This light
saves Lives.
Haley’s Light was created following the death of 21-year-old Haley Boggs while on a road trip. Central to Haley’s Light’s initiative is the Haley’s Light LED safety flare–a simple yet effective device designed to enhance the visibility of disabled vehicles on the road. Every LED safety flare sold supports our mission to empower families with knowledge and tools to navigate these challenging situations safely.
Rachel Siegel, CPA Owner, Small Business Development Expert Cindy Lovan, EA Accounting, Tax Beth Kisner Communication Coordinator Joslyn Jones, Kirstin Pastorick, Matthew Siegel Bookkeeping Wendy Reed Strategic Account Manager
NE Office: 732-374-9641 SE Office: 407-855-6648 gofigureaccounting.net
PRODUCED BY
Jamie Ezra Mark Creative Director Heather Anne Lee Editor Rheya Tanner Art Director Josh Clark Designer Wendy Mak Designer Andrew Ontko Designer Evan Miklosey Web
407-573-6061 hello@emagency.com emagency.com
haleyslight.com
Haleyslight@yahoo.com / 407-217-3264
4 / goals / first quarter 2024
@EMagencyinc Goals is published quarterly by Go Figure Accounting. Copyright© 2023 Go Figure Accounting. All rights reserved. Reproduction in whole or in part without written permission is prohibited. Opinions expressed in the articles are those of the authors and do not necessarily represent the opinions of Go Figure Accounting.
R A C H E L’ S D E S K
I’m a lover
of productivity. For as long as I can remember, I’ve held myself to a high standard of “getting things done.” The act of ticking items off a to-do list brings me immense satisfaction, fulfillment, value, and worth. However, I’m currently challenging the notion that my worth is solely defined by what I accomplish. It’s time for me to reevaluate and appreciate productivity in a new way. So, here’s my pitch: let’s flip the script on productivity. Instead of going big or going home, why not aim for small wins? And yes, if you’ve followed us for any length of time, you’ll realize that does sound a lot like the Small Plates approach in Profit First. The key to success? Think big, but start small. Small changes lower the barrier to getting started, and if you make them small enough, you’re more likely to be successful. This means you’re more likely to actually develop a healthy habit that leads to successful change. I was reminded of this during our interviews this month with Dan McCarthy and Jamie Mark. Both men run very successful businesses and are full of incredibly creative ideas, but neither one of them understands cash flow or profit. But by breaking the big picture down into usable small plates, they are making huge strides in their businesses. Author James Clear has another way of thinking about it that resonates with a lot of my clients: the one percent better principle. To make big changes, you don’t need to start by taking big actions—you just need to be 1% better every day. And we all have that ability. So let’s drop the idea that big strides demand big time and monumental effort. Start right where you are, with what you already have. And that, my friends, will lead to incredible results over time. Dan and Jamie are living proof. If you’re struggling with your accounting or bookkeeping, need to develop some healthy new financial habits, or are simply curious about how Profit First can help your business, we’d love to help.
The key to success? Think big, but start small. Small changes lower the barrier to getting started, and if you make them small enough, you’re more likely to be successful.
Rachel Siegel, CPA rachel@gofigureaccounting.net
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POINTS OF
Money vs Maker Influencers, YouTubers, digital artists, bloggers, and content creators of all stripes: you are not exempt from accounting or bookkeeping for your business. In fact, that’s how many creatives find themselves in trouble.
The creator life can be extremely rewarding if you are smart about it. Getting paid to dress up in free branded clothes, test new products, produce video content, visit exciting places, and enjoy brand partnerships that span digital media… what’s not to love?! HubSpot’s 2022 State of Consumer Trends report found
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that the creator economy is rising in popularity rapidly. In fact, 30% of surveyed 18to 24-year-olds and 40% of 25- to 34-year-olds consider themselves content creators. As Forbes describes, “Ask a kid today in the U.S. what they want to be when they grow up. No longer is musician or athlete the
top answer. It’s a YouTuber—an answer 3x more popular than astronaut.” And at $104.2 billion, the creator economy is one of the fastest growing industries, and it’s expected to double in size by 2027. However, whether you’re a social media influencer, an up-and-coming TikTok creator,
a streamer, or an Instagram-famous photographer, if you are making money from it, then you are running a business. That means the not-so-fun parts of business need to be taken care of too: for example, paying your taxes and managing your accounts. Many such professionals ignore this part because they are unsure what to do—we promise, it is not that hard! Here are our top accounting tips for content creators and influencers to follow to maintain spotless accounts. Record all transactions. Accounting for content creators requires you to keep a complete record of all income and expenses. This is tricky when you work in content creation, because you’re more likely to have multiple sources of income—ad revenue, brand deals, merch sales, speaker fees, etc. Use an accounting tool to create invoices and record the payments when they come through. Affiliate income is another excellent source of digital content creator income. There is no invoice for this, so you can just record it as a general sale of goods. To record expenses, your easiest option is to link your bank account to the software so it can automatically pull the details and calculate any relevant sales tax. You can also look for a tool with a “receipt capture” feature to take a photo of any receipt or bill and upload it from a mobile device. Lastly, if you get paid in kind rather than cash, you need to record the market value of the gifted item for tax purposes. Gifted items can be tricky but must be included in accounting for social influencers – which brings us to our next point. Be careful of freebies. Many influencer deals include freebies, i.e., the company gifts you an item separate from the money they pay for your content. If
BY THE NUMBERS
207
million
content creators in the world today. SOURCE: LINKTREE
6
MONTHS The average time it takes to earn the first dollar. At 17 months, they start earning enough to support themselves. And at 25 months, many are able to hire their first employee or freelancer. SOURCE: THE TILT
46.7% of creators are full time.
SOURCE: CONVERTKIT
10%
of influencers earn $100K or more per year. 26% make between $1,000 a nd $10K. And 27% make between $10K and $50K. SOURCE: INFLUENCER MARKETING HUB
21
billion
the global influencer market value as of 2023, a 53% increase over 2021’s $13.8 billion valuation.
you are required to post about the gift, though, the IRS may ask you to pay tax on the item’s market value – so it is not quite as “free” as you think! One way to avoid this is by demonstrating that the items you are given are for use only in your content, making them allowable expenses. However, this means that you must be careful about using them elsewhere. Gifts are to be included in accounting for content creators. Plan for taxes in advance. The influencer life can be lucrative, from sponsorship deals to affiliate income streams. You do not want to spend it all, though! It’s best to keep aside 15% of your income for paying taxes and consider tax-free investments for the rest. A good bookkeeper can get you started, but at tax time, it’s always best to consult with a CPA on building wealth and minimizing your tax burden. Make sure your entity structure is set up correctly. Typically an LLC if you’re self-employed, or S-Corp if you have employees or hire freelancers/contractors. Some creators set up separate business entities for their various income sources. The necessity of this practice depends on the accounting implications for each income stream. With things like ad revenue, monthly subscriber fees, and affiliate brand deals, you could easily lump those into one entity. Once you start adding things like an e-commerce store, which has inventory and sales tax in different states, it makes sense to set these up under a separate entity. The most important thing is to start things off right from the beginning, while you’re small and while you’re capable of tracking these things. That way, you can set up a foundation for success before you get to a point where it’s too hard to manage.
CREATIVE BUSINESS CLAIMS In accounting for content creators, you do not have to pay tax on several categories of expenses including (but not limited to): • Legal expenses • Business travel • Advertising and marketing • Office rent, maintenance, and utilities (If you use part of your home as your office, you can claim part of the associated costs as an allowable expense.) • Website/email list maintenance • Outsourcing to other professionals • Business-related equipment. This includes hardware like phones, cameras, or computers, as well as software such as editing and social media management programs • Trademarking and/or copyrighting • Business-related subscriptions, such as to a site providing licensed images
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WIND
GOAL GETTER
America’s biggest offshore wind farm is up and running.
Vivacious, ebullient, and punny are just three ways you can describe Shweta Patel. But that hardly sums her up. Shweta is an inspirational force in Winter Garden, illuminating the path to women’s empowerment and innovative healthcare. In 2003, Shweta began her service as a first-generation military member in the U.S. Navy Medical Corps. It was here that she found the need for change in civilian healthcare, especially women’s healthcare. In 2016, Shweta founded Gaya Wellness, a telemedicine platform that embraces a holistic approach to women’s health. Shweta’s mission is to empower women with knowledge and choices, transcending conventional healthcare.Beyond her medical practice, Shweta co-hosts the Miss Labeled podcast, encouraging candid conversations on personal growth and societal labels. “It was the first of its kind in Florida and was amongst only a handful of full-scope virtual platforms in the country. Our vision was and is to transform women’s healthcare into an engaging and empowering experience for both the patient and physician.” Since launch, Gaya Wellness has gained 1,500 members and over 500 forum members, as well as adding six new services, an all-hours digital triage, and employee supplemental healthcare benefits. “We are just getting started,” Shewta says. “The best part is being able to feel like I’m truly practicing the art of medicine again, while sustaining balance in my personal life. I believed in my vision, and seeing women responding to it makes it all worth it.”
BREAKERS
A new turbine off the coast of Martha’s Vineyard started delivering electricity to the New England power grid Jan. 2, marking the kickoff of the country’s first large-scale commercial wind farm. By the end of the year, Vineyard Wind aims to have 62 800-foot TRUST YOUR GUT: A 7-year-old golden doodle turbines spinning, named Cecil ate up $4,000 which it says will in cash his owners set on a counter in their Pittsburgh power 400,000 home. Cecil called it homes in Massainvesting in himself. chusetts. Vineyard Wind became the first US offshore wind initiative to receive complete federal approval in 2021, but it is not the first utility-scale offshore wind farm to start generating electricity. Another large project off the coast of New York, South Fork Wind, began producing power in December. Once completed, South Fork will be capable of producing 132 megawatts of electricity. 8 / goals / first quarter 2024
Shweta Patel
POINTS OF INTEREST
Accounting for the World’s Oldest Profession Their questions were unique, to say the least: Should I tell the IRS that I left my job to become a full-time dominatrix? Will my bank close my account if I say I’m an escort? Does filming in your bedroom count as a client meeting in your “home office”? While these aren’t our clients, we were fascinated by a story that ran in the Washington Post, “The prostitute nudging sex workers to file their taxes.” Look, most people are wary of filing taxes. Those working in “illegal” professions have more cause for concern. They fear arrest, and they fear that banks and credit card companies will shut down their accounts because of what they do. But the IRS isn’t interested in the legality of your business—only in your taxable income. And for escorts, strippers, OnlyFans creators, and yes, prostitutes, filing taxes is an important step toward improving their finances. We’re not promoting sex work as a profession, but the rise in OnlyFans accounts does make the topic relevant. Filing taxes, especially for low-income start ups, can mean an infusion of immediate cash, like a child tax credit if they have dependents. And it can establish a financial history that would help them, for example, to apply for a mortgage someday.
GIVING BACK
Hayley’s Light
The love of a mother is one of the strongest imaginable. Brook Stealey, resilient and unflinching, knows that love should be ever-prevalent, especially in the face of tragedy. Traveling with a friend one dark night, Brook’s daughter, Haley, suddenly experienced car trouble, prompting her to pull over and exit her car. There, she was tragically struck by an oncoming vehicle that was traveling well over the posted speed limit. Haley was airlifted to a trauma facility, where she ultimately succumbed to her injuries. Despite this profound loss, Brook emerged with a conviction that even one light can save a life. Following the tragic death of her daughter, Brook set out to ensure
that no other parents feel the same grief and loss that she experienced. The result was the establishment of Haley’s Light, a 501(c)3 non-profit organization committed to cultivating meaningful relationships with the community to promote travel safety. At the core of Haley’s Light is a groundbreaking innovation—a roadside safety light designed to illuminate disabled vehicles and individuals stranded on the roadside. In Brook’s words, “Haley was the light—not only in my world but to everyone
she came in contact with.” The radiance of Haley’s Light extends far beyond the personal, now reaching and positively impacting countless lives. As Haley’s Light continues to shine, its commitment to safeguarding families remains unwavering— one light at a time. Brook’s journey from grief to advocacy stands as a testament to the enduring power of a mother’s love and the profound impact it can have on the world. For more information visit haleyslight.com or call 407-217-3264
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Dri 10 / goals / first quarter 2024
iven Dan McCarthy learned the hard way that perseverance is key to success. STORY MARK MCWATERS PHOTOGRAPHY FRED LOPEZ
an McCarthy is the owner of Village Airport Van and, by his own admission, did not exactly start out as a focused, goal-driven sort. Setting goals did not come easily to him. “I’m more of a ‘Hey look, a squirrel!’ kind of guy. I was always being pulled every which way. I needed someone by my side to keep me on track. Thank goodness my wife and now Rachel at Go Figure are great at that,” Dan says. One thing Dan has always been good at is perseverance—a word he learned the true meaning of during four years of service in the US Army with the 82nd Airborne during Desert Shield and Desert Storm. “Way back in basic training, I was on a run and we came to a spot where we had always taken a break before. Out of habit, my brain and body told me it was time to stop. Big mistake. The run kept going, and all of us who stopped were treated to an hour and a half of monkey drills:
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jump up/jump down/roll left/roll right/now do pushups and more pushups. After that, I determined that I would never fall out of a run again. I would never let my mind psyche me out, ever. I would hold on and never quit on anything, no matter what.” That never-say-die attitude came to Dan’s rescue when, in 2008 while working for Comcast, he took a bad fall on a blacktop road. He punctured a lung and broke his collarbone, among other injuries. At about the same time, Dan’s father, who had always wanted to start a taxi cab business, came down to Lake County to give that a go. They both helped one another out. They bought a taxi together and
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“After that, I determined that I would never fall out of a run again. I would never let my mind psyche me out, ever. I would hold on and never quit on anything, no matter what.”
soon found themselves in The Villages, waiting for fares with other taxis. They got zero takers. “We heard people saying ‘Don’t take any taxis but Village Taxis.’ We weren’t going anywhere.” They regrouped back at home at the dining room table. “We needed a different idea. Not taxis, exactly. How about shuttles? What about starting a shuttle business for The Villages and going after the airport business?” With just four used Crown Victorias, the two began getting the word out about their new Village Airport Van shuttle service. “My Dad placed one ad. The next morning the phone rang at 6:00 a.m. It rang again at 6:15. Then 6:30. It continued like that
all the next week. We had one cell phone. We passed it back and forth between meals and bathroom breaks. That’s how it started. We started making money that very first month. We would often run up to 33 passengers a day. That was a lot of airport trips back and forth in our old Crown Vics. So, Dad traded in his almost-paid-off personal car and bought a Ford Econoline van in December 2009. We put almost a million miles on that vehicle.” Village Airport Van has been through a lot since then. By now, they’ve transported more than 1.4 million passengers. In 2014 they converted all their vans to propane gas. It was a good move. “In 2013, we spent about $750,000 in fuel. So, we switched it up. Propane works well for us, and it’s more sustainable, with 50% less emissions than gasoline. Plus, all our vans and propane conversions are made here in the United States.” By 2019, they had 35 vans on the road. Then COVID hit. “Those times were tough for us, like for most people. Our business plummeted. There were some airlines still flying, but at severely limited schedules. We booked trips to the airport at 8% below our first-year numbers.” But Dan, as always, chose to persevere, just as he promised during his basic training days. Village Airport Van never stopped running. “All through COVID we were here. We would not leave our customers stranded. You just don’t leave your people. The military taught me that. And these were our people. They kept us
alive during very difficult times, and we will never forget that.” The year 2020 still had more challenges in store. The most significant of these was the loss of his father. “He and I had been partners all that time, and when I lost him, I was left to manage our business on my own.” One of the first things he did was fire his old accountant. “Dad would never have done that. She had been with us from the beginning. But I knew we could do better,” he says. “All she did really was fill out tax forms, and those were always late. She didn’t know how to look ahead, how to plan, how to recommend where we spend our money.” In her place, Dan hired Go Figure Accounting. “I have known Rachel for over 40 years now. Her brother and I were good childhood friends. I knew she was an accountant and had moved away from Florida and become partners in a big-time accounting firm. Lucky for me, Rachel came back to start her own firm.” An entire accounting firm was what Dan knew he would need to make sense of his father’s outdated accounting methods. “Dad ran our business from his dining room table and basically put all our money in one big pile. I had several other businesses by then. One of them, a non-emergency medical transport business, we grew from $600,000 in sales per year to $1.6 million. But we never knew which business contributed what. We never had any idea where the money came from or where it was going. I needed
someone, an accountant I could count on, and I knew Rachel was the one to do it.” But where Dan saw an obstacle, Rachel saw an opportunity to grow. “She gave my wife a book to read, Profit First, and my wife liked it. A lot,” he said. “She had us at the word ‘profit.’” Talking about growth, however, turned out to be a lot easier than growing. “I thought 2020 would be an exciting year with all the talk about profit and profit sharing. It was exciting, but not in the way I thought it would be. Finally doing things right, for the first time, was painful. I won’t lie. Like ripping a bandage off. I opened a bunch of new bank accounts. Thank goodness my wife is so meticulous and organized.” All that hard work paved the way for Dan’s next big move. Specifically, a move outward, to a second location. “The Villages is expanding to the south and so is my business. My solution was to add to my geographical coverage. So, I bought a piece of land by the Turnpike and US 27, the furthest spot south before we got on the road to the airport. My plan is to pick people up in smaller areas, bring them to our hub, then the airport. As much as The Villages expands, we’ll be able to cover the market. No more driving people around on long trips with many stops.” Construction on that new facility begins next month—once he’s taken care of the tortoises, of course. “Yes, tortoises. My new plot of land had five tortoises on it. When I bought it, there were
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five tortoise mounds. Three years later, by the time permitting was finished, there were 18.” As a threatened species, the gopher tortoise and its mound are protected by Florida law. Before construction could begin, Dan needed permits from the Florida Wildlife Conservation Commission to have the tortoises relocated. “It’s costing me $6,000 per tortoise to have them relocated to a safe tortoise habitat! I paid $78,000, and they are just now going in to collect the tortoises.” With all that going on—new leadership at VAV, new expansion, new facility in the works, a ton of tortoises—it was clear that Dan McCarthy and Village Airport Van needed exactly the kind guidance Go Figure was providing. “Rachel is amazing and sharp as a tack. I swear, she rattles stuff off and makes my head spin,” he says. “Yeah, at first it was like swallowing a bunch of horrible pills. But now I’m growing steadily, earning good profit. Go Figure is keeping me 100% legit and putting as much money in my pockets as possible.” More importantly, Go Figure has drive and perseverence to match his own. “Rachel taught me that I am in this for the long game. What I’m building now will last. It’s future-proof and I’ll be able to grow my business exponentially. Rachel has me spending money in the right places, where I get the best deductions and save the most money—and that is huge. You can’t ask for a better business partner than that.”
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“We never knew which business contributed what. We never had any idea where the money came from or where it was going. I needed someone, an accountant I could count on, and I knew Rachel was the one to do it.”
GOAL GETTER
Empowered Em Agency’s secret to success is a simple one: Do great work, and the rest will follow.
What does it mean to “do great work”? In most professions, great work meets certain consistent criteria. Maybe it’s timely, accurate,
comprehensive, or cost effective. But in creative professions, “great work” isn’t a box to be checked; it’s a standard to be upheld.
“We’ve always been about the work, finding the best solutions for creative problems,” says one such creative professional, Jamie Ezra
Mark. “We could come up with hundreds of ‘correct’ answers. But the best ones are more than correct—they’re memorable. They stand
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GOAL GETTER
out. That’s what we want our work to do.” Jamie is the owner and creative director of Em Agency, a branding firm specializing in identity development, campaign messaging, and a healthy dose of publication design (some of which you are reading right now). The company first opened its doors in February 2019, but its story truly begins long before that. “My old partners didn’t value the work,” he says. “There’s already a ton of mediocre, forgettable work out there. If we can’t do work that really resonates and will be remembered, then in our minds, we’re just adding to the pile.” So, he walked away from a comfortable, eight-year partnership— and five of his best people followed him. Together, the six formulated a new business concept: a creative agency led by creatives. “The inmates are running the asylum,” he laughs. The Em team spent those early days developing their creative voice. Any agency could throw around words like “high quality” and “award-winning.” To draw the kind of clients they wanted, clients who trust the
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creative process, they knew they had to focus on attitude and ambition. “We wanted to be fun to work with,” Jamie says. “That part is often underestimated. If we could do great work and make it fun for the client along the way, then we figured we’d do OK.” Five years later, Em has grown to more than a dozen “embassadors”—designers, illustrators, writers, photographers, developers, all passionate about the work. “This isn’t a ‘me’ thing. Em doesn’t work with just me,” Jamie says. “On paper, yes, they’re ‘employees.’ In reality, they’re my collaborators.”
Trusting the Process “Creative director” and “business owner” are two titles not often held by the same person. This is because most creatives won’t touch administrative work with a 10-foot pole. “Creatives have no business managing finances,” Jamie says with a laugh. “We avoid even talking about it. Spreadsheets, cash flow forecasts, P&Ls, ratios, statistics, data. Math. Nothing makes our eyes glaze over faster.”
“As a creative, your headspace is your workspace. If it’s taken up with worrying about forms and finances, it’s hard to do your best work.”
And yet, financially speaking, Em Agency is a startup success story. Year one saw growth of 7.69%. Years two and year three both increased by 34%. And even though last year was lower, just 20%, the company also pivoted toward more growth, hiring and expanding its capabilities. His secret to financial success? “I let Go Figure handle it. All of it.” “Creatives live and work in the abstract,” says Rachel Siegel. “As a creative, your headspace is your workspace. If it’s taken up with worrying about forms and finances, it’s hard to do your best work. And that’s where we come in and connect those things.” Connecting those things means that Go Figure functions as Em Agency’s CFO, handling everything relating to cash flow, business planning, and taxation issues along with bookkeeping. “We help shape major investment and financing decisions, and help him understand the big picture when he needs to,” Rachel says. Jamie adds: “The way I see it, a good client is one who trusts you to
do your job. I don’t walk into an accountant’s office and tell them how to do taxes. Why would I want an accountant to come in and tell me how to design? I practice what I preach when it comes to the numbers: Trust the experts to do great work.”
IT GOES BOTH WAYS: Em trusts Go Figure with its finances. Go Figure trusts Em with its branding and marketing. Everybody wins! A D V E R T I S I N G
Works presented are the work product of the Em Agency team. Some works created while at other companies.
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TAKEN INTO
A Better Business is in Sight When your work is highly specialized, it can be hard to focus on the “business” part of business. Here’s how optometrists and other specialists can streamline the tough stuff with Profit First. The following article is Most doctors, including an excerpt from Profit chiropractors, heart surFirst for Optometrists by Rachel Siegel geons, brain surgeons,
general practitioners, and optometrists, are taught how to do a job and do it well. But they are not taught how to run a business. We have seen it time and again: when doctors go out on their own or become a partner in a practice, they have no clue what is involved.
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That is especially true for optometrists who go out and buy a practice from another practitioner. The buyer typically assumes that the seller had figured everything out for them, and had that practice running smoothly. They expect to simply step into their shoes and be profitable from day one. Unfortunately, this is typically not the case.
Running a business is hard, and taking over an existing business is no easier. For example, as an optometrist, your cost of goods is extremely important. You need a good supply of lenses and frames and need to allocate appropriate monies for those materials. You’ll want to keep your equipment up to date and your doctors compensated well for their time and
benefits. On top of that, you have the rest of the staff and other overhead like payroll, rent, utilities, licensing, supplies, Internet, cell phone, EMR systems, and billing systems — just to name a few. It’s exhausting just to think about.
Where has all the profit gone? The widely accepted formula for determining
a business’s profits is the GAAP (Generally Accepted Accounting Principles) formula: Sales – Expenses = Profit. This formula is simple and logical in theory, but when put into practice, it often leaves businesses with less profit at the end of the year — or sometimes with no profit at all. The reason? It fails to consider that your business is run by humans, and humans aren’t always as efficient
as they could be. When you are given two weeks to do a project, for example, you can complete it in two weeks; but when you’re given eight weeks to do that same project, you somehow manage to make it take eight weeks. This idea that demand for resources always adjusts to meet supply is exactly why the GAAP formula doesn’t usually work in the management of business. In the GAAP formula, profit is
just whatever is left over — a pleasant surprise at the end of the year. The problem is, because of Parkinson’s Law, your business might not have anything left over. You had it available to spend, so, of course, you spent it. It’s just basic human nature.
How to get your bonus back The good news is that Parkinson’s Law works in reverse. Just like we could take eight weeks
to finish an eight-week project, we can also figure out how to get that eight-week project done in two, if we had no other choice. Enter the Profit First formula, which flips the GAAP formula on its head: Sales – Profit = Expenses. It’s a simple change, sure, but it’s a powerful one. By deciding upfront how much you want left over at the end of the year, you force yourself to find ways to get the same
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things done for less money. The notion of calculating your profit first (that’s where the very clever name for the formula comes from), is nothing new. It uses the same methodology as “pay yourself first,” a principle that has been the driving force behind the power of 401K retirement plans and of many of the world’s wealthiest. Profit First is among the greatest financial tools in the history of business, and it’s about time for you to start taking advantage of it for yourself. I’m not saying that just to say it because I am writing this book. I live it and breathe it every day. I implemented Profit First in my business during the pandemic. It is truly life-changing.
The growth question My clients ask a lot of questions before starting to use the Profit First Method, but the one asked most often is “If I set aside my profits, how will I grow?” What I’ve found is that the fastest, healthiest growth comes from practices that prioritize profit. And it is not because they plow money back into the practice (or business).
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Profit First sparks faster growth because it makes you reverse engineer your profitability. When you take your profit first, your practice will tell you immediately whether it can afford the expenses you are incurring; it will tell you whether you are streamlined enough; it will tell you whether you have the right margins. If you find that you can’t pay your bills after taking your profit first, you must address those pain points, readjust, and make the fixes. Fun fact: Taking profit first will help you figure out which of the many things you do makes money, and which does not. Then the direction is obvious — you do more of what is profitable, and you fix or eliminate what is not. You will focus on what makes profit for you, organically, and you will get better and better at it. And when you get better at what your customers want and like, they will like you more. Specialists, like optometrists, know the secret. Keep doing a few things really, really well, and you will attract the best customers and see your practice grow. Profit First keeps you focused so you can do this.
CPA Q&A
Ask Rachel
Rachel answers your tough business questions.
Rachel Siegel, CPA
someone decides to retire? What Even as a single-person busido you do if one partner isn’t ness, you are actually embezzling pulling his or her own weight? from your own company without Who keeps the company name? realizing it. For some it’s an occaAbsolutely. Without a doubt. How do you divide the assets? sional thing, for some it becomes This is crucial for your business Unfortunately, this happens a way of life. And the long-term for a hundred different reasons. all the time, especially in small effects can be disastrous if you When partners initially go into businesses. I had one client who want to sell your business or even business, they are motivated ended up in a very contentious take on partners. and happy to embark on this lawsuit that went to court, but Think of it this way: If you were exciting new adventure together. because she had an signed oper- a manager of “Your Shop Inc.,” At the beginning, they agree on ating agreement, the court went would you handle your business almost everything. These new straight to the books. The agree- finances the way you do? Probably entrepreneurs believe they will ment saved her. Without it, she not. You probably would need be in business together forever, would have lost the practice and to show your boss the projected or until they sell the company her clients, let alone six figures monthly income, the expenses, for untold millions of dollars. in income and assets. you’d know how much money the They assume nothing can or shop needed to make every day will go wrong. They trust each and have a plan on how you’d do I’m a solopreneur with other so much that they never it. Or you’d be fired, right? bother to get a written partnerno employees and Treating your business like a ship agreement. What could no contractors. Do I personal piggy bank can only lead possibly go wrong in this scenarto bad things. But the good news still need a separate io? The short answer: A LOT! is that we can always correct for business account? The reality is, the desires and that. Admitting your business expectations of business owners It’s tempting, right? The company and/or personal finances are out card in hand, at the gas station, change over time. A written of control doesn’t mean you’re agreement can act as a safeguard out to dinner, or at the store. Is broke. It means you have no idea this really a business expense? that protects both the business where any of it is going. And we Probably not. But we tell ourselves, venture and each partner’s can help with that. investment. A great partnership “This is part of being a business owner, the business paying for agreement, or operating agreethings.” It starts with a tank of gas, ment, spells out what happens Scan the QR code if the partnership or corporation then it’s towels that are actually at left to get your for the house, but you can always doesn’t work out. What if one of copy of Profit First. give the old ones to the shop, a you gets sick or disabled? What if laptop “for work.”
Do I really need a partnership agreement for my business?
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TEAM SPOTLIGHT
The people who put the “go” in Go Figure
In tune with Wendy
Wendy Reed has the solution — and if she doesn’t, she won’t stop until she finds it.
Picture this: you’re the captain of your professional ship, setting sail into the vast sea of opportunities, armed with a compass of innovation and a map of potential partnerships. Every day brings a new adventure, whether it’s forging strategic alliances, uncovering hidden market gems, or turning potential clients into long-term collaborators. The dynamic nature of the role keeps boredom at bay, and the ever-changing business landscape ensures that monotony never sets in. The soundtrack to your sail is Jimmy Buffet, and your Captain is Wendy Reed, part-time Parrothead, full-time mom to 22-year-old Summer and 6-yearold Teacup Yorkie, Kylie. Armed with a dazzling smile, a fun 5 o’clock somewhere mentality, and an arsenal of persuasive pitches, Wendy is a modern-day alchemist, turning leads into gold and handshakes into partnerships.
22 / goals / first quarter 2024
What is your official title at Go Figure?
What’s the biggest misconception about bookkeeping/ Strategic Account Manager, or as accounting? Rachel likes to call me, “The Go Figure Cheerleader.”
What is the best part of your job? Networking and meeting new people and business owners in our community. It is rewarding when I can establish friendships and then determine if there is a need for us to help their business grow and flourish. I am also super thankful for our Team at Go Figure Accounting. We are truly like a family and have a lot of fun!
What’s your favorite challenge to solve? Every level of Candy Crush! I have been playing it since 2013. Ok, seriously, I’m a connector. When I discover a challenge, I always find a way to solve it by connecting people or businesses together.
Almost every business owner is embarrassed by the lack of knowledge they have of their own bookkeeping and accounting. The biggest message I have for all of them is, “You are not alone!” That is why we are here.
Outside of work, how do you spend your time? My favorite hobbies are photography, riding a beach cruiser bike for fun, and traveling. My favorite place of all time is Key West. I love the history of the island and would love to retire there one day. My entire house is decorated with Key West and Ernest Hemingway décor, so when I come home, I am surrounded by the feeling of vacation with peace and tranquility. It’s always 5 o’clock somewhere!
Current song on repeat? Jimmy Buffet’s “Trying to Reason with Hurricane Season.”
GOAL GETTER
How Great Leaders Build Unstoppable Teams Mike Michalowicz — Excerpt from All In
I hate to break it to you: there is no magic wand for the teambuilding process. To flourish, we need the right set of conditions, created by great leaders. What worked for me and for the leaders I have subsequently interviewed and counseled wasn’t one strategy that produced better results over another. It was a formula that ensured my team cared about my company as much as I did. The formula works for the company I lead. It works for the leaders I have consulted. And it will work for you if you embrace it. I am sure of it, because it is the most empowering way to help people be themselves. Their true selves. The All-In Formula has four parts, and it breaks down like this: fit + ability + safety + ownership = all-in team I call it the FASO Model. I simply pronounce it “faso.” As in rhyming with the word “lasso.”
Fit. People will come, grow, and go. People aren’t the constant in a company, nor should they be; the roles are. To ensure your employees are a good fit, first understand all the functions of a role, and the qualities and qualifications required for that role. Then enlist people for the position matching their potential, talents, and identity to the role’s tasks. Don’t look for a person who can do it all; that is a rare situation. Look for the person who is best at what you need most; they are abundantly available.
People who want to do a job always outperform people who need to do a job. Seek the want. The desire. The thirst. Safety. People do their best when they are not worried by the rest. Protect your team and set up conditions in which they feel safe, enabling them to lean in to contribution. There are three types of safety to consider: Physical safety, where they have protection from harm to their physical self.
Ownership. If you want your team to act like owners, make sure Ability. Great leaders they feel like owners. know people are far This one insight alone, more than their résumé. put into effect, transHiring based on expeforms perfunctory perrience and education formance into all- out is limiting— for your effort. Once we have an team, and for your com- employee who does the pany’s growth. Rather right job for their abilthan match a person’s ities, who feels safe to qualifications to a role, be themselves at work, consider a person’s the next critical step is innate, experiential, to foster psychological and potential abilities. ownership over a task,
project, or idea. Psychological ownership is the strongest influence over selfidentity: When team members are designated ownership over aspects of their job, the natural tendency is for them to put everything they have into it. There you have it. The All-In Formula. F+ A+ S+ O. It can be helpful to think about the formula like this: Fit and ability (where potential meets opportunity— identity is developed) Safety and ownership (where development meets environment— identity is expressed) Each part is effective on its own, but together, these strategies have a multiplicative effect. Deploy the formula properly, and I promise you, you will build the team of your dreams.
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See the possibilities Mike Michalowicz’s Profit First is a book and cash flow method for creating good business habits. Go Figure is writing the Profit First for Optometrists book. While it’s Optometry focused, it has been expressly written so that the principles within can easily be applied to all types of business.
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