Profit First for Interior Designers - Episode 265

 

Mike Michalowicz’s “Profit First Method” flips traditional methodology on its head. Most people subtract expenses from earnings and whatever is left is “profit.” But you started a business to profit, right? So you should take your profit first and use whatever is left to operate your business. It shifts your mentality, leans your business, forces you to be creative, and leads to profit.

Dala Al-Fuwaires knows firsthand. She implemented the profit first method at her commercial interior design firm, House of Form. In this episode of WingnutSocial, Dala shares how interior designers can implement this practice in their business—and how embracing this methodology has impacted her business.

What You’ll Hear On This Episode of Wingnut Social

• [3:20] Wingnut Webinars and Wingnut Academy Updates
• [5:06] Mini News Sesh: Facebook launches new ‘Bubbles’ feature
• [7:54] Learn about Dala Al-Fuwaires and House of Form
• [9:43] What is the profit first method?
• [13:05] How banking works on the profit first method
• [17:45] How implementing profit first has impacted Dala’s business
• [23:28] Dala’s marketing strategy for House of Form
• [26:21] Where interior designers should get started
• [29:00] Could a profit-first mentality help you sell your business? 
• [32:03] The What Up Wingnut round!
• [36:24] Blooper Reel!

Connect with Dala Al-Fuwaires

• House of Form
• Follow on Instagram
• Connect on LinkedIn

Resources & People Mentioned

• Wingnut Webinars: 6 Ways to Infuse Personality into a Luxury Brand
• Get Wingnut Academy Updates
• Follow us on Instagram and you just might win a scholarship to our Instagram for Designers courses!
• Get FREE shipping on your first order from Article
• Profit First by Mike Michalowicz
• Built to Sell by John Warrilow

How to implement the profit first method

Because the profit first method involves allocating revenue very specifically, it’s best to have separate bank accounts for each “bucket.” When Dala implemented profit first, she modified it slightly to suit her interior design firm: Dala uses four main accounts:

• Opex: This account is for anything that involves operating expenses for the business. This includes things like payroll, your lease, marketing, computer programs—anything that is an expense for the business. 
• Tax distribution: Dala immediately sets aside 15% for taxes so at the end of each quarter she can make a payment to the IRS and not worry about where it’s going to come from.
• Owner’s Pay: As the business owner, you need to make sure you’re getting paid for your work!
• Profit: This is where you allocate bonus funds that can be put toward advancing your business. For example, Dala used it to build out an office for her team.

Each account is broken into a different percentage based on the performance and revenue of the company (i.e. Dala sets aside 10% of every check that comes through for profit). Every “Financial Friday” Dala spends the first hour of the day distributing funds into its respective account. 

How implementing Profit First has impacted Dala’s business

Before embracing the Profit First method, Dala had one account. She wasn’t on payroll and her salary was whatever was leftover at the end of the month. But when you implement profit first and go through the exercise of dividing up the money in various accounts, you realize what the revenue needs to be to meet the goals for your business. It allowed Dala to carefully evaluate big decisions. 

Logistically, she points out that it’s easy to log in to your bank account and look at each designated account and know what funds are available in each bucket. Dala can make informed decisions fast, such as hiring a new team member. It gives you the structure needed to run a successful business. 

Where should interior designers start?

Read the book. Talk to peers who have implemented the profit first method who can share some insight. If your business isn’t profitable, Dala believes that you can still implement this method. It will be the push you need to become profitable. It forces you to think differently about how you run your business. 

How can the profit-first mindset help you sell your business in the future? What next steps should you take? Learn all about it in this episode of Wingnut Social! 

Connect With Darla & Wingnut Social

• www.WingnutSocial.com
• On Facebook
• On Twitter: @WingnutSocial
• On Instagram: @WingnutSocial
• Darla’s Interior Design Website
• Check out the Wingnut Social Media Lab Facebook Group!
• 786-206-4331 (connect with us for your social media marketing needs)

 

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