Running a building business is no walk in the park. Long hours, financial stress, and juggling the needs of clients, employees, and suppliers are par for the course. But what if you could remove money stress and turn your business into a profit-generating machine? That’s precisely what Mick Hawes and guest expert Katie Crismale-Marshall discuss in episode 106 of The Toolshed Podcast.
In this episode, Mick and Katie explore the transformative potential of adopting a “Profit First” mindset for trades-based businesses. Katie, the author of Profit First for Tradies, shares actionable steps to ensure your business works for you, not the other way around.
If you’re tired of living week to week, wondering where your money goes, and yearning for more time to enjoy the fruits of your labour, this guide will show you how to apply “Profit First” principles and reclaim control.
Why Financial Stress is the Builder’s Silent Killer
Money stress amplifies every other challenge in your business. As Mick aptly puts it:
“When you get rid of money stress, everything else either disappears or becomes easier to handle.”
For many Australian builders, cash flow issues, tax debt, and the inability to take a worry-free holiday are all too familiar. These financial pressures create a ripple effect that undermines decision-making, strains relationships, and robs you of the joy of running your business.
But it doesn’t have to be this way. The solution lies in adopting a “Profit First” framework—a system that prioritises profitability while simplifying how you manage your finances.
What is Profit First, and Why Does it Work?
Profit First is a financial management system designed to ensure your business is always profitable. Developed by Mike Michalowicz and tailored for the building industry by Katie Crismale-Marshall, it flips the traditional accounting formula on its head:
Traditional Formula:
Revenue – Expenses = Profit
Profit First Formula:
Revenue – Profit = Expenses
By allocating a portion of your revenue to profit first, you force yourself to run your business within the remaining budget. This proactive approach makes profitability a certainty rather than an afterthought.
3 Steps to Make Profit First Work for Your Building Business
1. Know Your Numbers and Take Control
Katie’s first tip is straightforward but crucial: know your numbers. Many builders avoid looking at their financials, either out of fear or because they’ve delegated the task entirely. But understanding your numbers is the first step to making informed decisions.
Actionable Steps:
- Streamline Bookkeeping: Work with your bookkeeper to address inefficiencies. Write down everything that frustrates you about your current process, and collaborate on solutions.
- Schedule Time Weekly: Dedicate time each week to review your financials. Even a 30-minute session can help you stay on top of your cash flow and identify potential issues early.
- Use Bank Accounts to Track Funds: Separate your revenue into distinct bank accounts for operating expenses, taxes, and profit. This visual clarity helps you understand exactly where your money is going.
Katie emphasises that Profit First simplifies this process by showing you at a glance what’s available for spending and what needs to be set aside.
2. Reassess Your Business Goals
Why did you start your business in the first place? Many builders lose sight of their goals, consumed by day-to-day operations. Katie advises recalibrating your goals to ensure your business supports the life you want, not the other way around.
Actionable Steps:
- Define specific, measurable goals for your business. For example:
- Work four days a week.
- Take 12 weeks of holidays annually.
- Generate a net profit of $150,000.
- Regularly revisit and adjust your goals to ensure they align with your personal and professional priorities.
This clarity not only motivates you but also helps guide your financial decisions.
3. Use the Power of the Reticular Activating System
Mick introduces the concept of the Reticular Activating System (RAS)—a part of your brain that focuses on what you deem important. If you fixate on scarcity or challenges, you’ll find evidence to support those beliefs. Conversely, focusing on positive goals can train your RAS to identify opportunities for growth and success.
Actionable Steps:
- Set clear, positive intentions for your business, such as increasing profitability or reducing workload.
- Surround yourself with like-minded individuals who challenge and support your ambitions.
- Celebrate wins, no matter how small, to reinforce a positive mindset.
Why a Bigger Purpose Matters
Both Mick and Katie stress the importance of having a purpose beyond profit. Initially, your goals may centre around personal financial freedom—and that’s okay. But as you gain stability, you can expand your focus to giving back or creating a legacy.
Mick shares examples of builders who used their businesses to support foster kids or build homes for those in need. These larger purposes not only inspire but also provide a sense of fulfillment that transcends financial success.
“Your business is the best platform to build time and financial freedom so you can help others.”
Collaborate for Success
One of the most powerful tools for implementing Profit First is collaboration. Mick encourages builders to engage with like-minded peers in groups like Builders Business Blackbelt or The Toolshed. Discussing goals, challenges, and solutions in a supportive environment can fast-track your progress.
Key Benefits of Collaboration:
- Gain fresh perspectives on your challenges.
- Identify actionable strategies faster.
- Stay accountable to your goals.
Overcome Challenges with Profit First
Profit First doesn’t just address surface-level financial issues; it transforms how you think about and manage your building business. By prioritising profitability, you can:
- Reduce money stress.
- Regain control over your time.
- Create a business that supports your lifestyle.
Start Putting Profit First Today
Running a building business in Australia doesn’t have to mean constant stress and sacrifice. By adopting the Profit First system, you can create a business that works for you—one that’s profitable, sustainable, and aligned with your goals.
Start by knowing your numbers, reassessing your goals, and focusing on a bigger purpose. And remember, you don’t have to do it alone. Join a supportive community, like The Toolshed, to gain insights and inspiration from others on the same journey.
Ready to take control of your business finances? Pick up a copy of Profit First for Tradies and start building the business—and life—you deserve.
