Juggling Entrepreneur Podcast
Profit Mastery with Rocky Lalvani
Rocky Lalvani, a renowned Chief Profitability Advisor, is dedicated to helping businesses maximize their profits. Balancing his expertise in corporate finance with the insights gained from parenthood, Rocky brings a unique perspective to empowering entrepreneurs. He has successfully transformed numerous businesses with his expert guidance. Join us to uncover Rocky's top strategies for achieving financial freedom and building a successful enterprise. This is a rare opportunity to learn from a true leader in the field!
Rocky Lalvani, a renowned Chief Profitability Advisor, is dedicated to helping businesses maximize their profits. Balancing his expertise in corporate finance with the insights gained from parenthood, Rocky brings a unique perspective to empowering entrepreneurs. He has successfully transformed numerous businesses with his expert guidance. Join us to uncover Rocky's top strategies for achieving financial freedom and building a successful enterprise. This is a rare opportunity to learn from a true leader in the field!
I am a dad. My kids are older now in that they've graduated college and are out getting started in life, but we've been through that whole journey, spending time with them and helping to raise them and do all of that, and also to have them as part of the business and having them, even up to this day, helping us in the businesses as well. So finding that harmony between it all and figuring out how to make it work for you.
Speaker 2:So how did you start your entrepreneur journey? What motivated you to create this business? And try to help specifically the business owners.
Speaker 1:So this has been a long time in the coming. I was very entrepreneurial as a kid and then I ended up getting a job and the job was good, so I stayed there a long time, but it wasn't what I loved, and so this kind of was more to say what is it that I want to do on my terms, the way that I want to do it, and how do I figure out how to do that in a way that I can also build a client base that would make it worthwhile to do the business and to walk away from W-2? Throughout that time, we've always had side businesses. So even when I was working full time, we had side businesses, we had real estate, always doing a variety of different things, and I think this was the final walk away and just be 100% on my own choice that I finally made. But it took a lot of planning, testing and figuring it out before making that leap.
Speaker 2:That is interesting. Why, specifically the small business owner? What motivated you to create this business, specifically helping the small business owners?
Speaker 1:So I actually started out on the personal finance side in helping people to build wealth, because I looked around. I'm like I don't understand why there aren't more wealthy people, and so I was doing that. But what I found was it was very hard to market to them and also to get people who wanted to actually build wealth slowly. It's really easy to sell people on building wealth fast, but nobody actually wants to take the time to do it right, and so there was a market mismatch there. And while I was trying to figure that out, I came across this concept that business owners weren't looking at their financials. And I'm like, wait a minute, that makes no sense. How do you own a business, run a business and have no idea what your financials are doing? I mean, that's a principal thing of being a business owner. And I started to realize that wait a minute.
Speaker 1:Business owners went into business to do what they loved, and most of them don't love the finances or the accounting. They're not looking at the numbers at all. And I was like, wait a minute, this is now kind of that market segment where the skills I have and the value I bring are badly needed, and if I can make a pivot from personal finance to business finance. Then I have the ability to build a market, and as part of that, I read the Profit First book, which was really enlightening Not so much for how Profit First works, because I've been doing Profit First my whole life. I understand the principles of it.
Speaker 1:What amazed me was that business owners were struggling so much with this, and so I took probably another year or two of testing the market, trying to figure it out, and say is this really true, will this work and can I build a business around it, and is it valued? And I came to learn that it was. And now that I've built my business, it's like oh yeah, this is normal. It's no longer like I can't believe it. It's like this is the norm. People aren't looking at their numbers, and if you can help a business owner to be successful, they don't have a problem investing and being able to do that as well.
Speaker 2:That's interesting. Let's a little bit dig into Profit First book and what motivated you. What are the key points that you think are the most common mistake business owners do?
Speaker 1:So, first of all, there's a couple of things that they get wrong. A lot of business owners focus on top line revenue and they think, oh, if I just sell more, I'll be able to keep more. What they don't understand is their expenses are keeping up with their revenue, if not exceeding it. So for a lot of business owners, the amount of money left at the end of the day for them is very little. And too often we're told you have to spend money to make money, or they hit a hiccup in their business and they don't have cash reserves or something along that line happens.
Speaker 1:Profit first goes by a simple equation of sales minus profit equals expenses, which means you put profit first. You actually take your profit the moment you make your sale. Now it doesn't mean you don't pay your bills, it means you constrain your spending, which is the same principles of personal finance, right, everyone? It doesn't matter how much you make, it matters how much you save or keep, and so that was pretty much the same principles. And then I think the second thing is setting goals, so setting financial goals for the business and then measuring against those targets on a regular basis. I've always done that in personal finance, and yet I was shocked to see most business owners weren't doing it in business finance, and so those are probably two of the main things is setting the goals, tracking against them and making sure that you're actually pulling your savings, your profit, first, and making sure that you're getting paid before you start spending money on everything else.
Speaker 2:How can anybody do that? Rocky, can you help us? Because I think the main set how the brain works is you get a little bit of money and then you go into this loop of buying a house, buying a car, take the mortgage and so on. If I'm looking at because it's a parent entrepreneur podcast, if I'm looking at a parent who is doing a corporate nine-to-five job and he wants to actually implement the formula of profit first, what are the things they need to consider?
Speaker 1:Profit first. What are the things they need to consider? So, first off, if you're in a W-2 job, think about your 401k. That is the perfect example of profit. First, you put money in your 401k before you get paid. You don't miss it, you don't notice. It's even gone. And if you increase it slightly over time? So let's just say, for example, at the beginning of this year you're putting in 4%. Well, what happens if every three or six months you up it by 1%? So you go from four to five, then you go from five to six, six to seven. Over a period of time, you'll never miss those small changes and before you know it, you can be saving 12%, 15%, 18%.
Speaker 1:Now the problem with that is it's all in retirement. So if you want to start a business, it's hard to tap into your retirement money without paying a ton of taxes. So then you start a second bank account. So then you start a second bank account and every time you get paid, put a small percentage of that pay into a separate bank account and let it grow. That will become your seed funding for your new business and give you the cash flow to get started and get moving over time. And it's the same thing. Whatever money ends up in your bank account, I don't care how much you make, it all disappears. So if you constrain yourself, you will just naturally not spend as much. Because there's no money there, so you don't spend it.
Speaker 2:Hmm, that's an interesting point. How about if we go and tap into different age groups and maybe we can go through that part of it? If I have a teenager, I think you're a father of teenage kids who have now grown up. So if I have a teenager and he wants, or he or she wants, to have profit first on their first job or their volunteer or their you know, the part-time job, what they're making money off, how can we train the teenagers to have the profit first mindset?
Speaker 1:This is the number one mistake of parenting. Okay, you're trying to change teenagers. You failed. All right, I taught my kids profit first when they were five years old. When they were five years old, we gave them an allowance. It was equal to their age, so they got $5. Now we didn't have bank accounts, we had envelopes. $5. Now we didn't have bank accounts, we had envelopes. Same concept. So when they would get their $5 of allowance, they would take their $5 and $1 went to charity, $2 went to savings and $2 they could spend on anything they wanted.
Speaker 1:And so we were just building a habit of them having money. We were building a habit of them saving money because we told they said well, what are we going to do with this money that we're saving? We're like well, you can use that money to maybe buy a house or do something. So far in the future you can't even imagine it. Now, this is the surprising thing. You know what happens? After 52 weeks of putting $2 aside, you have a stack of over $100. That becomes a pretty thick stack of bills and over time the kids start to watch this grow. Now, as they get older, you can open up a bank account, move the money from the envelope to the bank account, move the money from the bank account to a brokerage account and start teaching them how to invest. But even when they got birthday money, it's the same concept.
Speaker 1:Take your gift. Part of it goes to savings, part of it you can give to charity and part of it you can save Now, or part of it you can spend Over time. You have to teach them how to spend money appropriately. You have to teach them about commercials. You have to teach them about consumerism. You have to teach them hey, if you save up for a few weeks, then you can buy something larger. You have to teach them that.
Speaker 1:Hey, if you buy a candy bar at the gas station, it costs $2. If we go buy that same candy bar at the grocery store, maybe it's only a dollar. And hey, if we go to Costco, you can get that same candy bar for 50 cents, but you're going to have to buy $10 worth right, because it comes in a large package. Then they start to understand the principles of how this all happens. The next thing you do is the next time you go to the grocery store and they want a candy bar, you go, you have your own money. Buy it and you will be shocked how quickly kids will learn how not to spend their money, because I guarantee you they will spend your money without even thinking twice.
Speaker 2:Spending parents' money, even thinking twice. Okay, that's a strong one, but I think that gives a reality check on how to train the kids to value the money and to think about the future the principle of profit first. Again, there is one curious fact I learned about you but correct me if I'm wrong is that you already have a podcast called Richer Soul, where you're trying to help other people with your tips. Is it true?
Speaker 1:Yes, I do have another podcast podcast and that was the original podcast. So that was teaching people how to build wealth and how to do that, and but we weren't teaching what everyone else was teaching. So we were teaching a lot of these principles, but we were also teaching it to high income earners. So it was like, hey, if you're just going to chase the money, you're not going to be happy. It's more than just chasing money. So we talked about all of the different things about how to live life on that podcast and I still have it, we still record, we still do all of that, but there's no business behind it. Um, but it's fun and it's enjoyable behind it. But it's fun and it's enjoyable. I meet the great people and I get to give back. Yeah, that sounds really great and actually I did an episode with my daughter. So that's one. Yeah, I think it's number 72.
Speaker 2:And we talk about how to raise kids and what we did with our kids, which was vastly different than what most people do. Oh, I will definitely hear that one for sure. So, rocky, let's hop into your journey. As a parent, I know you a little bit touched base about your belief in profit first principle and how you taught your kids around it, and you worked in some years in corporate America while you're raising your kids, and then you have your business and you started entrepreneurship journey. Tell us what went into your mind when you really wanted to make in a full-fledged entrepreneurship journey and what kind of discussions that you guys had as a family and as kids, why it's hard or why it's challenging, especially for parents, to go into entrepreneurship journey. What you thought from your journey was most challenging.
Speaker 1:So I think the startup phase is difficult unless you have clients to walk out with, because you have to go out, you have to build a business and that takes time and effort. That said, I did this so that I would have time freedom and financial freedom. I make a lot more than I did when I was in corporate. I spend more time now, probably than I did when I was in corporate, but that's by choice and it's also because the kids are gone. If I had to figure out how to create the time balance, I would create the time balance. I think, more often than not, we waste a lot of time, just like we waste a lot of money, and I think that's the biggest thing with parents. They're signing their kids up for all this stupid stuff that is not going to get them into anything, and we actually talk about that on my podcast, like what is important when it comes to looking at college? How do you make it faster and easier? How do you not play the game that everybody else is playing? And how do you create the time to be home with your kids? How do you create the habits and the stacks to be able to have more time freedom with them and to be more involved as they are growing up.
Speaker 1:I coached a lot of their sports. The advantage of coaching their sports is guess who gets to pick when we practice? I do it goes on my schedule, not somebody else's, and I'm not running around to 20 different places. If my son and my daughter both had soccer practice, I'd call the other coach. We'd work together and we'd be side by side. The girls would be over there, the boys would be on the other side. We do the same night, so that I'm not killing myself for somebody else's craziness.
Speaker 2:I think that is a very smart and strategic approach that most of the people don't think, and personally I see a trend about people go in a herd and follow that somebody else is following, rather than standing or sitting for a minute, think what is my kid doing? What are they really good at? Where do they want to go, and is this class or is this effort that we are putting in really going to give them value in the college? Right? Each kid is unique in their own kind. Each kid have their own skills and each kid have their own path to go to.
Speaker 2:So the formula that might have worked for one kid might not work for the other kid, and it's quite surprising that not most of the parents think that way. Would the same thing apply for? Profit first, too? Means, for example, there are different kind of families with different lifestyles, right, different economic styles. So if we go, if we can start with middle class family and higher middle class or richer family, I think for every kind of economical backdrop, profit first is their top priority. It doesn't matter what class they are in. Do you agree or disagree?
Speaker 1:Yeah, it doesn't matter how much money you make, this always works. Yes, so if we.
Speaker 2:yeah, if you look at the middle class family, or if there is a family of two kids and they are school going, kids in elementary or middle school and what the parents are doing corporate America are in corporate America. What are the things they need to consider? And start the value of profit first lifestyle.
Speaker 1:I think first of all, you have to teach your kids the value of money and you have to gamify it and you, you have to understand that it's not your job to be their bank and just hand the money whenever they want it. Um, that's a big part of it, and so I think if the kids are involved in family planning, they start to understand what is involved in having to buy all the things that they think that they need, from cell phones to fancy clothes, to all of that. But you've got to model it for them so you can't say you can't have this while you go do it, because they know when you're a hypocrite and they'll call you out in a heartbeat for being a hypocrite. So I think it's learning to model it and decide what's important. Like I see these parents, they're spending thousands upon thousands of dollars for sports. None of these kids are going to make it to the major leagues, or if they do, it's like I don't even know the astronomical odds. Might they get some money for college Maybe, but most college sports don't pay that much money. I think parents spend more on sports than the college will ever give them.
Speaker 1:And then the other question is is college, even the right choice, and how do you determine the value of college? A lot of these colleges are ridiculous $300,000 for a useless undergrad degree. I would never pay that. My kids know it. They're like I said I don't care if you get into Harvard, we're not going because I'm not paying that ridiculous bill for what little they teach. You got to figure out how you can get through these processes faster, quicker, easier. And you got to figure out the game that's actually being played, because there is a massive game being played around you. And you got to figure out the game that's actually being played because there is a massive game being played around you. And if you don't realize that, you're just going to hand your money to whatever Ivy League school or whatever school that your kid thinks they should go to.
Speaker 1:My son, both my kids, graduated college early. My son graduated college at 20 with an engineering degree. We got through in a fraction of what everybody else was paying. We figured out the scholarship system. We figured out the merit system. We picked our colleges based on value. We figured out how to go in with a ton of credits at very low cost, and there's so many new online programs, so many other programs coming up today that you've got more flexibility than you've ever had to get through school, and it's only if you need an advanced degree. Then you can see about going to a fancier college at that point, but for undergrad it's pretty much useless, I think that is a very interesting fact.
Speaker 2:I have never heard anybody say no they're not going to yeah, no, and that's I think it's very, very honest uh, feedback, and I really really think the listeners will hear and understand this concept. Um, because it's like a rat race and people just you know, somebody said it, it's a good one and they just go blindly right without the planning of it. Um, let's talk about. You talked about the value of teaching the curse of profit first and knowing the value, knowing what it takes to buy the awesome things that you want, but also at what cost that you're sacrificing for others. What other things we, as parents, should teach the kids on the work-life balance or enjoying the profit first principles, but also enjoying life at the same time. What are the principles the kids have to learn?
Speaker 1:Well, first of all, I think they need to under. Most kids have no idea how much people get paid, right, they have no idea how much life costs. So if you're not sharing with them, or at least teaching them, hey, if you're looking at these professions, how much does it cost to go to school? What is that person going to make? Are you happy with that lifestyle that that salary affords you? Is that the kind of work you even want to do?
Speaker 1:People go to all these career paths never examining what it actually means to do that work, and you should have your teenagers go talk to people in these different fields and have conversations to understand what does it mean to work in this particular field, or is this particular job and what are the income potentials and what is? How long does it take to get there? And is that a sacrifice you're willing to make or not make? Nobody's having these conversations right. They just tell you go to school, get a four-year degree, everything will be OK and everyone's starting to wake up in their late twenties now going wait a minute, that was a lie and I think kids need to go out and see. Some kids are. They might do bad. I mean, an auto mechanic today can make six figures right. An electrician or a plumber doesn't have to worry about AI, doesn't have to worry about their job going to China, right, and they can make a very good living and they can turn it into a business and they can have a very nice lifestyle doing what they like, because some kids like working with their hands and yet we tell them they can't or they shouldn't, or this or that. So I think it comes back to understanding who your kids are, what they want, and then giving them exposure. So I will give a hands out.
Speaker 1:I think one of the best programs out there for exposure is the Boy Scouts. The Boy Scouts have so many different merit badges in so many different areas. They can learn about electricity, they can learn about welding. They can learn about electricity. They can learn about welding. They can learn about sales. They can learn about robotics. They get exposure to adults who are willing to come talk to them and they get to start to see, hey, you've got to teach your kids how to ask questions of different people to find out what is important to you.
Speaker 1:And if you hear my daughter's episode, you'll see at 16, 15, she was talking to women who were in their late 20s. What were your regrets? What do you wish you had known at my age? What would you do differently? And that's where she started to see what other people had learned. So she didn't have to make their mistakes. And it wasn't me, the parent, telling her, cause they're not going to listen to me, but by giving them the opportunity to go have these conversations, they are going to learn. They're going to see it from peers or from people they might respect. And when they start to hear the same thing from multiple people, then they start to go, oh okay, and then you can have conversations with them.
Speaker 2:Makes sense. How can you and your institute help parents to build a profit first?
Speaker 1:help parents to build a profit first. Well, so I think everything that we we don't have any formal programs for teaching parents, but throughout the podcast there's a whole bunch of free information that we share on how to do a lot of these different things, and you just got to find those episodes and listen in and see what it's different. But I think the biggest thing is to have an open mind of not following the herd, because if you want to follow the herd, have fun. And I'll be honest, when I was a parent, here's the biggest struggle I had Do I want to teach these people how to do it the way we're doing it, or do I just want to shut up? Because you know how much easier life is going to be for my kids if they're all going the wrong direction. Right, the competition becomes slim to none. And actually and it's been a while since I've looked at this, because my kids are out of high school Even the NEA is the National Education Association they came out with I think it's called the four C's.
Speaker 1:They're like these are the skills we need to teach our kids, and then they come out and say we don't know how to do it. I'm like I do. This is how you teach this. Our kids went to a classical education school, and classical education is how they used to teach people before the current school system came into place. They teach your kids how to think, how to speak, how to write persuasively, how to make a point, how to understand the psychology of how humans make decisions Okay, and using logic, and all of these different things that we don't teach kids anymore. We don't teach them how to think, we teach them what to think, and so you have a bunch of sheep running around.
Speaker 2:Yeah, so true, so true. How can your organization help small business owners around the world?
Speaker 1:So we do work with small business owners. We sit in the financial seat for them. We help them to figure out what are their goals for the year, how their goals fit in with their personal desires in their family life, and how does the business serve you instead of you serving the business. At the end of the day, if you're going into business to make more money and have more freedom, then your business is supposed to serve you. Most business owners become a slave to the business. That's not the way it's supposed to be. So we help them to understand their business, to reverse engineer it to work for them, and then to set targets and figure out how to make it all work in a way that works for them. I tell my business owners I'm like you need to take vacation, you need to do this, you need to do that, and I'll show you how to make your business pay for it all. That's what we do.
Speaker 2:And that I think, is very unique compared to what other people in your industry are trying to sell. It's working smartly and strategically and working towards what works for you best, but also having the profit first, rather than going into the cheap world as most of the other services do right, using the old formula that most of the sheep follow, and I think that makes you and your business very unique compared to others. So, rocky Lawai, thank you again for being on our podcast. It is truly, truly a pleasure talking with you, truly a pleasure talking with you, and thanks a lot for sharing the different dimension about your parent entrepreneurship and your style of parenting that most of the people will love and will start to follow after hearing this podcast. Thank you again, rocky. Any last words before we wrap up the podcast to the audience.
Speaker 1:No, thank you for the opportunity to be here and to share, and we'll see who wants to actually do something different.
Speaker 2:I bet it really needs some good bravery to start doing and acting differently, but we really hope you have motivated a lot of people today. Rocky Lalwani, everyone Thanks, Rocky, once again.
Speaker 1:Thank you.