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Note from Larissa… Happy April, folks! Donna is just as busy with the tax season as the rest of our readers in the financial industry. Make sure you are up-to-date on your taxes for a smooth tax season. I have been researching Profit First for a while now, and I have learned a few things about the system and how it applies to gig workers. I can tell you that it has worked well enough that I am branching out from gig worker to solo small business owner. So, how is the experience working with Profit First from the beginning?
As you know, Profit First is a cash management system that reframes the typical accounting system to work with human psychology. The system is best described (in my opinion) as a modern update to saving strategies used by the greatest generation during the depression. Think about a mother sorting money into a series of envelopes to help her understand her finances at a glance. Profit First instructs us to create a series of bank accounts to take the place of those envelopes. This is where Profit First earns the name, because one of those ‘envelopes’ should be titled ‘profit’. After the bank account is created, the system requires us to allocate a percentage of our revenue as profit. Thinking of our business’s profitability in this way forces us to be critical of how we use our money. The end result, though, is a business that becomes incredibly more profitable. But, while theories are fun to fling around, it’s much better to see results. In June 2023, I was challenged to apply Profit First to my position as a gig worker. As of December of this year, I see myself more as a young entrepreneur using Profit First to guide my business in its early stages. Let me tell you what I have felt working with Profit First for the last year.
However, before I tell you about my experience, I need to tell you about how I implemented the system. When I originally tried to implement Profit First, I quickly failed. It was laughable to send 20% of my small income into a savings account only to accrue warnings from my bank when I immediately pulled the income out to cover an unexpected cost. After consulting with Donna, the reason became clear: I needed to implement the system step-by-step, working with a Profit First Professional. Consulting with Donna gave me insight into my own spending habits and a predictable time scale for when I should or shouldn’t worry about an aspect of the system. If you’re a business owner at any stage of your business, it’s crucial to work alongside a Profit First Professional to implement the system appropriately.
The first thing I did was decide who I could develop a working relationship with to outgrow platforms like Fiverr and Upwork. These platforms are a fine way to make a quick payday, but given their 10% middleman fee, there is no sustainable method to develop a business from that point. This is what caused me to market to Donna to take over more of her content writing, until eventually I found myself in a weird situation. As someone who loves writing, I never thought about how to apply writing to marketing. It wasn’t my thing, but I quickly realized that not only was that where content writing thrived, I wasn’t bad at it.
Lesson 1: Create a Foundation to build from - Profit First, warns against offering new services to clients without proper forethought. However, that doesn’t mean we don't create new services to offer. Transitioning from only content writing to social media management didn’t lower my profitability; with the correct application of my skills, I increased my profitability by nearly 50%.
Donna is in the middle of launching her Clockwork Coaching services, and we are excited to bring this new offer to our clients. However, she has been working to prepare herself for this new branch of her business for over a year now. Getting the correct certificates and training to avoid flopping or risking her profitability. This was insightful because, as a gig worker, I would spend untold hours sifting through jobs to find a job that might pay me enough to make ends meet. However, gig work is such a quick bidding war that you end up pitching yourself without understanding the amount of time you will spend working. In a way, as a gig worker, I wasn’t getting paid to find jobs, and I wasn’t getting paid my fair share to do the work.
Lesson #2: Professional Development is marketing - Part of Donna’s successes as a Profit First coach has come from simply talking about what she has learned. Not only does this give us an increased understanding of the skills we are mastering, but it also attracts potential clients into long-term working relationships.
Don’t waste time sifting through jobs on a platform designed to match you with untrustworthy clients and unstable income. Spend your resources in a way that naturally attracts long-term working relationships in order to earn a consistent source of income. These lessons and working with Donna to market her Profit First and Clockwork coaching services have given me the clarity to move forward with my own business. If you are a small owner like me or a medium-sized firm owner looking to significantly increase your profitability or just understand what to do next, I would strongly suggest working with Sooter Consulting. Donna and her team have the experience to help.