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Mastering Profit First Method With Rocky Lalvani

Rocky Lalvani

Rocky Lalvani is a Profit First Professional and the Fractional Chief Probability Officer at Profit Comes First, where he helps entrepreneurs and small business owners grow their companies profitably. Certified in the Profit First method, Rocky develops the strategies and models his clients need to maximize their profit potential.


Rocky is also the host of the Richer Soul podcast and the Profit Answer Man podcast. He graduated from Rutgers University with a bachelor’s degree in economics and earned his MBA from Penn State University.


Here’s a glimpse of what you’ll learn:


  • [02:12] Rocky Lalvani discusses Profit Comes First and the common misconceptions business owners have about financial management

  • [04:19] The importance of making profit a priority from the start

  • [07:19] Anticipating different business growth phases with profit in mind

  • [12:59] How customer feedback can impact a product launch strategy

  • [15:59] How can founders structure their compensation to align with long-term business goals?

  • [22:40] The strategic movement of capital between accounts for business discipline

  • [31:46] Rocky discusses the current impacts and limitations of AI on business finances

In this episode…


Many entrepreneurs dive into their ventures focused on their passion, often neglecting the critical aspect of financial management. This can lead to serious challenges in maintaining the profitability and sustainability of their businesses. So, what strategies can these business owners employ to ensure they prioritize profit while still pursuing their passion?


Rocky Lalvani, a Profit First professional, tackles this issue head-on by implementing the "Profit First" methodology. He explains that many business owners lack the financial acumen to manage their enterprises effectively, leading to decisions that can jeopardize their success. Rocky’s approach helps entrepreneurs establish a clear plan for extracting profit from their business operations. His strategy involves setting aside a portion of profits before addressing other expenses, ensuring business owners maintain financial discipline. He emphasizes the importance of building cash reserves to cover personal and business needs, adapting to changes, and making informed decisions to pivot when necessary.


In this episode of The Customer Wins, Richard Walker interviews Rocky Lalvani, the Fractional Chief Probability Officer at Profit Comes First, about prioritizing profit in business. Rocky talks about Profit Comes First, the common misconceptions business owners have about financial management, the importance of prioritizing profit from the start, and how to anticipate different business growth phases with profit in mind.


Resources Mentioned in this episode



Quotable Moments:


  • "You can't do what you love if you don't have money, because you still got to put food on the table."

  • "If your business isn't profitable, you have a hobby."

  • "Begin with the end in mind."

  • "You got to ask yourself, am I willing to work as hard as I need to for the lifestyle I want?"

  • "Give them what they want, so you can give them what they need."


Action Steps:


  1. Conduct regular financial review: This practice ensures you stay informed about your financial health and helps in making more strategic decisions, addressing the common challenge of entrepreneurs neglecting their finances.

  2. Implement Profit First method: This method creates a habit of profitability and financial discipline, which is essential for sustaining and growing a business.

  3. Create separate bank accounts: This helps you to easily track where your money is going and reduce the temptation to misuse funds, which can often lead to financial mismanagement.

  4. Invest in personal financial education: Enhancing your understanding of financial concepts can empower you to make more informed decisions and effectively manage your business's finances.

  5. Engage in strategic planning for growth: This proactive approach helps in identifying potential opportunities and risks, allowing you to adapt and thrive in changing market conditions.


Sponsor for this episode...


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Episode Transcript:


Intro 0:02 

Welcome to The Customer Wins podcast where business leaders discuss their secrets and techniques for helping their customers succeed and in turn grow their business.

 

Richard Walker 0:16 

Hi, I'm Rich Walker, the host of The Customer Wins where I talk to business leaders about how they help their customers win, and how their focus on customer experience leads to growth. Today I'm speaking with Rocky Lalvani, founder of Profit Comes First, and today's episode is brought to you by Quik!, the leader in enterprise forms processing. When your business relies upon processing forms, don't waste your team's valuable time manually reviewing the forms. Instead, get Quik!. Using our Form Xtract API, simply submit your completed forms and get back clean context-rich data that reduces manual reviews to only one out of 1000 submissions. Visit quikforms.com to get started.

 

All right, I'm really excited to talk to Rocky today. Rocky Lalvani is the Profit Answer Man. He teaches business owners how to ensure they get paid and make profit a priority. As a certified Profit First professional, he implements Mike Michalowicz Profit First system. Thanks for jumping in. We knew we're gonna do this. Rocky started with nothing when his parents immigrated to the United States when he was only two years old and his parents were in their 40s. It was his parents second time starting over in life, as they had moved here to experience the American dream. In spite of a lot of struggles and his mom passing away when Rocky was only seven, he's been able to achieve financial and life success. Rocky loves to share his journey inspire others to achieve their dreams even faster. This is why I wanted to talk to you. Rocky, welcome to The Customer Wins.

 

Rocky Lalvani 1:53 

Thank you so much for having me.

 

Richard Walker 1:55 

Yeah, I'm super excited. So for those who haven't heard this podcast before, I talk with business leaders about what they're doing to help their customers win, how they built and deliver a great customer experience, and the challenges to growing their own company. Rocky, let's understand your business a little bit better. How does your company help people?

 

Rocky Lalvani 2:12 

So kind of all of those things that you just mentioned, I had a major AHA a few years ago, quite a few years ago. I assumed that business owners understood the business of business, which meant that they looked at their P&L, their balance sheet, they knew how to run their business. Turns out the truth is, most business owners don't look at their finances, just like most people don't look at their finances. They went into business to do what they loved, and accounting and finance were either not on the list, they're really low on the list for many of them.

 

And if that's the case, when you try and run your business and you're blind to what the numbers are, what's happening financially, you tend to make not the best choices, and you tend to get in trouble over time, and what we do is we fix that. We look at the business owner, what are their goals? What did they want their business to serve them with, instead of them being a slave to their business? And how do we make that happen by looking at the financials and the results and building a plan going forward to holistically run their business, to serve their life?

 

Richard Walker 3:30 

Nice, you're right. So many entrepreneurs are like, I have this skill. I'm going to go do it. I work with a lot of financial professionals in my industry, and I think a lot of them are about the financial planning process, not the business side of things. It's true of doctors and other types of practitioners. They're practitioners first, not business people first. But I'll admit something else, like, I got my degree in finance, so I'm comfortable with financial statements and such, and I don't look at the numbers that much. I let my COO and my accounting team do that. And if I go for a month or two without looking at I start to feel twitches like, what am I missing? So I love that your focus is on that. Why do you say profit first?

 

Rocky Lalvani 4:12 

Well, what's the purpose of a business?

 

Richard Walker 4:15 

Well, for a lot of people like you said, it's the practice of what they're doing, right?

 

Rocky Lalvani 4:19 

You can't do what you love if you don't have money, right? Because you still got to put food on the table, you got to pay your mortgage, you got to take care of your kids. If your business isn't profitable, then let's be honest, you have a hobby, and hobbies are wonderful, but I hope you have money coming in from somewhere else to pay your bills and to support your hobby. And I think that's the key. So a business needs to be profitable. And the question then is, well, how much is enough?

 

Richard Walker 4:54 

May I ask a different question, yeah, how do you define profit then?

 

Rocky Lalvani 4:59 

Yeah. Yeah, so this is a tricky one, right? In sometimes you have to say certain things to get a point across, but then the reality is different. And here's why I say this, because you probably know it. If you look at a profit and loss statement at the bottom is the profit, but profit doesn't equal cash in the bank, right? Right. And so they are two separate numbers. At the end of the day, it's really about how much cash can you appropriately extract from the company to and again, going back to what I was going to say, how much cash do you need for your life, and how much cash does the business need for the business to operate stably?

 

And what that means is, I can make payroll in two weeks. It means if COVID hits and things are uncertain for 90 days that we're going to survive 90 days. So I think those are the two questions, how much cash does the business owner need to live their life in a comfortable lifestyle, and how much cash does the business need to consistently perform and grow and be safe and that's what you got to figure out, and then that's what you have to ensure. And as a business owner, you got to ask yourself, am I willing to work as hard as I need to for the lifestyle I want? And that's a choice.

 

Richard Walker 6:40 

Yeah. So this feels a little bit like budgeting. I don't want to budget my expenses first because I can easily spend all the money in the world. I want to budget my income first against what I have to be able to spend so I don't go into debt and not be able to afford my lifestyle. I'm building corollary. I'm not saying it's exactly like that, but let's also talk about the stages of a business, right? Because in a startup phase, you may not make money for the first year, five years, whatever it is your startup is going through, then you might get to a comfortable phase, or a high growth phase. So how do you approach the different phases of a business with this concept of profit first?

 

Rocky Lalvani 7:19 

Begin with the end in mind. So when you start this company, you need to tell me, is it going to take us a year to make money? Is it going to take us five years to make money? Because if it's going to take us five years to make money, how are we going to pay for those five years? Are you personally wealthy and you're putting money in, okay, are you going to borrow? Well, if you're going to borrow, does whoever you're borrowing from have the capacity and the desire to fund you for that long and to ensure that you can get out that far? And then the other part of it is, as those years go by, are we hitting our milestones? Is what we said actually working? Because you might have to pivot. Right? Many companies pivot. Hey, we started out with this idea, Uber pivoted. Netflix pivoted. All these companies have pivoted over the years, and so you've got to have something to say, is it working or do we need to pivot? Because you can have a million dollars in revenue and be losing money faster than you can imagine.

 

So I think that's the other half of it. So what is our plan and is our plan realistic? So we're recording now in the middle of October, right around now, in the next 30 days. Let me sit down with all my clients and say, what is 2025 look like? And as part of that, well, we're going to do X amount of growth. Okay, if we're going to do X amount of growth, what is it that we're going to do to get the growth? Do we already have a growth trajectory, and we're like, hey, we've been growing at this rate, so it's actually consistent, or is it new growth? Or are we bringing on a new service? What are we doing differently that you're going to grow whatever percent you decide for next year? And then the second half of the question is, what do we need to deliver that growth? Do we need to hire somebody? Do we need a new machine? Do you have capacity like, what's going to change in order for you to be able to do that?

 

And so we'll plot that all out, and we'll put the numbers down and say, does it make sense, or does it not make sense? Because the thing I find most entrepreneurs, they've got an amazingly positive attitude, a little too positive sometimes we're going to double our sales next year. Great. How? Because the last six months, you've been going down, and supposedly a recession is coming and chatGPT came in the market, and others are hurting because of x, y, z, what are we going to do? Like, show me a plan.

 

Richard Walker 10:10 

It's a really hard thing to do, especially in the early days of your business. But just in general, it's a really hard thing to do to forecast, at least that's been my experience, because you can go out and do what you think are all the right things to do, and they turn out to do nothing for you. And you can have also windfalls that you didn't expect. Bigger customer comes your way that you had no idea was going to happen. Or you lose a customer, that's another possibility that happens. So I've always found that when you start saying I'm going to achieve this, it's a lofty vision of what you want to get to, but it's really about what are the levers you're pulling to drive for that goal, and do you know what they are? So there's a book I read The Four Disciplines of Execution that I liked, and it talks about leading versus lagging in indicators. Do you talk about that with your clients?

 

Rocky Lalvani 11:00 

Yes. So if you tell me we're going to grow 20% then my first question is, how are we going to get the 20% more clients? So where is that going to come from? It can come from a variety of ways. It can come from price increase. It can come from getting your current clients to buy more. It can be from new clients. So if we're going to get 20% new clients, what are we going to do to drive whatever that lead flow is, to get the 20% more and what does that metric look like? And what is it? Is it just throwing more money at a proven marketing plan that already works? Or are we going to add a new channel? Are we going to do something different, and then how are we going to test that and know that it works? Too often, we throw money at all our problems and we expect the return, and more often than not, what we do is burn money.

 

Richard Walker 11:58 

Yeah, I know, but all the same. This is also what I love about being an entrepreneur, Rocky. I love the gamble in the sense of, I'm going to put my time in this and push for an outcome. We decided to launch a new product this year. Well, I should say, we decided, more than a year ago, to launch the product this year. And we put a lot of investment. Software companies do that. You put a lot of upfront investment into it with a theory of what it's going to do, and some of our theory has been proven wrong, like how fast it would sell. We had customers tell us, this is amazing, this is what I've always wanted, and then stop and stop and stop. And why are they stalling?

 

They just said it's the perfect thing they want. And what we realized is we're offering something they've never thought the next step about. They're gonna get something they've always wanted, but they don't know what to do with it once they get it. My analogy is, if you had a flying car arrive in your driveway, would you know how to park it? Fly it? You know what the rules are. Everybody would love to have a flying car, but we don't know the next step yet. But anyway, this is the, one of the things I love about being an entrepreneur.

 

Rocky Lalvani 12:59 

So I'll challenge that. If your clients say this is exactly what I want, say, great. We need 10 new beta clients. I'm going to need 5000 whatever, $5,000 down, because you're going to help make this possible. Are you ready to go? And the answer is either yes or no, right? Either they're going to put up their money, which tells you they are interested, or they're going to say no. Now the second part of it, because big companies do this, they'll bring in 12 clients, they'll put them in a nice conference room, they'll ask them all these wonderful questions. They'll throw beautiful pictures up, and they'll be like, hey, this is our wonderful new soft drink. Do you guys and everyone, of course, is nice. Oh, I love it. It's the best thing. I'm going to go out and buy gallons of it. 

 

And they, at the end, they go, thank you for coming. Here's your $100 for showing up today. I say to them, rather than doing that at the end of the conference, I want you to just ask one simple thing differently. Here's your $100 for showing up today, or, by the way, because you've been so nice and because you love this product so much, I'll give you $500 a product, or you can have your $100 in cash. What would you prefer? And that is where you get the true feedback of whether or not they love your soda.

 

Richard Walker 14:20 

Yeah, I love that idea. I'll just in my own little defense, our product is quite complex. It requires an implementation, proof of concept, all those things. But here's the irony, Rocky. What they did, instead of just stopping, is they said, we want your other products first, and that's what threw me off. I wasn't expecting them to want the other products first, but they did, and I figured out what they were doing, was doing what they know how to do, because they liked us and liked what we were offering, so that they could then get to what they wanted to do. It gave them time to plan for how to actually use the product. And that's what's happening. Those customers are buying.

 

Rocky Lalvani 14:57 

Give them what they want, so you can give them what they need.

 

Richard Walker 15:00 

Yeah, there you go. There you go. Okay, I actually want to go back to something else, because I forgot to ask some questions around. When you talk about, I'm going to use a phrase that I learned from somebody when I was in college, pay yourself first. To me, it's the concept of you, like, if you have a salary, you invest in the things that are important to you first, before you first, before you start spending the money on the new car, the house, whatever, like your 401K perhaps, or the big vacation you have to have. But in running a business, I think it's similar the idea of Profit First is you need to pay yourself a working wage, or better, you need to achieve your goals with your business. So I'm just kind of curious, how do you construct the compensation aspect that a founder should have when it comes to having the profitability? Do you look at salary, total compensation, different methodologies? Do you look at just how the company is going to give you dividends in the long run, or you could sell it? What are the factors you think people care about?

 

Rocky Lalvani 15:59 

We look at all of that, but what we do is slightly different. Okay, so let's take a startup. Since you've been talking a lot about startups, we're going to start a startup. And you come up with a plan, right? And says, all right, at the end of this year, we're going to have 200,000 in sales. I'm going to pay myself $40,000 okay, we're going to lose money, that's okay. But when every time we sell a product, even though we're losing money, we expect it to be profitable. When we sell it, we expect a 15% profit margin on that product. And so what we tell people, is okay, here's your model. Now, in order to make this plan work, you're going to have your ski capital, right? So we take your seed capital, we put it in one bank account, a separate bank account, my seed capital bank account. Because every time I take seed capital out and I put it in my business, I want it to hurt kind of like pulling $100 bill out of your wallet and handing it to somebody. So month one comes out, and you make one sale, the first thing we're going to do is say, well, you told me you're going to be 15% profitable, so we're going to take 15% of that sale and we're going to put it in a separate bank account called profit.

    

You're going to pay yourself first, Profit First, yeah, separate bank account. Now, you projected that a certain amount of that goes to your salary, so we're going to take a small percentage out, and we're going to put it in your salary bucket, and we're going to leave it there so that you can actually pay yourself. Because a lot of owners pay themselves last they're afraid to pay themselves. In the beginning, we probably won't put money aside for taxes, but once you get rolling, we're going to put money aside for taxes, and then the remainder is going to go on our operating account. And so now you know, okay, here's my operating account. This is what I have to live on for the month. This is what the business can afford to spend. The next month comes around, you go, okay, there's not enough of my operating account. You're right. I'm going to take some my seed capital. I said it was going to cost me X amount of seed capital this month I'm looking at my sales.

 

Yeah, that's about right. And I'm going to move my seed capital over. So now I have my operating and this month we sell four things. And again, we're going to take that 15% we're going to put it in the profit account. We're build. I go to the gym, I build a habit. I don't walk up to the bench and put all the weights on and go Devo, right. I start with an empty bar, and I learn my form. We're building the habit of being profitable. We're building a habit of discipline with money, and as we continue to grow, this is the way it works. And so now every time I look at my bank, I'm like, I've got 12 months of expected seed capital. Yes, we're pulling it out at the appropriate rate. I said I was going to be profitable, and you know what, we're putting our profits away and I see my profit account growing. You don't have to spend it. We just leave it there.

 

And over time, you're going to see if your business plan is actually what you say it is, and whether you can pay yourself first, and whether it's working appropriately and then you also have immediate true cash position. Because I look at those accounts, I'm like, okay, this is how much I have for operating expenses. Yeah, I have profit, yes, I have money to pay myself. And if we're saving for taxes, yeah, the tax accounts growing. Like, I got guys who have to write a six-figure check for taxes, and they're happy. They're like, oh, It's tax time. Oh, I owe 130 grand. Oh, I got 170 in the tax account. I can stroke that check. Look at me, go here. It's weird, because I hate paying. In taxes we all do, but the confidence of being able to say, hey, I was profitable and I have to pay taxes and I can stroke a check and sleep at night, it's the power of being able to do that.

 

Richard Walker 20:14 

Man, I like that. It says a few things to me. Number one, you have to have some clarity on what your plan is. And I will admit, when we started our business, our plan was terrible, my gosh. And I'll give you a reason why, because my mom and I started this company. She put in capital, I put in software. So we had a little bit of seed capital, and we figured it wouldn't be hard to sell a product for 150 bucks a year to 1000 users and make 150,000 within the first 12 to 18. 18 months. That shouldn't be that hard for software. In year one, we signed up six total paying customers, and in year two, we signed 70 more. And I mean, our plan was terrible.

 

The other thing you're saying, though, is that seed capital account feels a little bit like a line of credit. You're not paying it back, per se, and you didn't talk about when you start to pay that back, but you have this like a line of credit sitting on the side you pull from when you need it. I'm assuming, if you're in month three, and sales came in and enough money came in, you don't need to draw from the seed capital bank. You don't. Right?

 

Rocky Lalvani 21:18 

No, you don't. And the reason we do this is because when month three comes along, let's say there was 150,000 in seat capital. Well, now I got 150,000 in seat capital. I got the money that came in. And how much can I pay myself? And am I really profitable in? Oh, I got 150,000 let's spend no, no, no, no, you don't really have that money. That's seed capital. And so it gives you clarity on what's spendable and whether or not you're spending your profit and whether or not you're spending your paycheck.

 

Richard Walker 21:58 

Yeah. So the other thing that offers the clarity here is you need more seed capital than you probably realize. And that was my lesson, right? Double it, triple it, whatever you can do. Because here's the other side of this that I was going to get to. If you have this profit account, how tempting is it to take that profit money out when you're feeling the burn of capital and you're getting low on seed capital or low in your operating account, and for my mom and I, we were out of money in six months, frankly, and we had to do jobs on the side to pay the bills and borrow money like crazy to pay the bills, and it all should have gone into a seed capital bank at some point, but hindsight, so how do you thwart that temptation?

 

Rocky Lalvani 22:40 

So it depends. Some people are disciplined. I'm disciplined. I can let it sit there and I'm okay. Mike Michalowicz, the guy who wrote Profit First, not disciplined. What he has to do is the seed capital is in a separate bank. There's no There's no checks, per se, it doesn't have a debit card. And if he wants to pull money out of his whatever that profit account is, his check needs to be co-signed by somebody. So he makes it so hard for him to touch that money, and because it's in a separate bank. When he looks, he forgets about it. Oh, this is all I have. This is what I got to work with. I know the money's over there in the back of my head, but it's not front and center, and it's really hard to get that money out.

 

And in that case, maybe you would have had to call your mother and say, mom, I need money in seed capital, and she'd be like, for what? Right? No, that's not a good reason. You can't spend it on X, Y, Z, right? And so you don't. And this is the other principle in business. Everyone tells me that this is what most business owners do. They go, oh, it's profitable. I'm going to reinvest my profits. Okay, Rich, if I came to you and said, hey, I'd like you to reinvest some of your profits in my business, would you have some questions for me? Oh yeah. Oh yeah. What are some of those questions?

 

Richard Walker 24:17 

What are you gonna do with the money? First and foremost, what are you gonna do with the money? And then what kind of rate of return are we talking about? When do I get my money back?

 

Rocky Lalvani 24:25 

Okay, perfect questions. If you're going to reinvest in your business, I think you need to answer the same questions to yourself. And I find a very rare business owner that will do that, they're just like, oh, we got to try this out. Let's do this. And then they forget, and there's no return of their profit. And then they wonder why they're always running in behind.

 

Richard Walker 24:53 

This goes back to something else, and I'll just use my company as an example. We're at a stage. I mean, I'm year 23 but many years ago, we got to a stage where we said we need, as executives to pay ourselves, our owners, founders, we need to pay ourselves like an employee that we had to hire. Yes, and we do it for a couple of reasons.

 

One is, if I suddenly was incapacitated, killed, whatever, and my company is going to keep going, and we have to hire somebody to replace me, we better have the budget for that amount. So therefore I should get paid that budgetable amount to ensure it's there. And two, it's also, in my view, what you defined as profit. I need a living wage, or better than that, at whatever you want to call it. So that's one form of doing that. When do you look at that, or do you look at that

 

Rocky Lalvani 25:41 

Always. So, I don't usually deal with startups so much. I usually deal more with a business. Let's say you've been here at five to seven years, you've grown your revenue. You're like, hey, we're doing seven figures. And I'm like, yeah, how much you keep me? Like, well, we're struggling. Okay, so let's start with a business like that, and say, we can't do this overnight, but what is your actual worth to the business? What should you be paid as a salary? And that would be a starting point. So you're not really profitable at 50 grand, because technically your salary was supposed to be 100 so you actually lost 50 grand, right?

 

So let's be realistic, and even though the books don't say you lost 50 grand, you lost 50 grand. And so I think those things need, you're doing what you're supposed to be doing correctly. And yes, you need to take the appropriate salary, and you got to go your live your life too. Now, if you want to take the money out of the company and go, well, we're going to reinvest, great, but ask those three questions and set up a loan payment back to yourself to be able to do that. Be disciplined.

 

Richard Walker 27:01 

Yeah. So this is one of those things that I was thinking about when I asked you this question, if as a founder, you pay yourself enough of a salary and a compensation to make your life meaningful the way you want, then beyond that, that profit is life-changing. It's windfall. It's retirement money, whatever. But like myself, I have a 401K, so I'm building that retirement anyhow. So if we talk about profitability, I think this choice of return is based on, do you have the prospects to grow your company with putting the money back in? And second, how do you measure that? And we started tracking something called return on operations about five years ago, which is to say, what is the return on our invested capital, essentially, and what is it doing for us?

 

The challenge I have is it's just a number, because I'm not taking that money back. It keeps going back in and keeps going back in and keeps going back in, because we keep focusing on growth, we want to keep growing and invent new products, etc, and this would hurt if I wasn't making enough money otherwise. So I'm making enough compensation that it's okay for me to keep making that investment. But I think, to your point, even though we track this return on operation percentage, etc, I don't really feel like I know what I'm getting a return on my money. And when do I get to get all that money back? Right?

 

Rocky Lalvani 28:25 

Let's face it, the world is constantly changing. Okay? And I think the late, if you look back the internet coming out late 90s, massive change. The iPhone. People don't realize how much the iPhone changed so many industries like, everyone says, oh, Kodak lost it because of film, but at the same point, the iPhone replaced the camera, right? So if you were in the digital camera business, or Garmin selling GPS is or if you were Palm Pilot selling a PDA, all of those businesses got wiped out. Yeah, today we've got chatGPT, it's gonna wipe somebody out. Okay, not good or bad. It's just life. And what I say is I would like there's a book called Richest Man in Babylon, right? Take 10% put it aside. So I tell every business owner, I want you to build a nest egg outside of your business, so that no matter what happens in your business, you can always sleep at night.

 

A, it's going to give you comfort, and B it's going to make you bold, because you know you are safe, no matter what happens, you are safe. And then if you've got access beyond that, now we can start making investments. The question is, do I make the investment in this business or another business? And if I'm going to make the investment in your business, meaning your own. Business, where is my loan payback? And so you should be paying it back, and then two years from now, after you pay it back, if you go, hey, we've paid it back. We're good, things are doing what we said, let's make the next investment. Do it again. You got the money back. Go do it again. Nothing wrong with that. It's just bringing the discipline and the truth that we are actually doing what we said we were gonna do, and the cash shows it does.

 

Richard Walker 30:36 

One of the things I like about this conversation Rocky is that I recently talked to a group of entrepreneurs about how did they compensate themselves as founders, it was all over the board. Some took very little salary because they took tons of dividends. Some took huge salaries, etc. I didn't get a sense that many of them were building a nest egg outside their business. They viewed the business as the nest egg that they could eventually sell. And frankly, I don't look at how to sell my company. I get offers and I don't really want to sell my company, so I don't look at it from that standpoint when I say, how do I build up the wealth?

 

I think more in terms of, how can I derive wealth out of the business over time? And maybe this is bad thinking on my part. I just think we're going to hit a stage of growth where our costs are just a small portion of the revenue that we could bring in. And I think software companies can scale in that manner. There's something else I wanted to ask, you brought up chatGPT a couple times. So I'm curious your perspective on AI when it relates to what you do with your customers. Is it changing how they're able to manage their numbers better or have this discipline, even?

 

Rocky Lalvani 31:46 

I have not been able, chat is great at certain things. I think it might be good as they build it into being able to do the bookkeeping. It probably will start to get better on the tax side, but a lot of these questions aren't A&B, they're discernment and there's a lot more to it. And so I think it makes it harder. The other thing that we really do is accountability. And I don't know if chat is going to be an accountability partner. And so maybe Elon's new robot will come with a hammer and chase you around the house. Maybe that'll work.

 

Richard Walker 32:36 

There's certain human behaviors that no AI is attempting to do right now.

 

Rocky Lalvani 32:42 

Correct so where we use chat, creating marketing material, writing emails. I have a podcast, all my podcast, it creates the transcript from the video. It creates the notes, it creates the all of the clips. It creates the script for YouTube and for LinkedIn, it does all of that for me, and I think it's phenomenal at that. I will take my sales calls, and I will put it in chat, and I will say, what can I do to improve? What did I miss? How can I make myself better? So it's teaching me. I will take my client calls and say, what do I need to focus on? What did I miss? Where could I have explained something better? Yeah, and so forth. So I'm using it to make myself better. From that standpoint, I think it's good. When the internet came out, I don't think we ever imagined this. Everyone in 2000 said, Oh, retail is dead. Well, retail ain't dead, right? So I don't know what the future is, but we're gonna have to keep adapting to it.

 

Richard Walker 34:04 

But it sounds like you're not seeing any really big advances or innovations that AI is driving into finance and accounting tools or systems.

 

Rocky Lalvani 34:12 

I think they're working on them. I don't have access to them. There are a bunch of tools that are out there right now that will go into your QuickBooks and create all these beautiful reports. But what I find they don't have is discernment. Here's a beautiful report of your P&L and your trends are going this way and this and this and that, and then it's like, but what should I do? What do I do in the next three weeks? Now, it might tell me, Oh, be aware that your cost of goods has been going up by 5% sure. Could it tell me that? But can it tell me how to lower it? I can say, how do I lower cost of goods? And they'll spit out 10 things. Well now I'm like, well, which of those 10 applies to me and which one should I focus on? I don't think we're at that level yet. I think they should change.

 

Richard Walker 35:10 

I have to share something with you. I had a guest on my show named Geoff Woods, and his episode was in September of 24 and he read, he wrote a book called The AI Driven Leader. Honestly, it's a game-changer. It is. Have you read it?

 

Rocky Lalvani 35:24

I think I might have heard him speak, or I heard somebody very much like him speak.

 

Richard Walker 35:30 

Yeah, it's a game-changer. Everybody I've given it to is like, oh my gosh, this changes how I use chatGPT, and I'm actually working on doing more and more and more with chatGPT, or other AIS because of the influence of his book. But to your point, like if you have challenges, you're trying to figure out strategically, chatGPT becomes your thought partner in helping you think through those challenges. And his methodology for how you prompt it, I think, is what's game-changing, because you start to really interact with chatGPT differently.

 

Rocky Lalvani 36:00 

So I don't know exactly what he's going to say, but let me tell you what my game changer has been. I asked chat to ask me questions, to help it better serve me. And that was a big one for me.

 

Richard Walker 36:14 

That's a huge one. Yes, absolutely. Yeah, I've started to learn to give it way more information than I ever gave it before, context, documents, transcripts, whatever I have that can fuel it. And in fact, I just started recording audio. I bought an audio recording device, the plot device, not sure you've seen it, I had I just started recording my story about how I started my company, and the competitive landscape and things like that, because I'm going to use that to help fuel how these AIs can give me better feedback on strategy or marketing or sales ideas, etc.

 

Rocky Lalvani 36:51 

So we have customGPTs for each podcast and a customGPT for the business, and I've created customGPTs for my interests so I have a spiritual interest, I've created conversations to help me better understand the spiritual material I'm reading, turning it into actionable insights, and then having chat ask me questions about that. I got to tell you, I've never had a therapist. I've had coaches chat's a game changer in that front of challenging me to think about it and tell it back, and then it keep, we're going back and forth, and it's a game changer.

 

Richard Walker 37:45 

Yeah, man, I'm gonna run out of time here, and I love this topic, so I shouldn't have saved it to the end. Before I ask my last question and we wrap up, what is the best way for people to find and connect with you?

 

Rocky Lalvani 37:57 

Before we do that, can I ask your audience a favor? Okay, do you guys like Rich? Is he bringing you value? Have you ever hit the like button there somewhere? Whatever you're listening on. There's got to be a Like button. You can leave a review. That's how you say thank you to people like Rich. Because here's the thing, I know, you're busy doing what you're doing right now, and you probably didn't send them an email to thank them. And this is a nice, easy way, because it's a lonely world on this side of the microphone, the two of us are talking, but we have no idea about the rest of you. So be nice to Rich.

 

Richard Walker 38:31 

Very nice of you to say so.

 

Rocky Lalvani 38:32 

If you want to come find me, I have two podcasts. One's Profit Answer Man, I literally everything we do for our clients, I share and I bring my competitors on so that you can learn how they do things and how we think differently. And then the other one that you've been on Rich is Richer Soul. It's like, okay, now that you made all the money, what are you going to do with your life? How are you going to live that ultimate life? And so the two feed into each other. Hey, this is how you make the money, and this is how you live life.

 

Richard Walker 39:02 

Yeah, no. Thank you for having me on your podcast. It was honestly probably the best episode I've ever been the guest on, and that's based on feedback comments, how it inspired people. And I know I posted it on LinkedIn, I told everybody. I said, I feel really vulnerable putting this out there because I'm sharing things I don't normally talk about. It is called the Richer Soul, so I bared my soul a little bit. But yeah, amazing podcast. Okay, so here's my last question, who has had the biggest impact on your leadership style and how you approach your role?

 

Rocky Lalvani 39:35 

So what Mike Michalowicz did for me was put into words, in action, what was in my head. And so he's really helped me to see how I can use the value I provide and help business owners. And there's another person who kind of took what Mike did. His name's Jeff Brager, and he. He told me how to then take that to the next level, because Profit First is very basic. And so those two gentlemen have helped me to literally build a business in a way that has really served me to take my gifts and figure out how to bring them to the world in a marketable way. And that's a big part of what they've done, I think, on the business side, and extremely thankful. I built my business on both of their systems.

 

Richard Walker 40:34 

Oh, I love that. That's so great. All right. So got to wrap this up. I want to give a big thank you to Rocky Lalvani, founder of Profit Comes First, for being on this episode of The Customer Wins. Go check out Rocky's website at profitcomesfirst.com, and don't forget to check out Quik! at quikforms.com where we make processing forms easy. I hope you enjoyed this discussion, will click the Like button. Share this with someone and subscribe to our channels for future episodes of The Customer Wins Rocky, thank you so much for joining me today.

 

Rocky Lalvani 41:04 

Thank you for having me.

 

Outro 41:07 

Thanks for listening to The Customer Wins podcast. We'll see you again next time, and be sure to click Subscribe to get future episodes.

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