In this episode of the Business Owner Breakthrough podcast, host Pete Mohr discusses the importance of profit and introduces a new concept called the "Profit Hierarchy". This hierarchy is similar to Maslow's hierarchy of needs and consists of five levels: wealth, relationships, leisure, health, and legacy. The first level is wealth, where business owners must generate enough profit to free up their time and invest in other aspects of their business. The subsequent levels involve redistributing the profit to improve relationships, leisure, health, and ultimately leave a legacy. Pete emphasizes the importance of taking action and planning to achieve one's desired level in the hierarchy.
Here are a few things Pete covers:
It's time to take action:
After listening to this episode, consider where you currently stand in the Profit Hierarchy and where you want to be in the next year, three years, five years, and 10 years. Write it down and create a plan to achieve your goals.
Download link: Pete’s Downloadable Business Owner Planner
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Are you ready to move from operator to owner? Well, decisions in your organization should be made at the lowest possible level of your business. Every day, there is a framework that can help and it's called the five P's. Understanding your promise, aligning your product process and people to it will generate the most amount of profit. And that's when the freedom comes freedom from the day to day management and freedom to start doing the things that you want, and deserve to do, inside and outside of your business. No one ever said it was easy, but it's time to start the process on the business owner breakthrough. If you'd like to chat with me about helping you breakthrough in your business, simply go to speak to pete.com that speak to pete.com, to book an appointment and to see if we're a right fit. So let's talk a little bit about profit today. And let's face it, I mean, without the profit, we don't have a business, and it's the fifth of the five P's and you know them by now, your promise, your product, your process your people and your profit. And the reason we get into business as business owners is so that we can generate the right amount of profit, because with the profit comes the freedom, right. And I think most business owners have this idea in business, that you know, they got into business so that they can have more freedom freedom to do whatever it is that they want to do in life down the road. And whatever it is they want to do with in their business down the road is living in your love zone, right. And I think today, I've come up with this little what I call the profit hierarchy. And the profit hierarchy. Really, if you think and probably have heard of, or studied at one point in time, Maslow's hierarchy of needs, it's that triangle, right. And, you know, it all starts at the very bottom level and got five levels to this profit hierarchy that I call, The first level is wealth. And until you get a certain amount of profit, so that you can take out of your business and have it at that level, it's really hard to get past that. And because you're mired down in the frustrations, you're actually working all the hours, you're doing what you need to do in order to build your business. And that's normal for startups sort of business. But once you've crusted that, and you start to, you know, reap some of the rewards and get a little bit of the profit, now you can start thinking about how you're going to redistribute that profit, right. And usually, the redistribution involves getting your time back. So I'm going to hire a manager, I'm going to hire a marketing company, I'm going to hire a bookkeeper, I'm going to hire, you know, have you I'm going to hire another salesperson, whatever it is, that's freeing you up of your time, as you choose to take some of this profit and reinvest it in having other people take the load off of your plate. But then what, as we are full out with our schedules, we miss some of these other things. And I'm going to give you the other levels of the hierarchy here. And they are relationships, leisure, health and legacy. And when we look at those kinds of things, how much as you're buying other people's time, whether it's that manager, that salesperson, that bookkeeper, as you're becoming more profitable in your business, and you go to that next level, what is it that you want more of, and typically, that next level is relationships, especially for people with younger families, and all that sort of stuff is like, I want to go to my son's baseball game or hockey game, or I want to be a leader at Girl Scouts or I want to take them to dance lessons. Or I want to spend more time with my partner and we want to have a date night once a week or we want to take a family vacation, you know those kinds of things around the time around the relationships that are near and dear to you. A lot of times that next level is relationships. And think about how you as you get your time back, where do you want to spend it? The next level after that is often leisure. Right? As we feel as though we're spending the time with the people that we love and we want to outside of our businesses. Now we free up some time to do the things that are unique to us. Maybe I want to play a little bit of golf maybe I want to go skiing maybe I want to take a kayak down the river, you know whatever those things are maybe I want to craft or read, you know whatever those things that are uniquely yours in the leisure aspect is that next level and then I find often once we feel as though we're at that level, we start thinking a little bit about our health again, and although I actually think health should be down further and often isn't, and that's why I've got it sort of at this fourth tier, but the health is the side of your physical and mental health, both need to be considered. Because both are so crucial to the operation of your business, and of your life, right? There's a great saying out there. And the saying basically, is this, the person that has their health has 1000 dreams, and the person that does not has but one, if you don't feel mentally and physically healthy, you can't run a successful business, you can't have successful relationships, you're not going to enjoy your leisure time. So when we look at these things, how important is health and it's often the most important thing in order for you to build better relationships, better leisure time, and better legacy. The only true reason I put it in that fourth area, essentially is because that seems to be how people roll up the hierarchy. So we've got it sitting there. But once you fulfilled your relationships, because often you will sort of push through health in order to get your relationships in in order to do the odd thing for leisure time. But you need to really take this focus on mental and physical health, for the benefit of your future. And we're in businesses to have, you know, your business is supposed to be there to prop up the life that you want to live. And then the next and last piece, the legacy. Think about your personal and professional legacy. What is it that you want to leave behind? How do you want to be remembered? How do you want your business to be remembered? So important, but we often don't give much time to the legacy portion, but it is the guiding star for a lot of the decisions that we make in life and in business. Remember, your business is there to prop up your life as the business owner. And I think that is an important piece to keep in mind through this profit hierarchy. What do you want to do with your profit of your business? How do you want to continue to build the wealth, both within your business and outside your business? How are you going to build the relationships in and outside of your business? How are you going to enjoy the leisure time that Prophet can give you what are you going to do to improve your physical and mental health so that you can leave the legacy behind that you choose to leave for your business and your life? The profit hierarchy, give it some thought. Where do you stand in this hierarchy of wealth, relationships, leisure, health and legacy? Where do you want to be within the next year, three years, five years and 10 years? Write it down on a piece of paper? Think about it and start making decisions and action plans in order to achieve what you want out of your life and your business with this profit hierarchy. Now go and make it a great day. An ironic media production visit us at our ONICK media.com