The Profit First Money Management System and Why Every Real Estate Agent Needs It

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I'm Jennifer Myers, Founder of Agent Grad School and host of Confessions of a Top Producing Real Estate Agent, The Agent Grad School Podcast.  My goal for each episode is to give you actionable steps you can implement today to grow your real estate business.

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When you sell a house as a real estate agent, it is so exciting when you deposit that big commission check into your bank account.

Whether it’s $5,000 or $50,000, all of a sudden your bank account looks fabulous and you feel like you finally have money to spend.

But, do you know HOW to spend that money to not only pay yourself, but also grow your business?

Most agents don’t have a cash flow system in place that tells them what to spend money on and how much money to spend.

Managing your money as a real estate agent can be a big guessing game:

How much should I pay myself to do whatever I want with?

Can I take that vacation?

Can I hire someone to help me in my business?

Will I have enough money to pay my taxes when they come due next year?

How much can I spend on marketing myself?

That’s why today, our last podcast during Money May here at Agent Grad School, we’re going to dive headfirst into a very important topic:

Cash flow.

And, even more fun–how managing your cash flow correctly can lead to a profitable real estate business for YOU.

No one tells us real estate agents how to manage our money, especially when our selling seasons are naturally cyclical.

How are we supposed to know how much to spend in our business to grow our business and how much we should be paying ourselves, both of which are crucially important to understand?

On today’s podcast I’m talking to Entrepreneurial Coach, Financial Consultant and the Agent Grad School Profit First Coach Jennifer Dawn about a cash flow system for business owners (that’s us real estate agents!) called Profit First.

It’s a simple yet genius way to navigate the natural ebb and flow of the real estate market — and the cash flow challenges it presents.

Here’s what you’ll learn in today’s episode:

  • How many accounts you need for effective cash flow management (hint: just one business account is not enough!);
  • How to decide how much you are going to spend on things like marketing and paying yourself – even if you don’t have any idea how much money you are going to make this year!;
  • How to prevent surprise tax bills at the end of the year;
  • How to steady out your business cash flow;
  • How to pay off any debt you have;
  • How to be profitable;
  • And so much more.

Whether you are just starting your real estate business and haven’t sold a house yet or you are a seasoned real estate agent selling all the houses, Profit First helps streamline your finances and empowers you to make better financial decisions.

Listen in to this episode to learn about Profit First and get it set up in your real estate business.

To your success,

Resources Mentioned In This Episode:

The first 5 chapters of Profit First, the book free!

Jennifer Dawn Financial Coaching

Become an Agent Grad School Student

Episode Transcript

Over the last 18 years, I’ve been a real estate agent. One thing has stressed me out more than anything else, and that is how to manage and how to know how to manage the money coming in and out of my real estate business and how that trickles into our personal lives. Like, how are we supposed to know how much to pay ourselves? How do we know whether or not we can hire an assistant? And if we’re saving enough or too much for taxes, how do we know how much to spend on marketing? Those questions always felt like a guessing game to me. And I just never knew whether I was doing it, quote-unquote, right until recently. And this is because one of our students said, Hey, I’ve learned about this system called profit first. And I think it’s something that you should talk about. And so I dove head, I dove in and I tried to learn everything I could about the system. And what I realized is then I started seeing it everywhere. I saw so many business, they didn’t necessarily call it profit first, but I saw so many businesses, so many different places where this profit-first system was showing up in real, in businesses, not just real estate, but otherwise. And so I decided to hire a profit first coach to teach our real estate agents inside agent grad school, our VIP students who are students who are, have been with us for more than six months, just because The Profit isn’t necessarily the very first thing that you need to learn as a real estate agent. I think you also need to learn how to get clients and then how to handle those clients. But then right after you get that figured out, which, you know, takes a few months then and getting those systems in place, then it’s important right away to start thinking about how to manage your money. And so that’s why for our, for our VIP students, I’ve hired a profit first coach to help us, me included, install the profit first system into our businesses. And so whether you are a student or not, I wanted to share, or at least have you let you know about the system that is so helpful for not just real estate agents, but all business owners, because all business owners have a cash flow management problem and have those questions. What should I be spending money on? And how much should I be spending it? And I think especially for the cyclical nature of real estate agents, that’s a question that we really have to steady out. We have to be able to answer and then be able to steady out our income and how we spend and make money. And so this system called profit first is exactly how to do that. So on today’s episode, you’re going to hear me and the Agent Grad School profit for his coach, Jennifer, Don talk about this system and how, what it is, why it helps and so much more. Jennifer Dawn is a financial coach. She is a certified profit first coach, and she just makes talking about money management, cash flow, and profit, a joy. You can really hear it in her voice. And she’s passionate about teaching other business owners, real estate agents included. In fact, she used to be one, many years ago about this system and how it can be both business and life-changing. Listen in, welcome to this episode of Confessions of a Top Producing Real Estate Agent. I’m your host, Jennifer Myers, listen in, as I share exactly what I did to go from not being able to sell a house for years to becoming one of the top 1% of agents in the US even opening my own brokerage full of agents helped me serve all the clients that were coming my way. I taught those agents the same strategies I use and date two became top producing agents. Now through this podcast and agent grad, I’m sharing those same modern marketing and business strategies with you. Most of which I learned from looking outside the real estate industry, no fluff, no theory, no outdated sales techniques or paying for leads, just the exact steps to get you the real estate business you’ve always wanted. And the life outside your business, you’ve always wanted to let’s make it happen and dive into today’s episode. Welcome, Jennifer. Thank you so much for being here. Thank you so much, Jennifer. It’s so fun having a Jennifer and Jennifer show Jennifer square. What the heck is profit first and a little bit of, I know we’re going to get into this a little later, but just a little bit why real estate agents should be listening to this episode? Like why should they care about what profit parks is? Oh, I love that question. You know, I actually had my real estate license many, many years ago, and I really remember one how hard it was. People think all you’re doing is just collecting huge commissions all day, but working your butt off to get those commissions. But I also remember that it was very cyclical, you know, up and down, up and down. And so one of the most important things that profit-first can help with is really steadying out cash flow so that you’re not having like, you know, a huge month and then three months of nothing. It can really, really help with that. But you know, your first question was what this problem occurs. And it’s a great question to be asking profit first is a cash management system. It is not an accounting system. So you still need your accounting system. You need your QuickBooks, your zero, don’t get rid of those things, but it’s a way of managing the cash that comes into your business. More efficiently, more effectively. It makes you a more empowered real estate agent business owner helps you make better financial decisions. And honestly, it helps you answer questions, which a lot of people don’t always know like, well, how much should I spend on marketing? How much should I pay myself? It really is a great guidance system for knowing the answers to these questions. And you don’t have to be like a CPA or a financial Wiz. Anybody can use it. And so profit first isn’t necessarily just for real estate agents. It’s really for anybody that owns a business. And I think I’ve heard you say before, you could even use it in your personal life, but specifically, private purse was designed to help businesses with cash flow. So what we’re talking about today can be applied to your real estate business, but you’ve helped all sorts of entrepreneurs and business owners. How did you even come to, to be in The Profit First space? Like how did you end up here and why are you a profit first coach? Yeah, yeah, absolutely. And to answer your question, yes, you can use profit first with any business. You don’t have to be a real estate agent. And I do recommend that any business owner absolutely implemented. So it’s kind of a funny story, how I came across profit first. So I owned two software companies. I’d taken them both into seven figures and multiple seven figures never used anything like profit first at all. And I had left corporate. I was in a transition phase in my life and I became the, I was asked by a national network of women entrepreneurs to come in and lead their accountability and masterminding circles. And so while I was there, we would bring in a guest speaker every month. And so we brought in this guy named Mike , who I’d never heard of before. And I sat in the audience and I listened to him, speak to myself and our women that night. And Mike’s a great speakers. So he’s very engaging. He’s really fun to listen to, but as I’m listening to him, tell the story of how he came across profit first and how he, you know, why he’s now developed it. It’s a book, it’s an association that certified coaches and accountants and bookkeepers. I literally sat in my chair that night. I was just like, I would have spent millions of dollars better if I’d had a system like this. And I just hadn’t heard of anything like it. And so I immediately just on my own started helping the women in our organization, like get on the system because I could just immediately see the value and the power of it. So fast forward a little bit, I’d left that organization. And I went out and I started my own coaching practice and Mike found out about it and he was like, Jennifer, I need you to like kick off my mastery group. And I was like, yeah, absolutely. So for about two and a half years, I helped Mike get his mastery group for profit first off the ground and was coaching his bookkeepers, CPAs accountants, coaches on how to put profit first into their businesses and then helping them coach their clients on getting it into their businesses. And so really at a ground level, I was just really helping so many people get on profit first and absolutely loved the system. Use it, have used it in my own business since day one. But then, you know, I did that for a few years and then my practice got so busy. I had to step away from it a little bit, but I never stepped away from using profit first and using it with, I mean, every client who comes into my practice, of course they can choose what they want to do, but I always very strongly recommend, you know, this is something you really need to take a look at as a business owner and let’s get you on this system. So before we dive in a little bit deeper into what profit first is and how it can help real estate agents, I think it’s always helpful to like hear a success story. So can you tell us about somebody like the outcome? Like what’s the results of spending the time and energy and money, and frankly, putting in the system into a business specifically for real estate agents like Abs. Absolutely. So I worked with a client who was a broker, a very large broker based out of New York city. And what had happened is that he had a really good profitable year and got hit with an enormous tax bill. And We bought we’ve all been there, You know, and when you get a, you know, an all low seven-figure tax bill, you’re like, ah, any didn’t have the cash resources to pay it. He was going to have to go into some debt to pay it. And that’s how he actually came to me. And this is not unusual. I’ve had many business owners come to me who said, I got hit with a huge tax bill. I want to make sure this never happens again. And so they’ve heard about profit first. And so that is exactly what we did with him. And we put him on profit first and using the system, we set aside money to actually, you know, help pay off the old tax bill. But then we were setting aside money to pay the new tax bill. And the huge success story was that the next year when the tax bill came due, he had the money to pay it, which if you’ve ever had to pay a big tax bill, the stress of like not having that money and worrying about it and going into debt to pay it, all of that, it’s awful. But when you were just like, no worries, we’ve set that money aside, the tax money is there and we put it in a separate account. So it’s a little bit out of sight out of mind, it’s just such a huge relief so that you can really focus on other things like growing your business and not have to worry that you’re ever going to be in that situation, that you have a tax bill you can’t pay. Yeah. And I think the other thing about that is it like removes that question. Like I know, like for me for years I was always like, am I saving enough money for taxes? Am I overthinking that maybe I should be using that money differently? And so it sounds like it just adds that layer of clarity even. I mean, I guess one could even have maybe a surplus at the end or, you know, like it, it just means like having more than enough, it’s probably not exact, but just not questioning like, am I doing the right thing with my money? Is it, you know, am I saving enough too little, that kind of thing, just on a daily, weekly, monthly basis has got to remove this stress. That’s like back there, you don’t even realize it’s happening. It really, really does. And the beauty of the system is that it can be adjusted based on the type of business you have. So I always tell my clients, look, I want to see a little bit of a surplus in your tax account. I don’t want to see a huge surplus because it’ll hurt cash flow, but I want to see a little surplus. And so at the end of the year, when you do your, or when tax time comes around to be able to like, do your taxes, have the money to pay, and then even give yourself a little bit of a tax refund nap. Now we’re talking like basic spot. The other thing that I’ve heard about, about profit first, because listen, I’m hiring you as a private first coach, not just for me, but for our VIP students. So our students who’ve been with us for longer than six months. I’ve hired you to help us instill it into our businesses. So I’m really excited to actually put it into my own business. But one thing I’ve heard that was very, I don’t know, alluring to me was this thought of distributions and how you pay yourself bonuses. Can you talk a little bit about that as well? Because that’s, what’s most exciting to me. It’s so exciting. It’s so exciting. And I’ll tell you a client many years ago, she was a dentist and we put her on the profit first system and in the beginning. So the way that it works is, and this is a general way that it works. Obviously, it could be modified to work differently for you, but generally you’re putting money into your profit account every month. And then every quarter you do a distribution. So if you think like, if you own stocks and they, you get a dividend, it’s the same concept that you get a bonus for being a good business owner. And you get to like, pay yourself your profit distribution. So this client, she never spent money on herself ever. And so we got to that quarter mark and she got her first profit distribution and it was like, you know, $3,000. And she was just like, literally we had a whole coaching session on what she was going to do with $3,000. But that’s in addition to like her pain herself this whole time. Yeah. So that’s, that’s like a bonus in addition to her pay, she gets this bonus and she was just like, I don’t know, maybe I can go buy a pair of shoes or maybe I can do this. So fast forward, like, you know, a year later she’s like, I paid for this trip. We’re going here, we’re doing this like that profit distribution at a recorder. She was like, this is what it’s going for. I’m remodeling my kitchen. I’m, you know, whatever she was doing. But it was that mindset shift that when you’re just like, wait a second, I get a bonus for doing a really good job, which, you know, being well for your business, being an agent like these things, cause it’s a lot of work. So that’s one of the beauties of the system is that bonus. And it’s funny, like my husband literally knows like You’re going to come with the money. Like, You know, we Do want you to take that money and have fun with it and really enjoy it. And you know, sometimes with the profit distribution, if you’re in debt, we’ll take some of that and funnel it towards debt. So it’s not as much fun money, but like, that’s what I mean. Like there are things that we can do with that money to really customize it for yourself. But when you have that quarterly distribution, it’s truly like such a blessing and it’s so much fun. Okay. So I feel like we’re getting a little ahead of ourselves, but I wanted people to understand like the point of doing it. Cause sometimes numbers and accounting and they give them out money could be super giant boring. So I wanted to give people like a doesn’t that sound fun to confidently, pay yourself extra, to have fun money in your business, that kind of thing. So tell me, can you just give us like a mini overview? I know like, you know, I’m working with you or are in our students for four months. So we can’t necessarily give like everything about profit first in this short conversation, but can you give us just a general overview of like how it works or what somebody who’s never heard of it should know. Yeah. So in an overview, if you’ve ever heard of the envelope system, Dave Ramsey has shared this. He’s a very popular personal finance person. Maybe your grandparents, you maybe saw them like, you know, their money would come in and they would divide it up into envelopes and be like, this envelope is for rent and this envelope is for food and this is all the money that we have to spend on that. That’s kind of the concept that it’s built on. It’s kind of like an electronic envelope system for your business. So as the cash and we’re talking cash, not receivables, but actual cash that flows into the business as it flows in, it’s basically divided up into different accounts. So instead of having one checking account, like most business owners do where all the money comes in and all the bills are paid out of. And then when you look at that account, you’re trying to make decisions, right? And it’s not accurate because a lot of that money is earmarked. And if you don’t know that you’re going to make bad financial decisions. So instead as the money flows in, it’s earmarked into different accounts. So even now, if you look at your checking account balance, you’re going to have a much more accurate picture of what’s actually happening because the money that’s in that account is earmarked for that specific purpose. So that’s kind of the idea behind it. And as the money flows and it’s distributed or allocated into the different accounts based on a percentage. So we do this because as the business grows and scales that percentage, it will change a little, but it can generally stay the same. So, you know, even as you’re growing and scaling, you still got your percentage and that, that, that percent of money flowing into the accounts, I can’t even tell you how many times it saved me when I was just like, Hey, I need to make a decision in my business. And I can look in those accounts and see, well, what do I have in those different accounts? And it’s just so empowering. And you know, sometimes people do have a lot of fear around money and looking at their money or they think, oh, I’m going to have to set up a few more bank accounts. That’s all configurable, but it’s so worth it. You want to talk about fun when you open up your bank account and you see like these accounts and then you start to see surpluses building in each account. And you’re like, Ooh, I got money here. I got money here. I got money here. Like now we’re talking. That is just like super, super fun stuff, but that’s kind of an overview of the system and how it works. So it’s like earmarking money for certain things that will help you in your business. So things like, I’m sure there’s an earmark for like operating expenses of sorts. And there’s an earmark for like paying payroll, including yourself, paying people. So what you’re saying is like, you know, a lot of agents are like, should I can I afford to hire help? And rather than just like looking into the sky, wondering if you have, if you’re making the right choice, but you’re saying is like, if you have enough money in your pay account pay, after you pay yourself, is there money left every month to pay somebody else? And that is how just one example of one decision you’d be able to make to then know confidently whether you’re making the right decision. That, okay. Yeah, absolutely. So you’ll have an operating expense account. I have many clients who actually have a separate payroll account. And so they break that out and a percentage goes into that payroll account and they’ll Nuttall. It’s like, if you have a surplus in the payroll account, you can hire somebody. If you are still, you know, check the check and don’t have the money, you can’t hire anybody. It just makes those kinds of decisions be so much easier. But the other thing it does to one of the accounts as a profit account, we talked about all the fun of distributing that. But think about that for a second. So as you’ve got cash coming in, you’re putting money in the profit account and then you’re basically living off the rest. And when, if you’ve run your business by a bank account balance, we tend to spend what’s there. And what this does is it pulls the profit out. So you can still spend what’s there, but you’re living on what’s left after your profit. That’s the beauty of the system because when you have a certain amount to spend, that’s what you’ll spend, right? Business owners were just like, I got five grand, I got 10 grand. I’m going to make it happen for that amount of money. But the difference here is we’re living on a little bit less, still works. You can still totally run the business on it. You just have your profit taken out first. Yeah. And what I love about this system is instead of thinking, especially for real estate agents, instead of thinking, oh, I just made this 10,000, 20,000, whatever it is, thousand dollar commission thinking like, Ooh, I have all this money all of a sudden. And then like a couple months later, you have no money, right? It’s, it’s, it’s a totally different way of looking at that check and saying, Nope, this much percentage wise is going to go into this account to fund this thing. Maybe it’s paying yourself. This percentage is going to go into my marketing fund, right. So I know how much I can spend on the ways to market myself and increase my business. And so you have these little, you know, that tax account, there’s a couple of different accounts. And so rather than looking at a check, going, wow, 20 grand, let’s All of a sudden realize where all that money is going. And I think it’s just so much more clear for us real estate agents to know like how much do we pay ourselves? How much do we spend for a business? How much do we have left over? I just think nobody teaches us that. So They really, really don’t. And as an agent, you have expenses like you might have to, you might pay to have your, your listing staged. You might have to pay for signage. You might pay for extra advertising and those are all business expenses. And so that’s where the profit first is really brilliant in the sense of like you get that commission check, but a percentage is going to go back into your operating expenses, your marketing expenses, so that you’ve got the funds that you need to get that next commission check. And it doesn’t become like, well, I spent all the money, you know, and you can kind of eliminate that. The other thing that it will do is it will steady out your cash flow because you might get a $20,000 commission and have three months where you don’t have anything. And so with profit first, as you build up these accounts and then pay yourself each month, it will steady out those times when you’re super flushed or when it’s like feast or famine. And there’s nothing coming in to give yourself kind of that stability. It takes time to build up those accounts, but then once you, once you do it can really steady things out so that you’re not always just like, am I getting paid this month or not? I don’t know. Yeah, because there is a natural, like, I always talk about this natural flow of the real estate market. And no matter how much you, how much you, there’s just an ebb and flow. And so this could help with that. Yeah. I find that real estate agents tend to fall in one of two categories when it comes to money. Either they spend a ton of it. Like I made a lot of money, I’m spending it on me. And so they don’t seem to have a lot left over for their business or the others that fall into the category of like fear. That’s like, I don’t, I don’t want to spend any of it. And so again, what I love about this system is like, it’s like, no, here’s how much you get as the operator. Right. You’re getting paid. You’re also getting bonuses, right. Here’s how much you should spend on these separate these categories. Cause there’s a whole formula. Right? Absolutely. And it’s one of the few things in business that like, if you work, this system it’ll work. It just, it’s just solid. It’s so good. And it’s one of those things that the longer you’re on it, the better results you’re going to get with it. So don’t go into profit first thinking, I’ll do this for 30 days. It’ll fix everything. It’s not how it works. It’s a, long-term play. You got to stick with the system. But if you do the results are pretty fantastic. But isn’t that how everything works at works in business, right? Like yeah. Golden pill to 30 days and everything. And I’m like, no, no, no, do it for a year and then do it another year. And then you’ll start like really loving it. So last question is I can hear people saying like, it seems like I need to have a ton of money to be able to be able to do this. Because I think a lot of real estate agents who listened to this podcast, they’re maybe just starting in their business or don’t have that consistency. And so I bet you, there are people listening to this that are saying like, I can kick this down the can when, when I have enough money, I know that’s what I would say. Right. So when is the right time to start profit first Right now, right now, even if you don’t have money, you can still learn about the system. You can still get yourself set up. You can still create a system of allocations. And then when you have the money, you’re ready to rock and roll because ultimately profit first is a mindset. It’s a mindset that I’m going to be an excellent money manager in my real estate practice or my business. I’m not going to, you know, I want to say piss away my commissions, right? I’m not going to like overspend. I’m not going to underspend because when you underspend, you’re kind of doing yourself a disservice as well. I’m not really going to be able to grow your practice very well. So it’s that mindset that I really want to be responsible, a money manager in my business. So you can start right now, even if you don’t have money. And then when that first commission check comes in, you’re set up and ready to go. If you have a lot of money, great. You know, but there’s really nothing to stop anybody from just getting on this system right away. And when the money comes in, you’re all set up for success. Yeah. Awesome. So for anybody who just listening to this conversation is intrigued by this idea of profit first or wants to learn more, what’s the best way for them to do that? Absolutely. So you can hop on my website, which is Jennifer Dawn, D a w N If you go to Jennifer, John and just scroll down a little on the page, there’s a big block that says profit first. And if you just click on that, it’ll take you to a page and right on that page, you can opt in and you can get the first five chapters of profit first free. So profit versus a book, you can buy the whole book on Amazon or any other, you know, bookseller that has it. But if you want to just get an idea of what is this thing about those first five chapters are really instrumental and just really kind of giving you a good overview of the system and you can get them completely free on my website, just go to Jennifer, John and find the profit first and click on it. And you can get it delivered to your inbox instantly and start reading about it and finding out about it. That would be the best next step, if you want more information about it. And then after that, I would connect with the professional, you know, you read it and it’s like, but you might try to implement it yourself and get a little stuck. And so it’s definitely worth the time to work with a professional to just help you get on the system. And if you do, you’re going to be golden and in really good shape Because not every CPA or bookkeeper kind of is on the system. So it’s not like somebody’s like, it’s like people either like, are doing it or don’t. So it’s not like I could necessarily go to my CPA and be like, put me on profit first or my bookkeeper and say, put me on private first. They may or may not know about it. Right. Certified on the SA on the system. Yes, but many of them aren’t. And so, yeah, I would always suggest for the business owner, even if your CPA or book cooker isn’t on the system, get the five chapters, read it, share it with your CPA or your bookkeeper. If it’s, if it really aligns with you and you want to do it, get them on board too, because you’re going to need their assistance. Anyway, mostly the bookkeeper, not as much the CPA, but mostly the bookkeeper for any of those transactions into the accounts. Awesome. Okay. Well, this is great. And I’ll also link to the resource that you mentioned on the show notes for this episode, which would be agent grad forward slash profit first. So all that will be there too. So thanks Jennifer for introducing profit first. And I’m so excited to work with you over the next four months with our students putting this system into our own real estate businesses. So thank you for that too. Oh, you’re so welcome. It’s going to be awesome. And I know they’re going to get just amazing results. So thank you for having me. Thank you for listening to this episode of Confessions of a Top Producing Real Estate Agent. We purposely keep those podcasts sponsor and commercial free so we can focus solely on providing real estate agents with the content that will help them grow their real estate business. And how about like, they love outside but business too, but we need your help to get this podcast in the hands of other real estate agents. So please, if you liked this episode, leave a review on iTunes or wherever you’re listening, and also tell your agent friends to listen in to thank you so much for supporting the show for being a listener and supporting other agents along your way to success. That’s what this is all about. See you next time. On another episode of Confessions of a Top Producing Real Estate Agent. And until then come hang with me over at We’ll see you there.

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