Jack Jostes [00:00]
Prior to running Profit First, I would struggle to come up with the cash to pay my estimated quarterly tax payments. One of the things that I had to learn from Profit First is the difference between cash flow and profit.
Jeff Heller [00:13]
Cash flow is what you use to run your business. Profit is that portion of your revenue that you get to keep for yourself to do with what you want. People tend to just lump both of those into the same bucket. And it's not because by the end of the year, basically you see that bucket of money in your revenue and your expenses basically expand until it consumes all of that bucket. Having something in place that keeps you organized and disciplined goes a long way.
00:48 – Meet Jeff Heller & His Landscape Background
Jack Jostes [00:48]
Hey, everyone. Welcome back to The Landscaper's Guide Podcast. Today I'm here with Jeff Heller, who's on the Board of Directors at SIMA, and he's also a certified Profit First Professional. So we're going to talk about cash flow, profit, and management for snow and landscape companies. Jeff, tell us a little bit about your background.
Jeff Heller [01:07]
Well, I've been in the industry since 2005. Started with a national maintenance provider, spent about seven years there, went out on my own, formed my own company, Snow Landscaping, and some other ancillary services and so been doing that now almost 13 years. Been involved with SIMA, a member of SIMA, since 2005. As you mentioned, I sit on the Board of Directors. I've also, I also am in my last year on the Foundation Board of Directors. For the last two years, I've been a Profit First professional with The Green Executive out of St. Louis.
01:47 – What Is Profit First?
Jack Jostes [01:47]
Okay, great. And so do you. First of all, what is Profit First? If you could explain it in a nutshell for our snow and landscape company owners who are listening, what is Profit First?
Jeff Heller [01:58]
You know, it's essentially an accountability system. Our motto is make profit a habit, not an event. And it teaches business professionals, and we just happen to work with landscape and snow professionals, how to rearrange how they think about money and cash flow to where they would put profit first and teach them that it basically that an owner's pay is not profitable. And that, you know, that seems to be the thing they struggle with the most is how they don't know where their money goes. They meet with their accountant at the end of the year. The accountant said, you were profitable. And they say, but I have no money in my checking account. Where am I profitable? So this is a system that teaches you how to segment your money and put profits first.
02:56 – Jack’s Personal Profit First Journey
Jack Jostes [02:56]
Yeah. So I've personally been using Profit First for eight years and Prior to running Profit First, I would struggle to come up with the cash to pay my estimated quarterly tax payments. And I didn't have enough profit to consistently take a distribution. And more importantly, I didn't have the cash.
Jeff Heller [03:19]
Yes.
Jack Jostes [03:20]
And so one of the things that I had to learn from Profit First is the difference between cash flow and profit. I think this is a confusing topic. I'm actually working on teaching my leadership team about it because they are having more insight into the, into my business financials, and they're incentivized by it. Could you tell us what's the difference between profit and cash flow?
Jeff Heller [03:42]
Well, cash flow is what you use to run your business. Profit is that portion of your revenue that you get to keep for yourself to do with what you want. And people tend to just lump both of those into the same bucket.
Jack Jostes [03:58]
Yeah.
Jeff Heller [03:58]
And it's not because by the end of the year, basically you see that bucket of money in your revenue and your expenses basically expand until it consumes all of that bucket. Profit First will teach you how to organize and put money in an operating expense budget, a tax budget. You just mentioned that you would always get hamstrung when you're estimated tax payment came due. This. You have a separate account for taxes that you contribute to.
04:29 – Organizing Bank Accounts with Profit First
Jack Jostes [04:29]
Yeah.. So. it's June 19th. It's your birthday. Happy birthday.
Jeff Heller [04:35]
Thank you.
Jack Jostes [04:35]
And I'm sure you know that estimated quarterly tax payments were due on June 16th this week.
Jeff Heller [04:41]
Yes.
Jack Jostes [04:42]
And so I, I paid mine on time. And so the way that I did that was what you're talking about. You have five bank accounts with Profit First. You have an income account where all your money goes into it. And then from that you transfer a percentage into your tax account, profit account and a tax hold account. And then I have a fifth one. I call it my beaver pond. This is where I just put a percentage into savings. And is that, Did I say that right?
Jeff Heller [05:12]
I mean, you can name the accounts, whatever you want. You can have more than five.
Jack Jostes [05:16]
Yeah, totally.
Jeff Heller [05:18]
I've worked with people that have seven, eight, nine different accounts just depending on how much they want to break down, what they're contributing to. It may not be enough just to have operating expenses. They may want specific things that they're putting money into that fall under.
05:36 – Special Tips for Snow Companies
Jack Jostes [05:36]
Well, so let's think of an example. So what might a. We're at what, the Snow and Ice Management Association Symposium. The SIMA Symposium. What might a snow company… What have you seen as far as additional bank accounts or how. What are some tips and takeaways for snow companies from Profit First?
Jeff Heller [05:54]
Well, I would see several of them that would use an equipment specific account for equipment, whether they're leasing or purchasing. That is just a subset of their operating expenses. They would use a, what they would call a catch all account that would cover expenses that might increase during the winter season. Like, I don't know, for example, maybe salt prices increase because of a shortage. They've got the money there to cover the additional funds that are required and not have to go into another bucket to take money out for that. So those are a couple examples that I see pretty frequently.
06:34 – Common Challenges When Starting Profit First
Jack Jostes [06:34]
What are, what are some challenges that snow and landscape companies face when they're trying to get started with Profit First?
Jeff Heller [06:42]
Typically in the snow environment, you're outlaying a lot of money before it ever snows, right? Salt, purchasing, equipment, purchasing, leasing, additional labor, whatever. So that's where I see their biggest challenge. That's usually what they're asking me is, you know, how do I account for that when I have no revenue coming in yet for snow? And it's difficult when you get first.
Jack Jostes [07:09]
Get started, like, does it take years to get started with it? Or I mean, because I. How do you do that? So, so let's pretend that I'm getting started with it. And it's June and now we're, you know, by the time it's October, like when are they going to buy all the salt and material and things?
Jeff Heller [07:25]
Typically they're going to buy it in the summer, right?
Jack Jostes [07:27]
They're going to buy it in the summer when I'm making no money in snow.
Jeff Heller [07:32]
Hopefully you're doing something other than snow, maybe landscaping. And some of those funds would come off of that to help support getting started during the snow season. And then a lot of those folks would, as we get towards the end of the snow season, hopefully they've had a great one. They'll transfer some of that money back, basically pay back the landscaping side of their business. So they could.
Jack Jostes [07:59]
So do you recommend Profit First for companies that have a snow department?
08:03 – Using Profit First in Seasonal Businesses
Jeff Heller [08:03]
Yes, I think just what were talking about, with all the expenses up front, having something in place that keeps you organized and disciplined goes a long way to easing that stress.
Jack Jostes [08:17]
Well, so the discipline part of Profit First is that you're only supposed to then use money that you have in your operating expense account. Right. Or unless you have an equipment account or something else and it's the time of year to use it. Many people, when I describe this to them, they Say, well, I could never do that because I don't have the cash flow during that time of year.
08:40 – Real Revenue vs. Top-Line Revenue
Jeff Heller [08:40]
I get that. I get that. I hear that a lot. The biggest mindset change with Profit First and was actually the most beneficial for me when I started doing it is they define the difference between revenue income and real revenue. So yes, basically that formula works. Is that your revenue minus your materials and what you pay subcontractors is your real revenue? That is the number that you operate your business off of.
Jack Jostes [09:14]
Right.
Jeff Heller [09:14]
So that is the biggest distinguisher and probably the most difficult thing to overcome.
Jack Jostes [09:21]
It's a difficult concept and I'll admit that I made a mistake in my own communication with my operations officer because I had my cash flow. I was doing my bi weekly cash flow thing and it was working. But when were forecasting, we had forgotten to factor in that operating expense formula.
Jeff Heller [09:45]
Yes.
Jack Jostes [09:45]
And so were making forecasts based on top line revenue without factoring in what was minus. And that we corrected it pretty quickly once we realized it.
Jeff Heller [09:57]
That is the difference that these folks see when they go to their accountant. He says you were profitable. But I have no money.
Jack Jostes [10:03]
Yeah.
Jeff Heller [10:04]
You know, I do. I'm not a huge company. I do about 2 million a year in revenue. And that was the biggest mindset change me. A lot of my stuff is subcontracted. So I would operate off the mindset that I had 2 million in revenue to run my business. I didn't. I actually had a million two to run my business.
Jack Jostes [10:25]
Yeah. So just in round numbers, if you were subbing out 800,000 plus material expenses. Yeah. You're actually working with 1.2.
Jeff Heller [10:35]
Yeah. And that's the number you base your decisions off of.
Jack Jostes [10:39]
Yeah.
Jeff Heller [10:39]
And it is a difficult change to make. It's a difficult mind.
Jack Jostes [10:45]
It is a different difficult mind thing. And so it's literally putting the profit then first and in the Profit First, then there should be a separate line item for the owner's pay as an employee of the business.
Jeff Heller [11:00]
Yes.
Jack Jostes [11:01]
And that's different from the profit distributions that you're going to take.
Jeff Heller [11:06]
Yes. And that's another mistake a lot of people make. They mistake the profit as their pay.
Jack Jostes [11:12]
Right. And I. Well, some of it should be yes. But if that's it, then that's you're putting yourself in an unnecessary risk because if you don't make enough of that profit.
Jeff Heller [11:25]
Exactly.
Jack Jostes [11:12]
That puts you in a lot of stress with your family, paying your own bills. And the book makes you put the owner first because if you don't, then you're going to give up and then the whole organization goes out.
11:39 – Profit First Math & Mindset Shifts
Jeff Heller [11:39]
Well, yeah, basically Mike Michalowicz, who wrote the book Profit First, his big message in there is that he's changing the way people think about generally accepted accounting principles. Revenue minus expenses equals profit.
Jack Jostes [11:57]
Right.
Jeff Heller [11:57]
Well, since profit's at the bottom, that's what you're going to think of last. So he proposed rewriting the formula so that it is revenue minus profit equals expenses. And I would take it a step further and say it's real revenue minus profit equals your expenses. So that's a big hurdle for people to overcome. But once they get there, they get real excited. Excited because they see money in that profit account growing. And at the Green Executive, we encourage them once a quarter to take some of that money and go do something fun. Not. Not all of it. You may, when you get started, you may only have $200 in it after your first quarter, but take the family out for pizza and ice cream and enjoy something. You know, all the small wins, right?
Jack Jostes [12:52]
Yeah. The small wins, I think are important because it motivates you to keep doing the difficult behaviors and keep running your business. So what are you doing on the board?
13:02 – What’s New at SIMA
Jeff Heller [13:02]
Well, this is my third year on the board. I am the vice chair. So next year I will become the chair of the board. Doing lots of exciting things. Just came off of our first in person board meeting of the year in Canada back in April and we knocked out our three year students strategic plan where we want to see the organization go. There's a lot of exciting things. We're going to be working on some accreditation programs for companies that will ultimately help them either be able to get insurance in the primary market or be able to reduce their insurance costs. So that. That's a big one. We're starting regional peer groups where we're hoping to get at least 10 or 20% of the members in that region to participate.
Jeff Heller [13:55]
We've started our first one in northwest part of the country and in western Canada.
Jack Jostes [14:01]
Peer groups.
Jeff Heller [14:02]
Yep, peer groups.
Jeff Heller [14:03]
How often do they meet?
Jeff Heller [14:05]
They are starting off, I believe, meeting monthly, but we have.
Jeff Heller [14:10]
In person.
Jeff Heller [14:10]
No.
Jeff Heller [14:11]
Okay, zoom. Okay.
Jeff Heller [14:13]
They will try to do in person and meetings at places like the Symposium.
Jeff Heller [14:18]
Okay.
Jeff Heller [14:18]
But we had I think 50 companies represented at that first peer group. So we're looking to do, I think a total of five, I believe, five peer groups.
Jeff Heller [14:32]
That sounds to. They'd be like roughly 10 to 15 or so.
Jeff Heller [14:35]
Yeah.
Jeff Heller [14:36]
People per peer group. That seems more manageable than 50.
Jeff Heller [14:39]
Yes. So. But real excited about that.
Jeff Heller [14:44]
So is that. Is that an additional service from Saima or do people have access to that just with their regular membership?
Jeff Heller [14:51]
About a third of the people on that first peer group meeting in nor were not SIMA members.
Jeff Heller [14:57]
Oh, really?
Jeff Heller [14:58]
Yes. So it's open to anybody, really. It is. So.
Jeff Heller [15:07]
Wow, I didn't know about this. I know a number of people who would, who are Simon members and some who aren't that would really benefit from a peer group.
Jeff Heller [15:12]
Yeah. So, yeah, any. Anyone's invited. I mean, obviously we're hoping the people that are not members would be compelled to join once they get. Get a taste of how.
Jeff Heller [15:24]
Well, you just got to bring them to the Symposium and then. I don't know how they couldn't join.
Jeff Heller [15:28]
I, I beat on people all the time to get to the Symposium. I got a friend of mine that I could never get him to go, and he. No, that's just, you know, I think it's a waste of my time. I got to got him to come to Pittsburgh last year. He's back this year. And he said, you're right. I was wrong, you were right. So I think he'll be at most every Symposium going forward.
15:51 – SIMA Leadership Forum: What to Expect
Jeff Heller [15:51]
So, Jeff, tell me a little bit about The Leadership Forum. What is that? That's kind of SIMA’s next big event, right?
Jeff Heller [15:57]
Yes, that started. Let's see, this will be 1, 2, 3, 3 4. This will be the fifth one. It's in Nashville, October 24th to the 26th this year. It's. It's a smaller, more intimate group. You're typically going to see the business owners, VPs of companies at this group, as opposed to, you know, the groups that show up here for the trade show. It's, it's filled with some great, nationally renowned speakers and some great events to attend. Keep it short. It's usually a couple of days, but I said it's just, it's a small, intimate group and we just, we have a good time and it's great to spend time with owners of some of the companies that you see around here, but just don't get a chance to talk to everybody.
Jeff Heller [16:52]
Yeah. Well, Jeff Heller, thanks for coming on The Landscaper’s Guide for folks listening who want to network with you, how can they get in touch?
17:00 – How to Connect with Jeff Heller
Jeff Heller [17:00]
I'm on LinkedIn. Jeff Heller. You can reach me at my email jeff@thegreenexecutive.com and if you go on my LinkedIn account, there's other ways there you can reach me. I think my phone number is out there, so anybody wants to reach out, happy to talk to them about sima, about Profit First, whatever they'd like to chat about.
Jeff Heller [17:22]
Great. Well, thank you, Jeff.
Jeff Heller [17:23]
All right. I appreciate it. Thank you, Jack.
Jeff Heller [17:25]
Take care.
Jeff Heller [17:26]
Thanks.
Jack Jostes [17:28]
Like today's video and subscribe to our YouTube Channel to get upcoming videos to help you grow your snow and landscape company. My name is Jack Jostes and check out my free resources in the show notes and click the next video to grow your business.
Show Notes:
📺 Watch + Read the Full Episode:
https://landscapersguide.com/podcast/
🎁 Get Free Tools + Beef Jerky:
https://landscapersguide.com/toolbox
📬 Connect with Jeff Heller:
LinkedIn: https://www.linkedin.com/in/jeff-heller-csp-pfp-5446217/
Email: jeff@thegreenexecutive.com
Website: https://thegreenexecutive.com/profit-first/
📌 Learn More About SIMA:
SIMA 2025 Board of Directors: https://www.sima.org/board