Pay Yourself First: A Financial System That Prioritizes The Founder

Sean Weisbrot: Monica Duggal isn't your typical finance expert. She's the founder of the Whole Health Plan and the architect of the Financial Bites method, A system that turns financial chaos into clarity For founders, from bootstrap startups to scaling operations, she teaches entrepreneurs how to turn budgeting, investing, and risk management into tools for legacy building. If you've ever wondered how to pay yourself first and still scale profitably, Monica is the strategist you wish you met years ago. Is there a standard system that company owners can use to diagnose the financial health of their company?

Monica Duggal: Yes. I actually, uh, started a, a Financial Bites method and uh, basically is for budget, I is for investing, T is for taxes. ES for exit strategy and S is for systems. If a client U or a business uses this, say a monthly, on a monthly basis to go through each one, that will really help them get a really clear view of how the health of their business is.

Sean Weisbrot: So it's funny when you were saying that, I was thinking it was B-Y-T-E-S, not bi, TES, because I, I think about tech all the time. So let's go with the first one. You said it was budget. So what are some specifics around budgets that they could be thinking about?

Monica Duggal: Yeah, that's a great question. So if you think about your budget, if you think about your budget as a CFO, so what, what does A CFO do? So the CFO would look at your company and when they look at the company, they look at in terms of as being an executive rights strategically. So all the numbers are extremely important, but the way they're really looking at it is, how are we spending the dollars that we're making? We're making real revenue and how. Are we turning that $1 that's coming in into more revenue for the, for the company. So if you create a budget, you can start thinking about like, some of like the products, maybe products that are doing absolutely amazing, or maybe your, your clients are saying, Hey, you know what, if you did this, like I would really love this a product. Like, I need this. And so, so when you're looking at your budget and where you're, you have money. You can also look at maybe other things in your, like your product where you're spending money and sometimes you may find that you're actually spending money to have a product that is actually losing you money. So, so a budget helps in so many ways to take a look, right? To really just take a look and do a deep dive. The, the thing about it is sometimes businesses we get so busy and we don't wanna cannibalize like, oh my gosh, you know, if we grow this product a little bit more, then that product over there, you know. We're gonna hurt that team, but the but. The bottom line is your business. You want your business to thrive. You want your business to continue to do well year over year. So do making these decisions really is not gonna hurt your company. It's gonna help your company. And I think if, you know, even if that's explained throughout the company, that we're gonna be changing stuff, you know, when, when it's time to move a product or even extend a product, right? So let's go back to the, the client that's like, okay, we have this product. We would love if you had this product as an addition or something. That right there is a natural holistic upsell, right? Because here you already have a client that's paying you money. Not only are they already paying you money, they're asking you for another product. That means that as soon as that product is ready, you already have the client. So you don't have to go through beta, you don't have to go to iterations. I mean, that's there. So that's where a budget would really, really help. A company, and if you're really taking a look at this stuff, there doesn't have to be any pressure. And it can just be a very normal, uh, process that a business can take in order to continue to just make their clients very happy because you know, you're listening to your clients. And then also, like I said, you know, maybe turn off some others. Stuff that maybe now this year it's fine, but maybe in a year from now that product is gonna be obsolete or nobody's even going to use it. So just to kind of prepare, those are, those are what budgets are, are really, really good for also forecasting, right? You could look at 1, 3, 5 years down the road, many companies do this. And so that would also help with how you're going to, uh, be, um, allocating your $1, that you get it. And I always like to break it down to $1. I know some companies are worth like a trillion dollars, but, but at the end of the day, it's still the money that's coming in. What are you doing with that? Right? What are you doing with that? Also, what I love about budgets as well is that, that you can look at operations, you know, like I said, maybe a product's not really working or. Or maybe there's other places in operations that, hey, you know, we don't really use that. Or, whoa, we have like these warehouses and, you know, why are they even on the books and stuff? I actually hear about this in like, uh, like in generational wealth, right? Like third generation, fourth generation, like. Oh, well, that's just the way they set it up, you know, three, three generations ago. And sometimes nobody's even looked at some of these things. So, so a budget can help you in your personal, in your business and your third generation, fourth generation, just to really take a look at it. And sometimes, you know, it's hard to look at the budget, but it's a powerful tool. It's a powerful tool to, uh, to use

Sean Weisbrot: for a company that's just starting out or they're early in their lifecycle. How can they establish their budget if they are starting from something that they don't really understand yet? 'cause you're talking about, you know, three, five year forecasting. But I think a lot of companies that would be listening to this probably don't have enough information to be able to forecast it. Even if they are, they're probably lying to themselves because the data doesn't mean anything.

Monica Duggal: I love that question. I get, and I'll tell you what, that's my sweet spot and I'll tell you why. I am a risk management before anything else. I do risk management. I know that, uh, before I was talking to you about like Microsoft, like these guys, they have a lot of cash and they were one of the only companies that did not lose their AAA rating. And that's just 'cause they have so much cash, right? They can weather almost anything. So in light of that, they have a really great. Uh, credit line. So what I wanna tell you is act, and this is actually an offering that I have for brand new companies, and I've actually have case studies with companies that have actually helped with this. Uh, so, so the reality, if you're gonna get, if you're gonna like fund yourself, that's a different, uh, a different program than if you're gonna get equity funding, a VC funding angel investing, right? So those are different If you're self-funding. Uh, there are ways and, and it's interesting because if you don't look at the future, you're going to put yourself in a very big, uh, uh, uh, problem. And I'll, I'll tell you why. Growing a company from just starting it, there's gonna be a lot of things you're gonna wear, have to wear a lot of hats, probably like 10 to 20 hats as a founder. The other thing, you know, you'll bring other people and they will also, everybody will be wearing hats. Now, let's say that if you have like a, let's say you're growing, right? You're, you're, you're still starting this, but you're growing and let's say that, uh, you have customers, the thing that you don't wanna do is interrupt whatever service that you're giving your customers, right? Because you're building, right? And so what you're building, you're building the trust, you're building your, your platform. You're building your client base. So. To not think about like your two year run rate. 'cause that's the reality. It's gonna take you about two years to to, to like get off of the, the tar pit and actually up into the sky. So, so you do, you do need to have the funds. So if you really think like, oh, I'm just gonna go wing it, I'll just go get tons of clients, uh, and then figure it out. That usually doesn't work because. Because things will happen that you did not expect, something will come up, and that's not really the hardest part. The hardest part is the mental fatigue that you'll have to deal with because as an entrepreneur, you're, it's it all, it's all on you. Every single thing that you do is on you, like it doesn't matter. It all comes back to you. You're the one that's putting in all the time, all the effort, right? You're the one that's resing everything here. Everything. So, so you really do need to have that sounding board. There was a book that I read, and one of the things that the person said, there's two, there's an opportunity, uh, for a startup. And so they asked these two people if they wanna be the executive, one of 'em is living paycheck to paycheck. So that one, uh, you know. They're gonna get shares in the company and stuff, but they still have to pay the rent, right? The second one saved two years worth of living expenses. So hey, they can actually take it. They can go in there and they are getting the shares. The company will eventually do well, and they can actually take that risk because they can fund themselves for two years. And so I thought. When I read that, I thought that is hard like to do. I heard that it takes five years to, to save two years worth of living expenses. And, and you have to be very, um, and you have to be very, what is the word? You know, you have to be consistent and you have to be committed, uh, because it is a lot of work. So the other side of that is that it does, if you do it that way, you're, you're gonna be fine. But you're right, Sean, this is not easy. Um. You know, and people will just go out and they'll just start businesses without considering these things. And it's just however the person wants to do it. But if you really wanna be successful for the long run, you really have to think about these things. You really have to think about 'em and. And, and have you heard of the, uh, what's his name? Uh, there's this one person that talks about, he actually sold a company for a billion dollars, but he was talking about getting like equity, uh, private equity or VC funding, and. It takes a lot. They take a lot.

Sean Weisbrot: Yeah. It's not something I want to be involved in anymore. I did it once and uh, didn't see the success. I thought I would see, and I learned my lesson from that, but I wanna focus on the, the next letter. It's, I Tell us about that one.

Monica Duggal: I love that one too. And that one's a really, really great one because if you think about it, I, I wanna go back to, I'm gonna use on Microsoft as my case study. 'cause I, I, that's the one that. If I could share something with people, and you guys can, can run your companies like this, you can do really, really well for a really, really long time. Legacy. This is legacy building. So, so the i if you, if you look at your, again, your budget. You could look at your eye. So, so let's say you're bringing in a dollar again, right From your real revenue, you could just, you know, uh, put it all back in the company. And that's one thing that unfortunately happens, especially to entrepreneurs, beginning entrepreneurs, and even a lot of people in the industry, they get like a business model from like venture capital or private equity. And then they think like, this is how we're supposed to do business. That's so far from the truth, and it's such a shame. I'll say, uh, there's a, a guy that created a book, it's called Profit First, and in his book, yeah, he has this woman that, that is like crying to him. Like she's had her business, it's very successful for 10 years, but she doesn't pay herself. And so then I'm like, that's the perfect example of venture capital, right? Venture capital is like. You built the company and then at the end you get the waterfall, you get tons of money. Well, people, if you're a small company, that's pretty much not gonna happen. So you actually have to pay yourself, and that's what the whole book is about. It's like you're taking all the risks you need to pay yourself. I. I think for the first, like the lowest, uh, the lowest number you have to pay yourself 50%. So that means every dollar you pay yourself 50 cents, and that means that, uh, uh, then you have to pay your taxes, of course, and you have to pay it in your profit. And then you have your operations, which. If you're a entrepreneur and you're just starting, you need to get that book profit first open the accounts which are five and it's a pain, but it's so worth it 'cause you don't even have to think about it as the real revenue comes in. You put all of the money in the account and really the other thing that it helps you with, it helps you with the operations. 'cause that's a place where we can like lose a lot of money. And really, if you really think about it, I. You could actually make a lot of money as well, right? You could keep a lot of your money. And so let's go back to your question then on investing, right? So if we talk about investing, then we can say, like with our company, if we wanna have some cash as the dollar comes in, we could say, okay, we're gonna put a cer certain percentage into like a money market account. Or whatever, right? It depends. You can talk to professionals about that or do your own research on it, but at the end of the day, what that means is that you can then have cash building from day one for your company, it sounds like. Why would anybody wanna do that? Just put all the money in back in the company so it can grow really fast. The reality of it is you will have the hiccups, you will have the things that come up that are going to, they could derail you, and there is no reason to get derailed if you have these little, right, like this little investing account or even the profit. The profit first, the profit, it actually makes you have a profit account, which is amazing because you can use that at a party or if something comes up. You have that money to also pay that. So, so I'm a big, I'm, I, I'm, I'm really big on that. Some people are like, oh my gosh, no, your dollar, it's was, it's losing like, uh, whatever, 3% inflation every year. But think about it if that's the case. But if your company's doing really well, really well, you could be making like 10% return, 20% return, 30% return. So what is 30% return to. 3% inflation to have cash if something happens and you need it to continue to go, because the reality of it is, is you become successful. You do your thing, work hard, stay on top of your stuff, you're gonna do well, you're gonna do like, there's no magic to it. It's very, very practical.

Sean Weisbrot: So I really like the Profit First book, and I tried to get one of the guys I invested in in Canada to read it, and he's not so great on the reading side, so I just told him what I knew from the book and I pushed him to open multiple accounts for the purpose of being able to separate the money coming in because it's an extremely cash heavy business. And I wanted to make sure that there was a way for both of us to be able to take money off the table. And the business fell apart, but I tried.

Monica Duggal: Yeah, yeah. No, it, it sounds good. I, I don't know what the business was, but if it was cash heavy right there for me, it sounds that. Already throws a lot of complexity Yeah. Into the mix, right? Uh, because, because then you really have to plan. So, so, so it's kind of cool to get the revenue, but if it's cash heavy, that that's a lot. And you really have to think about like, what am I gonna do with all that money once it gets in? Like, how do I reinvest it? Or I, I don't know what your guys'.

Sean Weisbrot: It was a business where he would buy products that had been returned to Walmart, to Amazon, et cetera. He would buy them in bulk. They're practically unopened most of the time. Brand new, purchased and returned but never opened. And products, sometimes they're opened, but still returned, but still in perfect condition. Just the box is open. So he would get these massive discounts and then he would turn around and sell them for under retail, but still at a massive profit, sometimes three x for us. And so the only way we could see to grow was to take most of the money that came in and buy more product than we had last week. And so if we could continue to just buy more product and sell that product. 'cause the selling the product was super easy for us. It was having the cash to keep growing. That was the problem. And we had is issues as well where sometimes the product could take up to two weeks to arrive because he is in Vancouver Island, which is in the far west of Canada, and a lot of the products was being sourced from Eastern Canada. So it would literally take two weeks to put it on a 18 wheeler truck and drive it across to Vancouver. And so. If we bought like let's say half a truckload worth of product and we sold it in three days, but then we took a day to order the product in another two weeks to get it, there would be days where we had no product to sell because we sold the product so fast and so it was extremely inconsistent and we had to shut down some days and we had to deal with all sorts of issues. So. It was very difficult to grow that business. Yeah. But I've seen other people do that business and they're able to grow it to be tremendous amounts of money. Tens of millions of dollars a year in revenue. We were just not able to get there because we had a lot of those issues. I.

Monica Duggal: Yeah. Yeah. No, I, I hear you. Uh, Sean, and I think part of the, the challenge with anything, 'cause I also now I do like some investing in the stock market is sometimes it's kind of a waiting game, right? So, so I think, you know, we're talking about like budgets or looking at something one year, three year, five year out. So if you could actually, you know, just come up with a plan and then just wait it out, right? Because if in fact you already saw that somebody was successful. And you did find success, right? But then now you're like, Ooh, what is all this downtime? Right? How much was that downtime costing you? Tremendous. Uh, was it actually costing you? Yeah. So it was, so then at that point, now you're losing money. So, so I get what you're saying. Somehow there was part of the model that you didn't really like, you know, that wasn't clear because if in fact you were making money in the beginning, but then it kind of fizzled out and then now it was going. To red. Yeah. Yeah. I, i, I, I, I don't know what the, the thing is, but I'll tell you what, Sean, because I've done stuff where, where I do see people that are really successful in something and then I'll go and I'll try it, and then all of these things will come up. And it was like, well, nobody talks about that. And oh my gosh, that's so expensive. I'm like, you're actually losing money here. How are these people making money? But I think all, I think a lot of it really, if we really stop and think about it. That was a, uh, an, an entrepreneur company, so it probably would take you two years or re uh, to figure out all the kinks. The largest issue was his

Sean Weisbrot: location. That's it. Just where he was is so remote selling everything else was perfectly fine. I. I'd like to get to what T is.

Monica Duggal: Okay. So T is taxes. And that one's interesting because a lot of people, you know, uh, especially entrepreneurs, like I talked to solopreneurs even, and they're like, oh yeah, taxes. So if you do the profit first and you actually just put the tax account and just put all the taxes in there, you don't even have to worry about it. You know, when it comes. Time to pay, then you just, you deal with it. Uh, taxes for me are very interesting because like I said, right, if you're like third generation, fourth generation, you know, in terms of inheritance or whatever, then that's pretty much all you're doing is taxes. But like an entrepreneur that's just starting out, right? They don't have that legacy and all of this, these things, but they do have to deal with taxes and sometimes it just feels like. If you're a builder, you know, it's kind of like go and build. Right. Well, I, I know, Sean, you were just talking about that you guys have to pay like 50% taxes. Is that correct?

Sean Weisbrot: No, I was, I was talking about Spain for, I don't, I don't know Portuguese corporate taxes, but I'm under a special tax regime, which is 20% flat. But, but a lot of people don't have that, and I think they pay like 33.

Monica Duggal: Yeah. Yeah. So, so, so I guess the, the bottom line is like, you don't have to deal with taxes. So, so, so the profit first makes it really easy, you know, you just, you just do it and you take care of it. Yeah. So that's, that's where the taxes comes in, exit strategy. So I really like exit strategy because I, I use this, uh, it's kind of like a joke a little bit like Sean. Well, you're probably, this is probably not your situation 'cause you have lived in a lot, a lot of places, but sometimes people, you know. If they live in a, in a place, uh, they will collect a lot of stuff. So if you have like an exit strategy, right? You're, you're, you don't have a lot of extra stuff. Businesses can also do that, right? They can have like. Oh yeah. You know, we have all of this from like, you know, when we started or things of this sort sort, but if you were gonna sell your company, you're gonna have to deal with that stuff, right? You're gonna have to like, either the new owners are gonna take it or the new owners are gonna be like, please get rid of that before we get the company or, or stuff of this sort. So I think exit strategy is good because it makes you nimble and if in fact you wanna sell your company, you're gonna be ready. Uh, it also just helps you. You know, even with your company, if you're gonna grow it right, to maybe bring new products in or bring new ideas in. And there's not a lot of other things like, or, or even this, if you're the owner,

Sean Weisbrot: I would love to have multiple businesses that are completely automated, preferably with teams of agents that have no humans necessary. So I can just make a bunch of money and not have to do any work. And I don't need people to, to bring me back into the business. That's my dream.

Monica Duggal: Yeah, it's, it kind of goes a little bit with exit strategy as a systems and standard operating procedures. There are entrepreneurs that already work that way, right? Like that's just normal for them. There are operations people, but then maybe there are some that are not, and so the systems are, the systems are so important because they save you so much money and for companies to not have the systems, that doesn't really make a lot of sense, right? You lose a person and it's like. Whoa, what do we do now? But if you had your system in place, like, okay, well, you know, that person is gonna go look for something else and you bring the next person in, and then they could just, you know, pick up where the other person left off. So that's a Financial Bites blueprint.

Sean Weisbrot: Thank you for that. I appreciate it. What's the most important thing you've learned so far in your life?

Monica Duggal: Oh my gosh. I think the most important thing that I've learned in my life is just to keep going. Uh, and I'll tell you why, because. It's like we go a little bit to the breath here. Uh, Sean is, when you come into this world, the first thing you do is breathe. When you exit the world, the last thing you're gonna do is breathe. So it's like the most important thing that I've learned is like, you're always gonna be breathing. You're always going to be, be like, living here. So just. You know, for me it's like I try to make it the best that I possibly can, whatever I get, you know, look for that silver lining, look for that, that, uh, what is it? Have you ever heard of that joke? Like, uh, a manure and, oh, there must be a pony in here somewhere. You know, and that drives some people crazy. Like, oh my God, those rose colored glasses. Like, you know, but, but think about it. You can like, just look at all the, the, the, like, the heaviness of like, like that's real. Like that's real, but it just, that's real for everyone. Everybody has to deal with this. So how long do you hang out in, in those? That's like, something that I found really important for me is that I am just gonna try to focus on whatever it is that I want, because. You know, growing up you learn a lot of stuff and some of that stuff, it's like, did you pick that? Did you? Is that really your thoughts? You know, is that what you really feel that way? So if I really think about some of that stuff, I'm like, I didn't never, like why? Why do I even feel that way? Or why do I even think about that? And it's probably somebody said something to me somewhere, or somebody taught me something that, you know, maybe for them it was like something that was important or of value, but reality, it kind of like maybe. It, maybe it's one of my blind spots now, or something of this sort. So, so I think that's the most important thing is just to try to always like, you know, say, Hey, I have a choice. I have decisions. So what do I wanna do with this time that I have? And uh, and uh, there was one more, Sean, I'm gonna give you this one and tell me what you think about this one. I forget how many. Seconds or minutes there are in the day, and they're like, if all those minutes in the day were dollars, okay, and somebody cut you off while you're driving or somebody did something to you that kind of like, you know, it kind of like made you upset. Like, what the heck? And, and so you could take, like, they took 10 minutes of your life, right? So like you had to pay $10 for that. Like some people would be like, oh, it's ruined my whole day. Oh, it's ruined my whole week. Oh, it's ruined my whole month or my whole life even. It's like, it's like you are giving all that money away. So I thought, I thought, I thought that was kind of interesting, like, yeah, like why, why would I spend my time on something that maybe has already finished and that is just really not making me feel so like, you know, like, what else do I have to go get done? Like, what's my next thing that I get to go work on?