Madeleine welcomes Robyn Myer, a standout member of the direct acquisition team at Relay: a business and money management platform specifically designed for small and mid-sized businesses.

Implementing the Profit First Method

Robyn explains that the Profit First system flips the traditional accounting formula (Revenue – Expenses = Profit) to Revenue – Profit = Expenses. This crucial mindset shift ensures you pay yourself first, forcing your business to operate within the remaining expense budget.

• The Problem with Traditional Banks: Many banks make it difficult and expensive to open the multiple accounts needed for the Profit First method.
• Automation is Key: Utilize auto-transfer rules to automatically move funds between accounts based on percentages. This ensures consistent allocation for profit, owner’s compensation, taxes, and operating expenses, even during busy periods.
• Frequency: While Profit First recommends twice a month, Relay users can set transfers to run daily or weekly, especially when starting out or receiving frequent, inconsistent deposits like those from STR platforms like Airbnb.

Gaining Cash Flow Visibility and Organization

A common blind spot for STR hosts is feeling “in the dark” about their cash flow, even if they track revenue well.

• Stay Organized from the Start: It’s critical to know what you’re making, what’s tied to specific expenses, and what is your actual profit. This requires setting up systems and processes.
• The Danger of Commingling Funds: Robyn emphasizes the number one rule: do not commingle personal and business finances.
• Scaling with Clarity: As you grow from one property to several, keep funds separate:
• Multiple Properties, Single Entity: Use Relay’s accounts to separate funds for Property A, Property B, etc., even under a single LLC, and utilize tools like Airbnb to direct payments to these specific accounts.
• Multiple Entities: If you have separate LLCs, Relay allows you to manage all of them under a single secure login, easily transferring funds and maintaining a consolidated view.
• Common Blind Spot: Business owners often lack a clear view of which properties are truly profitable, sometimes allowing one to cover the losses of another.

Tools and Systems for Scaling

As a business scales, it’s essential to outsource and bring on experts.

• Securely Collaborating with Your Team: Relay offers different permission levels to invite bookkeepers, CPAs, or virtual assistants (VAs) without sharing your bank login credentials (a major security no-no).
• The Power of Virtual Cards: Relay allows you to create physical or virtual cards that are tied to a specific checking account. You can set spending limits (daily, weekly, monthly) and assign cards to specific team members (like VAs or property managers) or even specific properties for easy expense tracking.
• Streamlined Payments and Tax Reporting: Relay simplifies 1099 reporting by requesting payment details (like W-9 info) via text or email, ensuring all necessary tax information is accurately collected from the recipient.

Building Your Reserve Fund for Peace of Mind

Being prepared for unexpected expenses (water heater breaks, property damage, floods, etc.) is crucial for long-term success.

• Start Small: It can feel impossible to start a reserve fund, but Robyn encourages business owners to start with a very small percentage, even 1% of revenue, and utilize automations.
• Madeleine’s Reserve Goal: Madeleine aims for a six-month reserve of all business expenses to ensure the business never relies on personal funds.
• The Unexpected Opportunity: For many customers, the greatest value of implementing these systems is the peace of mind and reduced mental strain, allowing them to focus their energy on their “zone of genius.”

Short-Term Rental Profit First Percentages

Madeleine shares the percentage breakdown they use for their STR business (Note: these are malleable and should be adjusted to your specific business reality):

• Operating Expenses: 53%
• Management: 12%
• Tax: 12%
• Profit: 5%
• Reserve (until six months of expenses is reached): 8%
• Charitable Contribution: 10% (Optional)

Key Advice: Start with smaller percentages for profit and reserves if needed, work to analyze and trim expenses, and gradually increase allocations as you gain clarity and control.

Find Relay Online:

Sign up for Relay:https://join.relayfi.com/partner?referralcode=madeleinerh&utm_source=influencer

YouTube: https://www.youtube.com/channel/UCTmli04_PnCdhnbRvsRRMhg

Instagram: https://www.instagram.com/bankwithrelay?igshid=YmMyMTA2M2Y%3D

Twitter: https://x.com/bankwithrelay

Facebook: https://www.facebook.com/bankwithrelay

LinkedIn: https://www.linkedin.com/company/bankwithrelay/

Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank. The Relay Visa® Debit Card is issued by Thread Bank, member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used anywhere Visa debit cards are accepted. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply.

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Enjoy!

Resources:

🔗 Work With Madeleine’s Team – https://strsuccess.typeform.com/podcast

💼 Connect with Madeleine on LinkedIn – http://linkedin.com/in/madeleine-raiford-holland/

🎙️ Join Madeleine’s Podcast Insider: https://www.madeleineraifordholland.com/podcast-insider

📸 Follow Madeleine on Instagram: https://www.instagram.com/madeleineraifordholland/

🌐 Explore Madeleine’s Work & Coaching Programs: https://www.madeleineraifordholland.com/

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The views, information, or opinions expressed during this podcast are solely those of the individuals involved and do not necessarily represent those of The Luxe & the Short of It podcast or its affiliates. The content provided is for informational and entertainment purposes only and is not intended to be a substitute for professional advice. We make no representations as to the accuracy, completeness, suitability, or validity of any information on this podcast and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Listeners should consult with a professional for specific advice tailored to their situation. By accessing this podcast, you acknowledge that any reliance on the content is at your own risk.

Mentioned in this episode:

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