25 Years of Peer Group Stories - #4 Anthony Petersen

This article's content originated on Peer Talk podcast ep. 25 from Summer of 2021

Transforming Financial Management at Weavers Rental  

For many business owners, managing cash flow feels like a never-ending challenge. Money comes in, expenses pile up, and somehow, despite revenue growth, profitability remains elusive. Tony Petersen, the third-generation owner of Weavers Rental, faced this challenge head-on when he took full control of the company in 2020. By implementing the Profit First system, Tony radically changed the way his business handled finances, transforming its cash flow, eliminating debt, and increasing profitability. 

A Legacy of Hard Work and Financial Struggles 

Weavers Rental, founded in the 1950s, had always been a family-run operation. Tony grew up in the business, reluctant at first, but later took on key roles in outside sales, store management, and the party and event division. By 2012, he and his brother had purchased the company from their parents. However, like many business owners, they found that no matter how much revenue they generated, financial stability remained out of reach. 

"We were financially spinning our wheels," Tony recalls. "No matter what we did, we couldn't get ahead. There was no extra money for raises, hiring more staff, or even taking more profit." 

In 2020, Tony bought out his brother and suddenly had full responsibility for the company’s financial management. Determined to find a better way, he turned to Profit First, a book by Mike Michalowicz, which offered a disciplined cash management system focused on ensuring profitability from day one. 

The Profit First Mindset Shift 

The Profit First methodology flips traditional accounting on its head. Instead of the typical formula: 

Revenue - Expenses = Profit 

Michalowicz argues that business owners should make profit first: 

Revenue - Profit = Expenses 

This simple shift forces businesses to operate within their means while ensuring profitability from the start. 

“When I first read the book, the idea of a 'cash-eating monster' hit me right between the eyes,” Tony says. “I realized that we had been running the business completely backward. We needed discipline, and this system provided a simple way to do it.” 

Building the System at Weavers Rental 

The first step was setting up multiple bank accounts, each with a specific purpose. Tony established accounts for: 

• Operating Expenses (65%) 

• Owner Compensation 

• Equipment Purchases 

• Taxes 

• Profit 

• Vault (Emergency Fund) 

Twice a month, on the 10th and 25th, all income was distributed into these accounts based on predetermined percentages. This approach ensured that profit, taxes, and owner pay were covered before any other expenses. 

Making Hard Decisions 

Early on, implementing the system required tough choices. 

“At first, we had to confront the reality that we were spending more than we should,” Tony explains. “We had to cut unnecessary expenses, negotiate better rates, and streamline operations.” 

By sticking to the new budget constraints, Tony and his team found ways to reduce costs without sacrificing service quality. 

Immediate and Long-Term Results 

The impact of Profit First was almost immediate. 

• Debt Reduction: In just six months, Weavers Rental cut its corporate debt by 50%, despite operating with 40% less revenue due to the pandemic. 

• Improved Cash Flow: The company’s cash reserves increased by 300% compared to the previous year. 

• Stability: Tony built a vault account with six months of operating expenses to prepare for any future economic downturns. 

Lessons Learned and Next Steps 

Tony continues to refine the system, adjusting allocations as needed. His next goal is to fully fund the vault account and increase profit distributions. He encourages other business owners to start small and build discipline over time. 

“Even if you start with just 1% towards profit, you’re taking a step in the right direction,” he advises. “Once you see it working, you’ll be motivated to do more.” 

By implementing Profit First, Weavers Rental has transformed itself from a cash-strapped operation to a financially stable and profitable business. Tony’s story serves as a powerful example of how intentional financial management can change the trajectory of a company, ensuring long-term success and stability.