Happy Last FRIDAY in October!
If you are looking for more treats in your business, without too many tricks – Profit First will have you giggling all the way to the bank!
This summer I implemented the Profit First system in by business. You know how I love a good SYSTEM! This is based on the book Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machineby Mike Michalowicz and Gildan Media, LLC.
Wow – What a difference it has made!
- More profit (an actual PROFIT account!)
- More control of expenses
- Doubled what I pay myself
- Money sitting in an account to pay taxes
If you are like me and most other entrepreneurs – you manage your budget by looking at your bank accounts -right? It’s ok to admit it!
If there was money left – you could spend it – and spend it we do! The only problem with that is that when it comes time to pay taxes and yourself – there is rarely any money left!
Mike turns the basic accounting formula around from:
Income (sales) – Expenses = Profit
Income (sales) – Profit = Expenses
It’s a mindset and tactical shift that helps us do what experts have been saying since the invention of money- Pay Yourself First!
You may have heard of the envelope system used by Dave Ramsey and Suze Orman, Profit First acts like envelopes but in your bank accounts. You set up a series of 5 bank accounts (Income, Profit, Operations, Taxes and Compensation). BONUS – I switched to a credit union (ENT) and got a free $200 in my accounts when I opened them!
Next you work through the numbers in your business to determine what percentages will be distributed to each account. Mine have been bumped up/down as I use the system. For example when I started I put:
20% Owners Comp
After just 5 months I’ve updated my percentages to:
8% Tax- goal is 15%
27% Owners Comp
It’s so fun to see the money adding up in my PROFIT account! At the end of each quarter – you take 1/2 the money out and you must spend it on something FUN! Why are we in business if not to TREAT ourselves to some fun once in a while!
Step 1: Get the Book (Audible, Kindle, Hardback) There are many free resources to help you on his website https://profitfirstbook.com/
Step 3: TAKE CONSISTENT ACTION!
Step 4: Enjoy more profits! Start planning what you will buy with your first Quarterly Dividend (I bought my own Paddleboard!)
I’m not an expert by any means and don’t have any connection to this book, other than its a tool that has made a difference for me! There are certified Profit First coaches, but I’m happy to share my experience with you and tell you what I’ve learned. Schedule a call so we can chat.