Google defines a profit as “a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.”
While this definition is correct, it can be defeating to take “the difference between the amount earned and the amount spent” as your profit – because what if there isn’t a big difference between those numbers?
Business owners are always asking themselves how they can increase that profit number, but struggle to achieve profitability. Profits can easily turn into an ambiguous, achievable ideal – but it doesn’t have to be that way.
The Profit First method helps business owners to be intentional about their profits from the start, rather than waiting to “find out” what their profits will be.
This system is useful for how many interior designers do business. It’s common to get paid upfront for the bulk of your work, which includes the additional costs of decor, furniture, subcontractors, and more. When you receive your money in a lump sum, the profit you were supposed to make can easily slip away undetected.
In other words – it’s really hard not to spend the money that’s right in front of you.
You want to serve your clients and do a great job with the money they’ve paid you, so what will it hurt if you spend a little extra here or there? But what many designers don’t realize is when they don’t set profit goals it’s all too easy to spend that money before the project is over.
Profit First helps you change the way you think about the business’ money, gives you a highly practical and entirely new way to budget your money, and sets you up for success by making a profit and covering project expenses every time.
Why you need profit goals
Profit First is a great system, but you still need clarity on your profit goals to have success.
Profit goals will help you:
- Stay focused on the right things and disciplined with your expenses
If you don’t know your profit goals, you won’t have a good grasp on where you need to spend or save money – making it all the easier to spend money when you shouldn’t. But knowing your profit goals will make you more aware of your money at all times, and if you’re using Profit First, that money will go into a separate bank account so that you never accidentally spend it again.
- Make sure you’re compensated for your hard work
Nothing breaks our hearts more than when we hear of people working to the bone only to end up with very little for themselves and their families. You don’t have to play the martyr in your business by taking pay cuts just to stay afloat – that’s not helping anyone in the long run. Your business needs a healthy owner with a sustainable paycheck – setting profit goals will help make that a reality.
- Helps you build a sustainable business
When you’re managing your business finances well, you’re able to focus more on serving your customers with your design expertise, which will only help you grow your business more! The systems you use, from your money to your management and workflows, are the foundation to sustainability. Setting profit goals can be scary – but it’s much scarier to look back and realize you could have done something to set yourself up for more success but didn’t.
We hope you’ll look at your business’ finances head-on and start making decisions about your profits that will bring your success and stability for years to come.If you want to make a plan for setting profit goals and you think Profit First might be a good way to get started (we think it is!), we’d love to have a conversation with you!