Profit First vs. Traditional Budgeting: Which is Best for Your Landscaping Business?

It may surprise you to hear this from an accounting team: Budgets won’t solve all your problems.

Budgeting templates might seem like a must-have tool to handle your landscape business finances, but it’s not. There’s a less tedious, more business-friendly alternative that eliminates financial stress and confusion: Profit First. 

Despite their good intentions, many business owners struggle to stick to their budgets. It’s difficult to track every dollar they spend.  If you’ve experienced this, you’re not alone. Budgets are tedious and difficult to maintain. Without a dedicated team, managing spending becomes nearly impossible.

Through years of consulting clients across various industries, we’ve noticed that businesses rely heavily on budget templates because they:

• Overspend due to underestimating expenses or unexpected costs.
• Experience inconsistent cash flow, especially during slower seasons.
• Struggle to make informed purchasing decisions for necessary equipment.
• Feel financially strained and stressed, impacting both their business and personal life.

So while budgeting was intended to be a solution for business owners, it became a burden. 

If you find yourself constantly tweaking numbers, struggling to track every expense, or lacking financial clarity—try the Profit First approach. 

Profit First: Intuitive And Straightforward Financial Management 

Created by Mike Michalowicz and articulated in his book Profit First, the Profit First method is a financial management system designed to help businesses achieve financial stability by making profit a number one priority. Simply put, the traditional approach subtracts expenses from revenue to determine profit: 

Income – Expenses = Profit 

Profit First reverses the equation: 

You allocate a portion of income to profit first and then manage expenses with the remaining funds. 

Income – Profit = Expenses  

This proven method guarantees your business is profitable from the start making managing cash flow, reducing debt, and maintaining financial discipline painless and less time-consuming. 

Now, there are nuances to every industry’s bookkeeping realities, so let’s discuss how Profit First can benefit or even transform your landscaping business:

Profit First Helps You Control Spending

The core of the Profit First method is setting up separate bank accounts for different expenses, such as operating expenses, profit, taxes, and owner’s pay. Separate accounts  creates natural guardrails for spending. This is especially crucial for businesses with multiple moving parts and employees, where keeping these guardrails in place can be challenging without dedicated management. 

What’s more, this system leverages business owners’ natural inclination to check how much is in their bank account before spending. It’s common for us to overspend when we don’t see the amounts broken into their respective accounts. The separation helps curb this tendency.

Profit First Helps Create Stress-Free Slow Seasons 

By allocating funds during the busy season, you can ensure you have enough saved to cover expenses during slower periods. Here’s how:

1. Open a separate account. 
2. Determine the amount of funds you need for the slow season. 
3. Summarize expenses (rent, insurance, employees, etc.) and track them in a spreadsheet  
4. Stick to the plan and start putting money away to get you through slower months.

Profit First Encourages Smart Investment Decisions 

Let’s say you need a new piece of equipment. 

Enter Profit First. 

Similar to how you open separate accounts for taxes, and other expenses, we advise our clients to open a separate account for big purchases you need to save up for – like new equipment. Then, assess whether you have enough funds to cover the purchase. If not, plan how to get there: Can you manage without the equipment for now? How many additional services would you need to perform to save the required amount? Do you need to raise prices? 

That’s it. Easy, right? This brings us to the last, but not least, benefit… 

Profit First Brings You Peace of Mind

With Profit First, you can be sure that your financial needs are covered, allowing you to focus on growing your business rather than worrying about whether you have enough funds to sustain it. 

Bottom line: The Profit First system offers a simpler, more effective way to manage your finances, achieving financial stability and growth. That’s why we love helping clients succeed by integrating it into their landscaping businesses. Ready to hear how we can help your business? Click here to learn more.