Are you a Profit First beginner?

by | Dec 15, 2018 | Accounting, Profit First | 0 comments

The great thing about using the Profit First system is that once you start it’s easy to continue. Even if you got interrupted in the process, or somehow got off course, you can always pick up right where you left off. Because Profit First isn’t consumed with complicated accounting jargon and instead focuses on the business owner’s money habits and attitudes, the concepts remain easy and always available to implement. While everyone has setbacks, the Profit First methods do require follow-through if one is to fully benefit.

Following up with our blog Start Becoming Profitable Today, we discussed how to easily begin managing money that addresses cash flow issues by opening two new bank accounts—one to save money to pay taxes and the other to build profit.

Now that you’ve got those new bank accounts open, and have gotten a feel for separating out money for your profit and money for taxes, forge ahead by opening three more bank accounts for deeper money management!

The next 3 bank accounts for you to continue your Profit First journey will be:

    • Owner’s Pay — savings account

      Owner’s Pay is for the owner’s salary or regular shareholder distributions. To keep this balanced system growing in a healthy way, continue to keep these funds separate from the rest.

    • Operating Expenses — checking account

      Any monies spent on the business should only come from this account.  It might be challenging at first because essentially, what you are doing is limiting the bucket from which you spend.  When you limit the amount of money in this account, which is designated for operating expenses only, you begin to make different decisions about your spending.  This is Parkinson’s Law at work, which basically states that we spend what we have.

    • Income— checking account

      Be sure you don’t confuse this account with the Owner’s Pay account. This is where all money will initially get deposited and then transferred out to all of the others. Think of this account as a holding tank from which to disperse the rest of your funds.

After you’ve set up the 5 important business accounts, you will already be much farther along in the money management process which is a part of a profitable business.

What will complement this cash flow management method, even more, is to keep the accounting software organized and up-to-date. Cash flow management, via the Profit First system, does not replace good bookkeeping and accounting. It works in conjunction with your accounting so that your finances are managed for the highest success.

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Lori Peterson


Lori Petersen

Lori Petersen has seen the frustration and loss that landscape business owners experience when they don’t have command of their finances. Growing up, she watched her father work incredibly hard as a contractor. He’d come home late, eat the dinner kept warm in the oven, and do it all over again the next day. But it all came crashing down when he had to close the business and Lori’s family applied for food stamps. The business had failed and all of his hard work was for nothing. 

Today, Lori views every one of her clients as an opportunity to make this right. She firmly believes no one should work as hard as her dad did and not have a profitable business. No family should suffer because business finances were poorly managed. 

Lori has helped hundreds of landscape business owners make sense of their finances, implement proven money management systems and create unimagined profitability for their business. She ensures they experience the return they deserve for their hard labor.

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