Flying blind never yields positive results. In fact, it leads to disaster – literally, in the case of airplanes, but figuratively as well.
A pilot controlling a plane while wearing a blindfold would not be able to see his fuel gauge, navigation system, or even the sky right in front of him. He would have no idea where he was going, if his path was clear, or if he had the fuel he needed to get there. How terrifying for him and all of his passengers!
The same could be said of profitability for business owners that don’t have an accurate understanding of their finances. Without absolute clarity about your cash flow, you are essentially flying blind as you attempt to steer your business. There is no guarantee that you’ll get where you want to go if you don’t know exactly where you are, yet your employees, their family, and your own family are all counting on you. I understand the weight of that pressure!
The thing is, if all of your money is in a single bank account, how do you know if you will have enough cash for payroll? Or what about when April rolls around – do you know if you’ll have the funds you need for taxes?
Seeing a lump sum in your one account doesn’t tell you much of anything since cash ebbs and flows in and out daily. Maybe you really like the balance today, but what about tomorrow when the monthly payment is due for your credit card? Relying on a single sum in one account can be very deceiving because it doesn’t show the full picture.
You don’t have to operate your business blindly and simply hope everything works out. In fact, I strongly recommend not operating that way!
Understanding profitability for interior designers and knowing without a doubt you’ll have the resources you need to handle all of your expenses (plus compensate yourself!) is essential. Profit First can be a dashboard to gauge profitability for interior designers so you know where you stand financially.
With the Profit First system, you divide your money among five bank accounts:
- Owner’s compensation
- Operating expenses
By separating every dollar into one of those accounts, you will know at all times how much money you have for each category. Your online banking portal can serve as the dashboard of your airplane, informing you of the status of each account so you can make educated decisions for your business.
Another benefit of this system is that one glance at your accounts will show you if any of them need attention. You already know your goals for each category, so looking at your statements and online portal regularly will indicate if you’re on or off track for each area.
The Profit First system teaches you how to distribute funds among the five accounts so you don’t have to fear what traditionally affects profitability for interior designers – like paying for project costs, tax season, or unexpected expenses. You’ll be allocating money across your accounts all 12 months of the year, protecting yourself from spending money you’ll need for something else later. The regular allocation among the accounts builds in a cushion, meaning unforeseen expenses won’t be detrimental.
I know that performing an overhaul to your financial systems might sound daunting. I get it. But, it’s considerably less scary than keeping your business vulnerable to cash flow issues. You have worked way too hard to get where you are. You shouldn’t have to worry about running out of cash. If you’re ready to stop flying blind, my team and I can help make the transition as smooth as possible, freeing you to keep working on the tasks that only you can do.
Don’t crash and burn
Imagine the sheer terror a pilot would experience if he or she was operating a Boeing 737 without being able to see. Don’t do that to yourself as a business owner. Set yourself up for success by separating your money into separate accounts a la Profit First, which will give you a dashboard so you can have a real-time understanding of your funds.
Rid yourself of that lingering dread and the Imposter Syndrome you experience when you fly blind. Thanks to Profit First, profitability for interior designers can be identified easily, putting you in the driver’s – err, pilot’s – seat as you lead your company. We can help you lead with confidence. Schedule a call today!