Whether you’re an accountant or not, you probably have a general idea of how to manage your businesses’ money.
The method you use may look something like:
- Make money through sales
- Pay bills, supplies, and misc. expenses
- Then, if there’s money left, take a profit for yourself.
This is the traditional system, and yet it will more often than not leave you stuck with the “dregs” of what your business has to offer. When your profit just comes from the leftovers, it leaves you always running, striving, and reacting, rather than staying proactive and pursuing meaningful financial stability and growth.
But the Profit First system turns that all on its head. Here’s how it works:
- Make money through sales
- Take a profit
- Pay bills, supplies, and misc. expenses.
Success from the Profit First system works best when guardrails are set up from the beginning. Parkinson’s Law explains that people will almost always use the resources in front of us. If we have a big well to draw from, we’ll dry it all up. And yet if we have a small well, we’ll be able to make do with the smaller set of resources.
This law is important as you begin to implement Profit First. Creating boundaries for yourself will set you up for success!
Here’s how to make that happen:
- Set up your 5 foundational accounts – income, profit owners compensation, taxes, and operating expenses. These accounts will keep your money separate, so that your money stays where it needs to be.
- Create a predetermined system for what percentage of your earnings will be allocated into each account, and set a schedule for when those allocations will be made. This is a great time to bring in a Certified Profit First Professional to help you determine the best percentages and schedule for allocations based on your unique business and financial situation!
- Experience financial clarity for your business! Here are what some of our clients are saying after we worked through the Profit First principles with them:
“Since working with AccountSolve, my business has been drastically simplified. Our employees are a lot happier, expenses are down, and profits are up! I will definitely continue working with Lori and her team to keep my company and myself moving in the right direction!”
JW, Landscaping Company, Utah
“Our books were a mess and always behind. It’s a massive weight off my shoulders to know exactly where we are financially and not just hope there’s extra money in the bank.”
T.G., Landscaping Company, Nebraska
To experience this kind of peace of mind in your own business, schedule a call with Account Solve today.
