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An Introduction to Profit First - and why it works!

June 13th, 2024 | 2 min. read

By Anna Noa

profit first intro

Are you a business owner who wants to take control of your finances and maximize your profitability? If so, you're in the right place. I'm Matt and today, we're diving into an overview of the Profit First business strategy—a revolutionary concept that's changing the way business owners handle their finances. Let’s get started!

Traditionally, businesses manage their finances with this formula: Sales minus Expenses = Profit. In this setup, profit comes last and often ends up as whatever's left over. But let’s be honest—for many, this "leftover" amount often shrinks or disappears amidst growing expenses.

The Profit First model flips this formula on its head. With Profit First, the formula becomes: Sales minus Profit = Expenses. Simple, right? This switch is actually a total game changer because it means you are making  profita priority. Every time your business earns money, you immediately allocate a percentage of that income to your profit. Then, you use the remainder to cover your expenses. It's like paying yourself first, ensuring your profit isn't just an afterthought.

Now you might be thinking—this sounds way too simple. Why does this work? It’s all about human behavior. We tend to consume whatever we see as available. By taking profit first and setting it aside, you adjust your budget to what’s actually available for expenses, not the other way around. And it's not just a theory. Businesses around the globe, from tiny startups to large enterprises, have transformed their cash flow management with Profit First. It leads to more disciplined spending, better financial clarity, and, most importantly, consistent profitability.
In this video series, we're going to explore each component of the Profit First system. We'll break down how to implement it, the common challenges business owners face when getting started, and tips for maximizing its benefits. Whether you’re a seasoned business owner or just starting out, there’s something in Profit First for everyone.

If you found this overview video helpful, please give us a thumbs up, and don’t forget to subscribe to our channel. If you’re eager to jump in and are looking for some guidance with implementing Profit First across your business, schedule a call with our Patrick Accounting team by clicking here. We use Profit First in our own business and have experience coaching many other business owners in how to prioritize profitability, which leads to feeling more confident about where your money is and where it could take you. Book a call today, and make sure to check out our next video in this series: A Step-By-Step Guide to Setting up Your Profit First System.