Profit First is a radical accounting system that will transform your business. Since the book’s release in 2017, 30,000 businesses have put it into practice, and they’ve seen incredible results!
We’ve already done several introductory posts on Profit First. (If you’re just joining us, take a couple of minutes and take a look through these. They’ll get you caught up pretty quickly.)
- Why You Should Take Your Profit First,
- 3 Reasons to Read Profit First by Mike Michalowicz,
- and Five Reasons You Should Implement Profit First for Your Business
This week, I wanted to give you four simple tips for when you’re ready to implement Profit First in your small business.
- Use your existing bank account as your “Revenue Account.” That’s one less account to open.
- Open the “Owner’s Pay” and “Expenses” checking accounts with your current bank as well (if there are fees or minimum balance requirements you may want to shop around).
- Use the suggested Target Allocation Percentages (TAPs) for each account if possible. If it seems like it will be a stretch to set aside those kinds of numbers, lower the percentages and work your way up. The key, though, is to do something…but don’t let yourself stay there. Set a goal of getting your TAPs fully funded within 12-18 months.
A certified Profit First Professional is a great asset here to help you figure out what are the best percentages for your business right now. (What luck! Patrick Accounting just happens to be a Profit First firm!)
- Reward yourself when you make your first quarterly distribution. At first, you may have a goal of paying off debt, so most of your first profit distribution will go towards that. But because you’ve worked so hard, be sure to set aside a small amount to give yourself a pat on the back. What is something motivational that you could look forward to 90 days from now? A steak dinner? Mani-Pedi? Or go crazy and order a Venti for a change!
By this point, you’re probably thinking something along the lines of, “This sounds great and all, but is it really worth making a bunch of changes? Does this really work?” The answer, of course, is yes. But instead of taking my word for it, I also want to let you read about the experiences of some real-world business owners.
Warning: just because the Profit First system is simple doesn’t mean that implementing it will be easy.
Truth: Change is always hard to some degree. That’s no reflection on the value of the thing you’re changing to. (In fact, the more challenging a change is, the more valuable it may be!)
Guarantee: it’s totally worth it!
As you’ll see, there are lots of ways to implement Profit First. The beauty of this system is that it gives you rails to run on, but it doesn’t make all the decisions for you. As a result, it’s extremely adaptable. Any kind of business of any type and size can benefit immediately!
Here are a few examples of how people have successfully implemented Profit First:
Lisa Van Gemert is an author and speaker in Arlington, TX. She operates a business called “The Gifted Guru” where she specializes in helping educators, school administrators, and parents teach gifted children.
She makes 70% of her money each year in just two months, so finances have always been just a little stressful! Implementing Profit First (she says it only took her 30 minutes to set it up) has given her a huge sense of peace. She says, “The biggest difference, really, isn’t even in the numbers: the biggest difference for me is in the weight off of my mind. I KNOW what will happen. I don’t have to think about everything all of the time…”
Josh Steimle is a business coach and founder of WMI, an international marketing agency. He has made Profit First required reading for his management team and says it has changed how they run their business. Josh says, “…the benefits have been immediate, and large. I fully expect that 10 years from now we’ll look back and say ‘It wouldn’t have happened if we hadn’t read THAT book.’”
Wendy Keller is the founder of Keller Media, an agency that helps authors get published. She says, “It’s been challenging to really put it into practice at my company, but we’re making progress. The unexpected gifts were these: It taught me to see my TIME as an allocation of percentages too; and it’s led to me calculating the averages on my personal expenditures. Result: Seeing huge black holes into which I gleefully pitch my money. Putting this book into practice has been fascinating. 100% recommended for every small business owner.”
If your finances are stressful right now, then be certain that the system you’re currently using is perfectly calibrated to give you the results you’re getting. Any of these folks (and thousands more) would quickly tell you that the cost of NOT taking control of your finances is way higher than any challenges you’ll face switching to Profit First.
Besides, if you switch and hate it (not likely)…you can always go right back to the old way.
When you’re ready to learn more or partner with a Profit First Professional who can help set you up for success, contact Patrick Accounting here or give us a call at 901-755-9898 (in Memphis) or 501-834-5757 (in Little Rock) to set up your one-hour introductory meeting today!