Profit First was written by Mike Michalowicz in 2014. A book to help end entrepreneurial poverty. By taking a different look at your Income Statement: Sales – Expenses = Profit to Sales – Profit = Expenses. Yes, that is right, pay yourself first. As entrepreneurial you are the ones that put all your money, time, energy, sweet, tears, and sometimes blood to get your business started. You take the education classes, you hit the streets to get your name out there. So, why should you take the crumbs at the table? Pay yourself first!
There are several steps to having your business be a Profit First business.
The first step is to go to your bank and have a total of 5 bank accounts. That is right, 5. More detail about these accounts will be in later blogs. But for a sneak peak, you all your deposits will go into your Income account. Twice a month you will divide up the money based on your revenue (see chart).
Here is where some people get overwhelmed if they are doing this on your own. These percentages in the chart are where you should be at, not where you are going to start.
Your next step is to start working with a Profit First Professional (PFP), they will help you come up with a plan to get where you are, to where you should be. It is a process, not something that is going to happen overnight.
Your last step is to work the program with your PFP and enjoy the fruits of your labor.
If you are tired of running your business check to check or sales to sales, and you want to be able to sleep at night not having to worry about your bank account, not having to worry about making payroll, profit first is for you. Not only will you be paying yourself first, but you will have your accounts set up so you don’t have to worry about cash flow again.
If you want to learn more about Profit First, please schedule a Free consultation! I would love to share it with you and help you to make your goals into reality.