Profit, profit, PROFIT!!
As you heard in a recent post, I’m reading “Profit First”.
The author is Mike Michalowicz and he was mentioned to me several times by my dear friends Meredith Canaan and Kristi Pavlik.
Kristi is our OBM (Online Business Manager) and has been using this system for years.
My rule for books is that if more than one person recommends it, I buy it.
So far this year I’ve read “Atomic Habits” by James Clear, “Oversinscribed” By Daniel Priestly, and now “Profit First”.
The main concept of PROFIT FIRST is really clear, TAKE PROFIT FIRST!
Meaning that instead of waiting and watching and HOPEFULLY having a profit at the end of the year, you set a profit percentage (usually starting with 1%) and move it on a regular basis to an account in a bank you don’t use or can not get easy access to.
Sounds TOTALLY crazy right?
This is where you would be wrong.
Here’s an example.
Let’s say you made $1000 in sales last month.
Under normal circumstances, if you were like me, you would spend all of it on expenses. Leaving nothing behind.
But let’s say you allocated 1% to your profit account.
That would be $10.
Then you would have $990 for expenses.
Could you manage?
Of course, you would.
That’s what we do as entrepreneurs.
When we see money in our bank account, we spend it.
We hope there is a profit at the end of the day.
Most of the time we operate that way when there is not enough money.
We scrimp, extend, innovate, make calls, have sales, etc.
Let’s face it, we do this a lot anyway. I do!
So why not do it with $990 vs $1000?
Because if we take the PROFIT out FIRST?
Then we will actually have a profit to take at the end of the year.
Not just on paper but in the bank!
And this is just the first step.
What if you allocated another 1% to an OWNER DRAW account.
And 1% to a TAX HOLDING account.
And you did this twice a month for a year.
Could you pay your bills using the balance?
And pay yourself?
And save for taxes?
I think you would make it work.
I think you could make it work.
Here’s where it gets interesting and fun. Much like a game.
When you start doing this you are in fact saving!
Saving for year-end where you will ACTUALLY have profit to take.
None of this “profit on paper” stuff.
And because you have profits, you will need to pay taxes, and voila, the tax money is there.
FYI paying taxes is a good thing.
It means you are making money.
I hope you get that.
No money = no taxes.
Money = you’re making money.
Which would you rather have?
I choose to make enough that I NEED to pay taxes.
It really takes a mind shift.
I’ve almost finished the book and already I have created the 3 new bank accounts and allocated at least 1% to each account.
There are many more aspects to the process that I will share with you in upcoming posts.
If you’d like to know how it is going, connect with me.
Let’s see what works for you.
UPDATE… I’m looking for 1 more (I now have 4 people I am working with to learn what’s “under the hood” of their business) willing business owners to work with to see what’s going on in your business and it is FREE of CHARGE (I will want a testimonial).
This MY marketing so I can reach the people I want to work with and learn their challenges fears and frustrations.
Let me interview you and work with you to move the needle of your business at least one inch forward.
Post your answers and comments here on the blog and in our Facebook community.
And if you want to talk to me about how I can move your business, click here to book me for a coffee chat.