So many business owners we meet work far more than the 9-5 UK standard and still don’t earn as much as they deserve. This is where the Profit First method of cash management comes in, by taking your profit (and pay!) first, you will be forced to run your business on that which is left, finding new ways to get the same things done for less money. Whilst this may fill you with dread at first, this system has been successfully implemented by thousands of business owners worldwide.
As registered Profit First Professionals, we are well versed in the Profit First accounting methodology and can help you both implement and maintain this practice within your business.
The Profit First system was originally designed and implemented by US-based business owner and entrepreneur; Mike Michalowicz. Following his success with the system, he wanted to share this method of accounting (and cash management) with the world.
The GAAP (Generally Accepted Accounting Principles) formula for determining profit is: Sales – Expenses = Profit, whilst logically accurate, this method does not account for human behaviour and alas there is often no profit left after expenses are deducted. Profit First flips this formula on it’s head and states that Sales – Profit = Expenses. The maths may be the same, but from a psychological standpoint, it is radically different. With Profit First, you take a predetermined percentage (which varies depending on industry and company size) of profit from every sale first, leaving the remainder for expenses/
Profit First will enable you to:
As certified Profit First Professionals we are able to help you establish what the best percentages to assign to Profit, Tax, Owner’s Comp and Operating Expenses for your business as it stands and to adjust these as your business grows. To ascertain what your Target Allocation Percentages (TAPs) should be, book a TAPs review to get you started today!
For a discussion about how Profit First can specifically help you and your business, book a Profit First Consultation with one of our team.