As a business owner, how do you define ‘profit’? Do you take your sales minus your expenses and then see what is left over? If you do, you aren’t alone; there are many business owners who do just that. It’s the way we have been taught, programmed and told to do. But there is another way. Say what? Yes, there is another way and I’m happy to share that with you here.
I work with an amazing system called Profit First. It was created by Mike Michalowicz and since being certified by him, I’ve helped numerous business owners make money in their business and — even better — take money for themselves from their business. Now I’m not talking about “Oh, look there’s money in the account, I think I’ll write myself a check.” I’m talking about seriously planning to make a profit and paying yourself a salary, all while you are covering your business expenses and your taxes.
The Profit First System is exactly as it sounds, take your profit first! We so often pay everyone else and then we live off of what is left (or not live in some cases, I kid you not). Well, this system flips all of that and has you calculating your profit first and paying yourself a regular salary. You wouldn’t accept a job interview by saying “By the way, I’m here to work for free,” so why should you work for free in your own company? If nothing else, you gotta eat, right?
The first step of the Profit First System is that you establish four accounts:
- Profit Account
- Owner’s Pay Account
- Tax Account
- Operating Expenses Account
I want to stress here that you want four separate accounts. You don’t want to have all your money living in one account because that’s one sure-fire way to end up with more month leftover than money.
The next step is to determine the percentages that you’ll be putting into those separate bank accounts regularly. Now the trick here is to look closely at your operating expenses and make sure that you aren’t paying for things that you don’t need to run your business. There may be things you think you need that you truly don’t, and guess what? Once you get rid of those, you’ll have more money for your profit and owner’s pay.
What if you could put more money in your pocket? Sounds way better, doesn’t it!
My clients go through an analysis so they can see exactly where they are bleeding money and also where they need to put money in order to have a healthy business. That’s what this system is all about; creating a healthy business that thrives not just survives.
If you are interested in learning a lot more about this Profit First theory, read Mike’s book. Here is my link on Amazon http://amzn.to/1Lbx1kq for you to pick up your own copy. And if you feel you need or want help with getting a profit first, let me know because I am a Certified Profit First Professional! Feel free to send me a private email at kim@kimravida.com.
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