I've been extolling the virtues of Profit First since I read the book way back a year ago. I've included it in webinars and on calls with clients, as a great resource for small business owners to understand what the heck is happening to their hard-earned moneys. I even went so far as to give copies away. But personally: I was totally holding back. Yes, I was resisting the notion of opening multiple bank accounts, a cornerstone of the Profit First system. I admit it.
But then I realized that the only way to know for sure if this thing is as awesome as it reads, is to full-on Do It Already.
So I did.
And not only that, I kicked off the process of certifying as a Profit First Professional. I took the plunge head-on.
And here's what I want to say about it:
it's a freaking revolution.
I totally dreaded, not gonna lie, going to the bank to open the multiple accounts. It took going twice to make it all happen, and I just did not love explaining myself and insisting on what I wanted and negotiating the account service fees. But I did it anyway.
'Cause how can I advocate for something if I'm not willing to try it myself?
And then on the 10th of August, I did it: my first allocations. See, the way Profit First works is that you figure out the appropriate percentages that you should be allocating, based on the size of your business, to Profit, Owner Pay, Tax and Operating Expenses. The idea, if you didn't know this already, is that from what you've been paid, you pull out the Profit first, hence the name duh, then Owner Pay, and Tax, with Operating Expenses last. These sums actually go into separate bank accounts. Profit and Tax actually go away to a whole 'nother financial institution, just sayin', to eliminate that temptation to raid those accounts. It's a whole other way of operating, I'm telling you.
But the smarty-pants thing about it is that it leverages what most of us actually already do anyway. Which is that we look at the balances in our bank accounts on-line to see what we can spend. If I leave my pay and profit and tax set-aside in the account from which I also pay my expenses, the total available is necessarily distorted, masked, inflated. Which can make for some nasty surprises.
But when I did that first allocation? When I calculated my percentages, moved money into Profit, then moved money into Owner Pay (and paid myself), set aside my percentage for Tax, and then had Operating Expenses to cover bills:
WOW, that was some powerful shit, not kidding.
I instantly felt like I had it way more under control, like I could really see what was what. And even though I'm still working toward my Target Allocation Percentages, I still feel like a powerful business-owning bad-ass on my way to having my shit even more together.
Because this is just way too common, in the businesses I work with and even in my own, that we leave ourselves til last, that we pay ourselves and figure out our profit from what's left over. There's a better way: making it a habit to move the bottom line to the top. That's already making a huge difference for me, and I can't wait to roll this out for others.
YAAASSSSS, revolution! Let's go.