What is Profit First?
Profit First is essentially a simple cash management system which allows you to manage your cash and measure the financial health of your business – from your bank balance.
If you’ve read the book – you will know all about it.
If you haven’t – then essentially – you bring all of your income into one bank account..
At the end of the week, every two weeks or every month – depending on what suits you – you would waterfall your incoming cash into 4-5 other accounts.
1) Profit – cash put aside for the fun stuff. We call ours the fun pot.
2) Owners Pay – keep the lights on at home pay
5) Business Development
There are some basic rules that you have to abide by – such as only using the pots of cash for the intended use. So once the cash is allocated to a pot, the tax pot for example, you can’t just decide to use that cash for something else – such as paying for a £10k development program… that’s kind of defeating the object!!
(LOL! Please excuse my fumbling at the end of the video when I realised my microphone was right over on the other side of the desk!!)
So, what are the 7 Reasons Why You Should Implement Profit First
1) Your business is not paying you well enough and you need to take home more of the cash you earn
2) You never have enough money for the fun stuff – so you put off the things you want to do month after month, year after year, until you can afford it.
3) You struggle to pay your tax bills when they fall due
4) You are not putting cash into your pension but you know you ought to
5) You know you are overspending and making impulsive decisions but don’t know how to stop.
6) You want to invest in personal development but if you do that, something else will suffer
7) You don’t like looking at the numbers, in which case a system that allows you to run your business from you bank balance is perfect for you.
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