Chris Vaughan has been running a successful photography business in Lincoln since 2011 but it was only when he switched to Dan’s profit-first accountancy approach that things started to take off for him. Here, he explains how operating not just his accounts but his whole business and even personal life with a profit-first attitude has revolutionised his life.
I’ve been running my business as a sole trader since October 2011, photographing local businesses and slowly but surely growing my network. I met Dan at a local networking event in Lincoln and was initially skeptical of his profit-first approach. I thought it sounded like a pyramid scheme!
This was in December 2019, and I had just received an email from my accountant, a week before Christmas, telling me it looked like I’d had a great year with some excellent taxable profit, so by 31st January I would need to pay £3,500 in tax and wishing me a merry Christmas.
I’ll be honest, I didn’t have £3,500 in my tax pot. I didn’t even have £3,500 in my bank account. I’d tried putting money aside, and I have no problem paying taxes as it goes to help pay for schools and hospitals and things like that, but for one reason or another, I hadn’t been putting money aside and had just over a month to find £3,500.
As a photographer working with companies to increase their visual presence, January is a really quiet month – after the excesses and exuberance of December, they’re just not interested in spending money. I somehow managed to make the tax deadline but promised myself, ‘No more’. I couldn’t go on running my business this way, scrubbing around for my tax, panicking about rates, and worrying about VAT thresholds, so I decided to move everything over to a limited company. I got everything set up, I got a full rebrand, and then Covid hit. I ended up delaying making the move until April last year, so I’ve now had a full year of trading as a Profit First business and it’s been brilliant.
Switching accountants was easier than I thought
I moved my sole trader business over to Dan after my tax bill disaster at the beginning of 2020 and he’s helped me manage the process of becoming a limited company. Dan’s like that – he just helps his clients. During Covid, for example, when Rishi Sunak was chancellor and would make announcements at the daily briefings, Dan created a WhatsApp support group for all his clients (and for anyone else who needed help), and was translating what was being announced (furlough schemes, grants etc) into normal speak. It was so reassuring knowing there was someone there supporting me.
For me, it’s all about the pots in my Profit First business
Now, as a Profit First business, I couldn’t be further from where I was January in 2020 than I am now. I have pots of money for literally everything. I’ve got one for operating expenses, one for VAT, one for tax, one for my electric car running costs, one for profit, even one for camera equipment – and I don’t buy any new kit unless there’s money in this pot. All these pots are set up within my Starling bank account app.
It meant I chased up Dan to pay my tax bill early because I had the money sitting in a pot. Being a Profit First business has completely changed my mindset, for the better.
Together with Dan, I’ve drilled down into the details of what expenses I need my business to cover. For example, I now have a business coach and he has his pot, my website is a specific pot, as is my insurance.
It’s so much easier to put £10, £15, or £20 in a pot each month than scrabble around for cash when a big bill comes in. The one that used to always get me was my web hosting. I have unlimited space so I can host online galleries for clients, but each September I’d forget I’d owe about £500, and it’d have to go on a credit card. Now, the money is already there, steadily growing in its pot and I feel so much better about it.
The results of becoming a Profit First business have been significant
One of the best consequences of becoming a Profit First business has been being able to treat my family. In the February half term, we had tickets to see the Frozen musical, but because I had some spare money in my profit pot, I was able to treat the four of us to a night in a hotel the day before, and it just made the trip special. Knowing that I could pay for it from my profit pot, rather than putting it on a credit card, felt priceless. Being able to do that for my kids made me feel like a great dad.
I’m so impressed with how Profit First has changed my business, I’ve started doing it in my personal life, and my partner has adopted it too. So we now have pots for everything from our car’s MOT to school trips expenses and uniform. It’s great to know the money is there and we don’t have to worry about it.
Now I’m profit first, I feel in control of my business. In the past, before I was doing profit first, I just felt like I was winging it a lot of the time and I’d feel a lot of dread if an email came in from HMRC or something like that.
It’s also helped me manage the natural ebb and flow of my business. I mentioned that January is often quiet, and I had the opposite last summer when I had such a busy period, I was working stupid amounts and I had to bring someone in to help me manage it. We had to photograph 42 school academies in six weeks, plus keep up with a couple of other big commitments, and it meant I had no time to do my usual marketing and promotion at that time. But because I had various pots of money already growing, I didn’t panic that I was coming up to a cliff edge, I was able to budget and plan instead, and it felt great to feel in control of my business.
I’ve not looked back since becoming Profit First
Becoming profit first is one of those things I wish I’d done years ago as it’s transformed my business and it was really easy to get set up – Dan talked me through everything, worked out what profits I needed to be working towards, and it was straightforward. Dan has integrated it seamlessly into my Quickbooks account too. If I manage to break anything, which does happen, he’s just a quick WhatsApp message away and it’s sorted.
He also suggested I read the original Profit First book, by Mike Michalowicz, which I did during Covid when no one was booking photographers.
Having someone like Dan on my team has made such a difference to my business. He’s such an easy guy to get on with and he wants to help the people he works with and to see their businesses grow. Most importantly, it meant I could focus on being a photographer and doing what I love.
If you’re tired of last-minute financial stress, scrambling for tax payments, and want to have pots of money ready for every expense, Profit First might be your game-changer too.
Here’s what you can do:
Connect with Us: If you want to follow in Chris’s footsteps, get in touch with Dan from D&K Accounting, using the link below to book an initial chat!
Don’t wait until the next tax deadline knocks on your door. Make the Profit First move today and take control of your business and your life. 🌟