Here at D&K Accounting, we are a team of Profit First professionals. This means that a lot of our operations and advice centre around the Profit First model. If you don’t know what the Profit First model is today we are going to quickly run through everything that you need to know about it.
As the name may suggest, the model revolves around getting you as a business owner to start putting profit first and prioritising it. Whilst also at the same time, changing how you view your profit in the grand scheme within your business. You may also find that you’re already following the ‘profit first’ accounting model which is:-
Sales – Expenses = Profit
The above may make total sense and may even just seem like common sense. However, there can be many things that crop up in business that can allow you to be distracted from what may seem common sense. A common distraction is to focus too much on putting sales first and putting profit behind this. And although focusing on sales brings money into the business first and foremost, you’re not actually putting profit first.
Knowing about the Profit First model is extremely beneficial if you’re starting out on your business journey. It helps you to look after your money a lot better and can boost your business’s chances of not just surviving but also thriving.
Profit First can be implemented into your small business by adhering to 4 main principles:-
- Digest things into small chunks – it is much easier to deal with things if they are put into digestible segments. If you have too much one plate this can overwhelm you and you may struggle to deal with the issues as best as you could. In Profit First terms this means splitting payments into pots.
- Serve sequentially – what we mean by this is when you have money coming into your business, for money that you’re sending back out, you’re going to want to use Profit First.
- Remove any signs of sources of temptation – Get rid of any temptation that could lead to you spending funds on things that may be deemed non-essential to the overall running of your business.
- Get a sense of rhythm ingrained into your business – know each month what income goes into which pot and what expenses are paid first.
This is just a small overview of how Profit First works. If you want to know more about the model and how it can help us help you get in touch with a member of the team today. We also offer a handy financial planner to help you put your profit first which is available to buy on Amazon.