you can achieve your business goals

What is Profit First?

The Profit First Formula

The GAAP (Generally Accepted Accounting Principles) formula for determining a business’s profit

is Sales – Expenses = Profit. It is simple, logical and clear. Unfortunately, it’s a lie. The formula,

while logically accurate, does not account for human behavior. In the GAAP formula profit is a left

over, a final consideration, something that is hopefully a nice surprise at the end of the year. Alas,

the profit is rarely there and the business continues on its check to check survival.

Sales – Expenses = Profit
Sales – Profit = Expenses

With Profit First you to flip the formula to Sales – Profit = Expenses. Logically the math is the same, but from the stand point of the entrepreneur’s behavior it is radically different. With Profit First, you take a predetermined percentage of profit from every sale first, and only the remainder is available for expenses.

 

                                                                Parkinson’s Law

                                                                             Author and historian C. Northcote Parkinson theorized that our demand for a resource 

                                                                             increases to meet the supply of it. That is why when we are given two weeks to do a project it

                                                                             takes two weeks, and when we are given eight weeks to do the same project it takes eight

                                                                             weeks. That is why when given $1,000 to complete our work we get it done with $1,000 and

                                                                             when given $10,000 to complete the same work, it takes $10,000. Profit First makes Parkinson’s

                                                                             Law an asset. By taking profit first the money available for expenses lessens, and we are forced

                                                                             to find ways to get the same things done for less money.

 

Bank Balance Accounting

Most entrepreneurs don’t have the time or gumption to read the different accounting statements necessary to manage the financial aspect of their business. Theoretically you should review and correlate your Income Statement, Balance Sheet and Cash Flow Statement monthly (or more frequently), but few entrepreneurs do. Most resort to “bank balance accounting,” where we check our bank balance every day and make financial decisions based upon what we see. Per Parkinson’s Law, we consume what we see in our bank account. Profit First encourages the entrepreneur to continue “bank balance accounting” by first allocating money to profit (and other accounts) so that the entrepreneur sees the actual portion of deposits that are available for expenses and they automatically adjust their spending accordingly.

 

Don’t change Habits, Leverage Them

Many entrepreneurs try to force themselves to become better at accounting and to become more disciplined in

their fiscal management by pure willpower. But just like a muscle, willpower can be drained. And in a moment of

financial stress or bigger than expected expenses the entrepreneur will break their own fiscal rules and spend

the money they have. The Profit First principle does not try to change your habits (that is nearly impossible to

do), Profit First works with your existing habits. By first allocating money to different accounts, and then removing

the temptation to “borrow” from yourself, your business will become fiscally strong and you will benefit from

regular profit distributions.

Mike Michalowicz

Recommendation from Mike Michalowicz!!

Adviser & Lead Profit First Strategist

 

Mike Michalowicz is the entrepreneur behind three multimillion dollar companies and is the author of Profit FirstThe Pumpkin Plan and what BusinessWeek deemed the entrepreneurs cult classic, The Toilet Paper Entrepreneur. He is a former small business columnist for The Wall Street Journal, speaks internationally on entrepreneurial topics, and is the creator of the Profit First method.  Mike is an active adviser on Profit First to our firm.

"Do not save what is left after spending...

But spend what is left after savings." 

- Warren Buffett 

“I’m making money… but where the heck did it go?”

Believe me I get it. Regardless of how much money you are making, at the end of the day if there isn’t much money left in your business bank accounts… it can make you feel frustrated.

  • Implementing the Profit First Model in your business will allow you to:

  • Keep more of the money you are making

  • Not have to worry about where you will find the money to make the next tax payment or payroll run

  • Let you know what you should and should-not be spending money on

  • Build a habit around the flow of money and so much more!

 

It helps you to create the HABIT of putting profit first (literally) and feeling empowered by my money instead of owned by it.

 

If you are in business you NEED to implement Profit First!

To Thrive In Business Today, You’ll Need a Good Plan

Transform Your Business With Our Effective Profit First Coaching

We are one of the select few, nationwide, that are Certified in Profit First.  Right Way Profits & Bookkeeping utilizes the Profit First method of cash management. Our team is trained and certified by the Profit First Professionals organization to guide business owners and entrepreneurs in maximizing their profits.

What this means is that we not only have direct experience guiding clients to higher profits, but that we additionally have access to the other accountants, bookkeepers and Profit First experts who have collectively addressed every type of profit challenge. Any profit question you face, we will have or find the answer.  We will guide you through the Profit First method so that you can greatly increase the profitability of your business.

You should expect excellent bookkeeping services from any bookkeeper, and you will get that service from us too – it goes without saying. 

Our process of maximizing your profits takes effect literally by your next deposit. There is no stretched, long consultative process or recommendations report that will sit on your shelf. We simply implement a few changes in your cash management and you are increasing your profitability from day one.

The Profit First method is 100% successful for all of our clients that stay 100% consistent in staying with the method. Sticking with the system, by yourself, is hard.  Get accountability to help you take the steps you need to reach your goals.  We integrate a monthly check-in with you to ensure you are constantly driving profits. And we help you navigate the challenges.  Mike Michalowicz, the creator of Profit First, is part of our advisory team.

Imagine yourself:

  • Transforming your Business from a Cash-Eating Monster to a Money-Making Machine.

  • Having a clear idea of your finances where you know how much it costs to run your business, you know what’s coming in and going out, and you finally feel a sense of peace.

  • Having a compelling profit strategy in which you have a clear plan to reach your revenue targets so everything actually seems possible and simple. You will even be able to easily track your monthly numbers to see how you’re doing and what adjustments need to be made.

  • Eliminating your debt. You’ll be telling your money where to go instead of it telling you where it went. You’ll be working your debt-reduction strategy and seeing the momentum growing each month. Imagine how empowered you’ll feel seeing your profits increase and your debts decrease.

  • Enjoying tax time. You’ll have organized and up-to-date records and payments so all you have to do is fearlessly hand them off to your tax preparer when it’s time.

This investment will MORE than pay for itself.

I have yet to see where this type of financial awareness, strategy and automation hasn’t produced significant financial results for the business owner. It’s generally a pretty dramatic difference. And that doesn’t even begin to describe the intangible results, of feeling so much more empowered, confident, hopeful and a zillion pounds lighter.

Our process of maximizing your profits takes effect literally by your next deposit. There is no stretched, long consultative process or recommendations report that will sit on your shelf. We simply implement a few changes in your cash management and you are increasing your profitability from day one.

We would like to give you the first two chapters of the Profit First book FREE.  Click here to download the chapters.

credly badge profit first advanced.png
1_Badge_Online_large (1).jpg

FOLLOW US

Facebook  |   LinkedIn