We love this question because the right time is always now. And as the saying ‘what you focus on grows’, when you focus on Profit-First, you set yourself up for a successful business.
By putting Profit-First, you’re making sure money’s set aside for non-negotiable expenses and you have a handle on what you can or can’t spend at any one time.
This means even when the economy dips, your business isn’t scrambling to keep the lights on. You’ve got a cushion ready, keeping stress levels down so you focus on running your business.
Then, when things look up and the economy starts buzzing again, your business is not just surviving; it’s primed to take full advantage of the good times. With the Profit-First system, you’re always one step ahead, smart about what your money needs to do, and when it’s time to invest or spend.
How do you know if it’s time to implement Profit-First in your business?
The Profit-First method was created by Mike Michalowicz, you may have read his book. It’s a best-seller.
His transformational approach flips the traditional accounting model on its head, ensuring that profit becomes a priority from day one.
Blu Bookkeepers are accredited Profit-First bookkeepers ready to help set up and manage your accounts in the Profit-First way.
Here are the signs you need to take control of your business finances NOW and implement the Profit-First method.
1. You have no clue if and how much profit you will make each month
One of the clearest indicators is when you have fluctuating profits or you’re not even sure you are making a profit.
One month you’re flush with cash, and the next month you’re scrambling to make ends meet. A typical feast or famine.
Huge fluctuations are a red flag and a sign that you may not be managing your money as well as you could be.
“Profit-First helps you create a steady stream of profitability that you can rely on, bringing much-needed stability to your business.”
Harman Johnston
Meet Sarah, the owner of a bustling café in Marrickville. Despite her café’s popularity, Sarah felt like she was constantly treading water. Every month, she struggled with the uncertainty of not knowing how much profit she would make, or if she would make any profit at all.
Sarah decided to seek help and came across our bookkeeping services. We introduced her to the Profit First methodology, a revolutionary approach that prioritises profit by allocating it first before expenses.
Together, we implemented the Profit First system in her business. We set up multiple bank accounts for different purposes: profit, owner’s pay, taxes, and operating expenses. Each week, we allocated a percentage of her revenue into these accounts.
Within just a few months, Sarah noticed a significant change. Not only was she able to predict her profits more accurately, but she also felt a newfound sense of control over her finances. Her stress levels decreased, and she could make informed decisions to grow her café.
Sarah’s café is now thriving more than ever, and she no longer worries about unpredictable profits. By embracing the Profit First methodology, she turned her business around and found financial peace of mind.
2. You are worried you can’t pay your bills or won’t have enough money in the bank to cover payroll.
If you’re constantly stressed about covering day-to-day expenses and payroll, it’s a sign that your cash flow management needs an overhaul.
“Profit-First ensures that you always have the necessary funds set aside for vital expenses, including payroll and bills,” says Harman .
3. You’re Losing Sleep Over Your Business Finances and Feeling Overwhelmed
Financial stress can be crippling. If you’re losing sleep over budgets, bills, taxes, and everything in between, it’s time for a change.
Adopting a Profit-First method can help small business owners feel in control and secure in their finances. Every dollar is allocated where it needs to go.
4. You feel like you’re guessing rather than making informed decisions.
When you don’t know what your finances are up to, it makes it difficult to make strategic decisions. Profit-First offers clear, detailed financial insights so you can make informed, smart choices about your business direction.
“Our detailed reports provide a clear picture of your financial health, enabling you to make confident decisions,” says Harman.
5. You’re growing fast and worried whether your finances can keep up
Growth is exciting but also brings financial challenges. If you’re worried that your rapid expansion is unsustainable, Profit-First can help ensure your growth is stable and well-supported.
“The only way to start achieving consistent profitability in the near term is to give profitability a long-term focus.”
Profit-First
6. Your profit margins are shrinking because of expenses
Ballooning expenses eating into your profits can cause huge financial stress.
Everywhere you turn these days, it seems costs are going up – and in business, this means shrinking profit margins.
Implementing the Profit-First method in your business can help you understand what you need to focus on to keep your profits looking healthy and a priority.
7. It’s tax time and you’re freaking out – there’s no money put aside
Tax season can be a nightmare if you haven’t set aside funds throughout the year.
Profit-First separates your tax dollars the moment you get it, so you’re prepared and never caught off guard.
8. Not paying your employees on time
If you miss payroll deadlines because there is no money in the bank, you have a cash flow problem.
Missing payroll is a bad look to your employees, and causes them to stress, and likely look for another job, not to mention attract penalties.
The Profit-First method is a way to ensure cash flow improves, and you start to have your pay reserves set up and ready to go. Never pay late again.
9. You know you want to have a lasting business but also know you’re not managing your finances well
Running off an Excel spreadsheet is fine when you first get started, but as you grow, you need to pay more attention to how things are structured.
Your revenue is allocated to things like payroll, super, tax, operating expenses, insurance, and your wage.
Sustainable financial management is key to building a lasting business. Profit-First helps create a solid foundation for long-term success.
10. Strategy? What strategy? You’re reactive, not proactive with your finances.
If you’re always putting out financial fires, Profit-First can shift you from reactive to proactive.
When you know your numbers, and understand the job each dollar does, you can make strategic decisions around how and when to spend.
Are you ready to implement Profit-First?
If you were nodding along to all our 10 signs, your business may benefit from adopting the Profit-First approach.
Profit-First is a fresh way of looking at your accounts, so you have a successful and sustainable business. Implementing this method provides a reliable framework for consistent profitability, reduced financial stress, and clear, informed decision-making.
Something every business owner wants.
We are delighted with the services provided by Harman and the team. They have helped us proactively manage our business and take a Profit-First lens – so we are confident every month that we have the cash to cover our critical expenses and we know what we have remaining to invest in the growth of our business. The team are supportive, very responsive, and provide information in way that is easy to understand.
Junitha Giles (Google Review)
Ready to transform your financial habits and secure lasting success?
Contact Blu Bookkeepers today to learn more about how Profit-First can transform your business financials.