Sustainable Growth Using Profit-First
Your business is important to you, as is its success. You work hard to grow the company and likely want a path to continue that growth profitably. This is where a Profit-First mentality can help you achieve your goals. Having a Profit-First mindset means different things to different business owners. Let me explain what it is, how it can help you, and how you can Profit-First your business.
What is a Profit-First mentality?
A Profit-First approach to accounting is a behavioral shift in how you view and handle your cash-flow. For sustainable growth, the profitability of your business should come first. To do this well I suggest taking the accounting formula, of Sales - Expenses = Profit and switch Expenses and Profit.
Now you have Sales - Profit = Expenses. The age-old accounting equation has always put your profit as the afterthought. The Profit-First mindset puts the focus onto profit "first" and then operating expenses. This is the first step to engineer how profitable your business can and will be.
If you’ve been in business for a while, it’s likely that your expenses are higher than they should be or could be. That's normal. It's normal because few small businesses are running at their healthy numbers. It's why so few make it past the ten-year marker. It's also why so few small business owners transition out of the business the way they envisioned. Cash-flow miscalculation is the reason why 80% of small businesses don't succeed the way they plan for. A solution to this is to Profit-First your business. Profit-First clarifies profitability, controls current expenses and allows you to plan for new expenses. Profit-First will also naturally provide clarity on where you need to be during an economic slowdown.
I've heard feedback that to be so focused on profit (stopwatch mentality) might harm the employee culture.
Profit-First isn’t just about focusing on profit. It’s about avoiding the mistake of making profit an afterthought.
Leave your stopwatch in the junk drawer. Profit-First provides a cash-flow system and structure that can allow you to design the business that you envision and drive organic improvement in productivity because you are healthy financially.
Bringing key employees into the Profit-First mentality will empower them to act and think the way you do about the areas they have control over. Embracing this system will also provide clarity on what your chosen business model requires in pricing to be sustainable.
What does this mean for the future of my business?
Any change can be difficult at first and in this case, requires your attention as well as your bookkeeper’s. Once there is a rhythm, things will become simpler for you. Rather than pore over spreadsheets, you can spend time fine-tuning your business model. Efficiency and innovation ideas will happen naturally. Profit-First will help you to strengthen your financial foundation for sustainable growth.
Seven of every ten businesses fall way short of their long-term financial expectations. Profit-First can help you right-size your business and in turn, maximize your personal wealth goals.
How exactly can I Profit-First my business?
At SMB Strategy Consultants, we guide you on exactly how to Profit-First your business. SMB Strategy Consultants offers a 45-minute strategy session using our instant profit assessment (rough snapshot). It's designed so that you can understand what the Profit-First Method might look like for your business and what you’re missing out on when it comes to profit, and owner pay. After the snapshot strategy session, the Profit-First full assessment lays out a road map of how, on a monthly or quarterly basis, you can make improvements over time. If you believe that this is a priority for you, jump right in and schedule your strategy session today by clicking here: Strategy Session. If your business isn't paying you what your worth and still running a 10%-15% profit after taxes, let's have a conversation. Your business is critical to your family and your employee's families and worth the effort in this area.
Isn’t it time to Profit-First your business?
Schedule your Profit-First Strategy Session
Schedule a free strategy session and I'll help you complete your instant profit assessment and review where you could be by implementing Profit-First in your business.