If you have worked with me to implement Profit First in your business -- or if you have done it on your own DIY style -- you know that at the end of every quarter it's celebration time!
Every allocation period (for me, that's every Friday), we set aside a percentage of revenue into our various Profit First accounts. Accounts such as taxes, owner's pay and operating expenses. And then there is the Profit account. That's my favourite! Putting money into that account means that the cash flow in my business is healthy enough to:
- support paying me what I am worth;
- set aside dollars for my tax liabilities;
- create a quarterly profit distribution or dividend for the equity owners (in my case as a bootstrapped company, just me)...
- ... all while having plenty of cash to pay the ongoing operating expenses of running and growing the company.
So why on earth would I be sad about this? Because this quarter is different.
When I first started implementing Profit First in my skincare company -- Cor Silver -- I had debt. I had grown too fast, unprofitably. I was "reinvesting" in the company, which just meant that I was not paying myself at all and was eating into my personal savings to grow, grow, grow the company. It wasn't sustainable. It wasn't fun. It wasn't how I wanted to live my life.
So for the first year of implementing Profit First, every quarter when it came time to take the Profit Hold distribution, 95% of it went to debt reduction for me. 5% I spent on a little celebration for myself ... at the beginning those were small celebrations. A spa day. A new pair of kickass shoes.
Last year, with the debt gone, the celebrations became a bit more extravagant. A trip to Cuba. A car paid in cash.
So. Much. Fun.
Not this year, my friend. This year calls for being conservative.
So, while I'm a little sad that the global situation has changed things for us all, I am still pretty blown away that the Profit First system still works ... maybe even better than ever. Instead of taking the full 100% of my Profit Hold account as a celebration this week, I am going back to my early days: I am going to take 5% as a celebration and do that spa day. But then I am going to take the other 95% and put it into my Vault Account. There is too much uncertainty in the world right now. I don't know what is around the corner. But what I do know is that I have plenty to weather the continuing storm due to the Profit First cash flow management methodology ... plenty to keep my Profit First allocations exactly where they are and plenty to keep paying myself what I am truly worth.
So if you are a current client and a member of our private Facebook group, head on over there and tell me how you are going to spend your Profit Hold distribution.
And, here's one last thought ... if you are wondering what the heck I am talking about, or you already know about Profit First but just haven't taken the step to implement it yet in your business, click the button below to go to my calendar and let's jump on a quick 20 minute call to see whether there is a good fit for us. I can get you started with our DIY Profit First Implementation Plan, or I can get it all set up for you from scratch while teaching you how to make it work for your specific business and situation.
That’s it, that’s all you have to do—no fine print here. So, ready to start paying yourself what you are truly worth? Let’s do it!