Today, we’re delving into the next installment of our Profit First series, a game-changing financial strategy that’s been turning heads and transforming businesses everywhere. If you haven’t yet, get Profit First by Mike Michalowicz.
Most businesses follow the conventional path of funneling all their revenue into one account, paying off expenses, and hoping for some profit scraps. But, my friends, we’re flipping the script.
Imagine: income flows to a dedicated account, then promptly allocates to profit, owner’s pay, tax, and an expense account. This revised sequence empowers you to run your business creatively and efficiently, with a keen eye on every dollar.
The Perception Challenge – Managing Multiple Bank Accounts
So, you might be thinking, “Hold on a second! Multiple bank accounts? Isn’t that going to be an administrative nightmare?” It’s a common reaction we’ve encountered from clients as they venture into the Profit First realm. It’s understandable – managing multiple bank accounts might seem daunting at first glance. But let me assure you, from the perspective of someone who’s been in the business trenches for decades, it’s not as difficult as it sounds.
Abby, the admin genius behind our operations, has been our go-to for managing these multifaceted accounts. And she’ll tell you firsthand – it’s not the bureaucratic labyrinth you might envision. It’s a matter of discipline and establishing efficient bookkeeping practices. Recording transfers and setting up a rhythm for account allocations – which Mike Michalowicz recommends twice a month – keeps everything streamlined.
Streamlined Financial Clarity – The Power of Account Segmentation
Now, let’s delve into the sweet spot – the profound advantage of this system. Picture this: every day, your income flows into an account, like a river coursing towards its destination. Twice a month, you move funds into your profit account, a designated space reserved for growth and financial rewards. Once a quarter, you tap into this profit to reward yourself – a reward for your diligent efforts, your entrepreneurial spirit.
It’s the tangible clarity it brings to your financial landscape that makes this process simple. Gone are the days of uncertainty, where you scratch your head wondering whether a purchase is viable or if bills are due. This arrangement means you have an overview of precisely what’s available for spending, right at your fingertips.
Navigating Resistance – Dealing with Opposition to Change
Now, here’s the kicker – what if your bookkeeper or CPA expresses reluctance or, dare I say it, opposition to this methodology? It’s a valid concern, and we’ve encountered a range of reactions in our experience. Some may dismiss the idea as too complex or propose a spreadsheet alternative (which is, by the way, not recommended). It’s essential to remember that your financial success is crucial, and if your team isn’t on board, it might be time for some reevaluation.
We’ve interacted with scores of certified Profit First bookkeepers and CPAs who absolutely support this approach. If your current advisors are hindering your growth and profitability, consider whether they’re genuinely aligned with your best interests. It’s your business, your future – and the decision-making power lies with you.
The Takeaway – Embrace Profit First for Your Success
The bottom line here is autonomy and ownership. Embrace the wisdom offered in “Profit First,” but remember, it’s not a cookie-cutter approach – it’s about customizing it to your unique business context. Adopting multiple bank accounts might initially trigger skepticism, but out personal experience has demonstrated that it’s not an impossible obstacle to overcome. The payoff in terms of financial clarity and strategic spending is unparalleled.
If your advisors stand in the way of your growth, it’s time to consider restructuring your team. Your success is paramount, and you deserve a crew that aligns with your aspirations.
The journey starts with the turn of a page, so grab your copy Profit First, make informed decisions, and watch your business thrive.
How We Can Help
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About Abby Johnson
Abby Johnson, is Matterhorn Business Development’s Chief Mentor, resident organizational genius and Certified Profit First Professional, helping our clients grow and organize their businesses. With a passion for empowering businesses to thrive and extensive experience in helping clients grow their revenue and manage their finances profitability, she’s committed to making a positive impact on your business.
About Greg Winteregg
Greg founded Matterhorn Business Development to assist small business owners in growing their business and increasing profitability at the same time.
He was an internationally recognized lecturer, sales trainer, and management consultant who spent close to 30 years working with professionals and small business owners across the US and Canada.
In 2019, he authored his book “Fun at Work.”
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