If balancing your checkbook was once a favorite activity you will love the Profit First system for Female Entrepreneurs. (If you have no idea what that is Bless Your Heart😉)
Money management is not often the most sought out conversation topic, but it’s something we need to talk about. Cash flow is the lifeblood of your business and we need to treat it as such.
When I was introduced to the Profit First system I knew it would be impactful for my business and those I get the privilege to work with. This will change the financial story for your business and your life. As females in business, we know everything we do in our business directly affects our personal lives.
Disclaimer: Truth Bomb Academy founders are not financial advisors nor accountants. Always refer to your financial advisor for advice on your individual business. *This post may contain affiliate links*
Let’s dive into the Profit First system and how it affects you as a female in business.
What is Profit First
Essentially Profit First is a money management system (and a book I recommend you read). This was developed by the small business finance expert, Mike Michalowicz. The system is focused on two main objectives profit first and allocation of income.
Profit First?
What do we actually mean with the term Profit First? Mike teaches the prioritization of realizing Profit before paying expenses. Traditional accounting methods take income, subtract our expenses, and the leftovers are considered ‘profit’. (If we’re lucky to have any….)
Income – Expenses = Profit
Using the Profit First system this script is flipped. We take our income, prioritize a percentage for profit, and use whatever is leftover to pay our expenses. If there is not enough that is your indicator expenses need to be cut. OUCH!!! I know not the best news 😵💫.
Income – Profit = Expenses
This is a real eye opener. Are you running a business or a hobby??? Read this blog post for: 3 Steps For Setting your Business Up For Success
Allocation of Income
Soo how does this look in running a business (or even your personal finances). This is where allocating your income comes in. Telling your money where to go instead of wondering where it went…….
Profit First teaches us to take all the money that comes into our business and allocate it out to 4-5 different categories based on predetermined percentages.
That is a lot to keep track of. At least it might seem that way at first.
The things to keep in mind and why I believe the Profit First System is so successful is that it helps you in these three areas where most of us struggle: Intention, Allocation, and Organization.
If women are good at anything they are the best at adapting systems to work for them. Keeping these three things in mind and carrying them forward it’s ok to adapt the system to work for YOU.
1. Intention to Creating Profits First
By setting profit aside first, as well as owner’s pay, taxes, and philanthropy, you are being intentional and by limiting what is put in operational expenses you will control the excess ‘shiny object syndrome’.
While profit and tax are obviously essential, one of the most important elements here is the owner’s pay!! As female entrepreneurs, we often feel guilty or even unworthy of taking a paycheck when other bills need to get paid. When you ignore this you are on a fast track to burnout.
If your business isn’t serving you or rewarding you for your hard work, it will begin to feel like a burden.
Truth Bomb
Adapting the Profit First System forces us to see those responsibilities straight on and see exactly where we need to assign our funds. It creates proactive actions in your business instead of reactive ones.
2. Allocation with Automation
Putting intentionality into practice, Profit First involves a system of allocating the money that is already in our bank account.
It becomes even easier when your bank does this for you!!! 🤩
We have been using Relay Financial. They have actually partnered with the Profit First System. You can set it up so that your funds are automatically transferred to the different accounts you set up. We have been using Relay Financial for over a year now and love the relationship we are building with them.
One of the best things about Relay Financial, you can open up multiple business accounts, and two business savings accounts with no fees.
Profit First is a Cash Management system and with Relay Financial there is no guesswork and it can be automated. It’s tangible, it’s visual, and it allows us to be more accurate than we would be with projections.
3. Organize Your Money
If you love balancing your check book to the penny and knowing where every dollar goes this system is your new best friend. This also appeals to those female entrepreneurs who make spending decisions based on what is in the bank account. With the funds separated into their respective accounts (for their specific job) you can see right away what is available for new purchases without stealing from yourself or Uncle Sam.
It’s an effective deterrent for rash decisions. You will have to intentionally transfer funds if you deem the purchase unavoidable. Profit First also recommends putting your Profit and Tax accounts in another bank altogether to keep yourself from self-sabotaging.
Adapting and Making It Your Own
Profit First is an incredible system all on its own. You can follow it to a ‘T’ and have great success. Like all incredible things, adapting it to you and your business makes this money management system highly effective.
When I Homeschooled my kids I adapted almost every curriculum to work for us. I didn’t change the subject matter or the historical facts I just tweaked it for the different learning styles of my children.
The percentages may not work for you right at the start of your business, or they may work perfectly, only you can be the judge of that. If the percentages don’t work they can act as a guide for something to work towards. You may start off with only 1% in profit, maybe only 1% in owner’s pay. With the goal of increasing those percentages every month as your income increases or you decrease your current operating expenses.
The key is to know your numbers so that you can make executive decisions wisely. If you struggle to know how much to charge for your products or services, this system gives you that answer.
If your INCOME – PROFIT = EXPENSES doesn’t work you have two choices. Increase your income or decrease your expenses.
Speaking with a lot of female entrepreneurs and hearing from bankers and grant experts, women often have the biggest issue with pricing their products and services for what they are worth. Start there.
Learning how to adopt the Profit First System is a life changing system for so many female entrepreneurs. Emphasis on life. Having an intentional and effective money management system will change your whole life, no doubt about it.
My hope is you see what this system is, why it works, and how it can work for you.
Join Truth Bomb Academy TODAY
Just like Mike Michalowicz reimaging the money management system for businesses and actually flipping the generally accepted accounting principles on their head. Here at Truth Bomb Academy, we have reimagined what business education looks like for female entrepreneurs.
We are on the lookout for all female entrepreneurs who are feeling stuck, overwhelmed, or struggling to build their businesses. We want to help and support more female entrepreneurs in becoming millionaires. To do this we had to reimagine the entire world of business education for women. Creating the first-ever business training that highlights women’s strengths and teaches you how to incorporate them into your business and life.
Enrollment is open for our LIVE, Done With You, Unlocking My Millions virtual workshops and open office hours, inside the Truth Bomb Academy. Grab your spot today! Discover a better way as a female entrepreneur to build and grow your business. You will LOVE this new approach. Increase your profits and have more time for what’s important in your life.
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Your Sisters in Business,
P.S. How would you feel if you unlocked your true potential as a female entrepreneur? Earn, play, and live life on your terms today! Enroll in ‘Unlock My Millions’ to have your dream life become your reality.