How to Keep More Money in Your Business
Do you ever wonder where all your revenue goes each month? You’re not alone. If you run out of money, your business will go under and be among the 85% of businesses that fail in the first five years.
It’s not a lack of revenue that’s the issue, which is helpful because more revenue always seems to be a challenge.
Nope, the key to business success is putting up guardrails and sticking to them.
When to Start Your Profit First Journey
You’ve heard the saying that there’s no better time to plant a tree than 20 years ago. And the next best time is right now. That holds true for so many parts of life and business. The best time to quit smoking, eat better, start exercising, save for retirement… You get the picture.
And so, when I hear people talk about starting to work the Profit First system and they decide to wait until January 1 or next quarter or whenever, I want to shout at them that NOW is actually the best time to start. Today.
Who is on Your Business Money Team?
There can be a lot of confusion around who should be on your business money team and their roles (including your role as the business owner). But without a solid team, you may feel confused about your finances–which is never a good feeling.
No matter how long you’ve been in business, it’s time to pull together your team now or revisit the individuals who are supporting you.
Time for a Mid-Year Goal Review & Revamp
If you’re working to grow your business, you probably have goals that you check in on from time to time. (I hope you have goals you’re checking in on!)
One of two things might happen when you check in on your goals: You discover that you’re on track or ahead of schedule…so you sit back and rest on your laurels. Or you’re so far off from meeting your goals that you want to give up.
Of course, there is also the business owner who’s on track and wants to push a little harder. Or who is far from hitting their goals and wants to double down.
All of these examples have something in common: The business owner needs to re-evaluate their goals to figure out what’s next.
Managing Quarterly Profits and Taxes
If you’re a Profit First business, you get to take profit distributions four times a year. It’s exciting to see the fruits of your efforts and be able to boost your income as the business owner.
It’s honestly the best thing about Profit First, that you’re not limited by your owner’s pay (though it is important to pay yourself a living wage!). You get quarterly “bonuses” that you can spend as you wish.
You might ask, why not pay yourself more each week or month and enjoy the extra income in the moment…so you don’t have to wait until the end of the quarter? Because your profit distribution is not part of your salary. Even though it might look that way on your taxes.
What to Do With Debt: Paying Off Debt With Profit First
If you’ve experienced debt in your personal life or your business, you know that it can feel suffocating. Your financial walls are closing in on you, and you’re ready to get rid of it once and for all.
We’ve talked before about good uses of debt vs. bad uses of debt, and there’s an important distinction. But aside from that, we think it’s important to let go of consumer debt and other debt sooner rather than later.
But how exactly? We can and will help you with this. But before we get into our recommendations for conquering debt, we need to lay some ground rules.
Use Your Summer Slow-Down Wisely
As the days grow warmer and people start taking vacations, wellness businesses often take a hit. Therapy slows down and people opt for outdoor workouts instead of the gym.
Hopefully you’re prepared for the financial slowdown that comes with seeing fewer clients. That means having a subscription-based revenue model and having an advanced account that holds your summer expenses for you.
But with the summer slow-down, your time opens up for so many opportunities behind the scenes while still allowing you to keep a steady paycheck. Let’s explore each one of these!
Take Action With Quarterly Profit Distributions
Our favorite time of year happens four times: at the end of each quarter. If you’re following Profit First, this is when you, as the business owner, get to take half of what’s built up in your profit account as a distribution (a bonus, if you will) to yourself.
That’s right, every 90 days you get to share in the profits of your business.
Using Advanced Accounts to Up Your Profit First Game
The big benefit of using the Profit First system is that you pay yourself first. You never have to forego paying yourself because that, and your profit, comes first.
At the same time, there are sometimes other parts of the business that demand your attention. Things like new equipment, large one-time or yearly fees, future investments that you may not even know you need yet.
No two businesses are alike, and each will have its own complexity. So while having the basic five accounts (Income, Profit, Owner’s Compensation, Taxes, and Operating Expenses) is important, sometimes we have other needs too. Thankfully, it’s easy to customize the system to meet the needs of your unique business, by opening additional, “advanced” or “drip” accounts.
Your Guide to Taxes the Profit First Way
If you’re like many business owners, you’ve just closed up your books from last year, sent 1099s, gathered all your tax information, and now you’re staring down the calendar wondering when you’re going to have time to do your taxes.
Sound familiar? No one said taxes was fun but I, for one, am anxious to get mine done as soon as possible. Why’s that? Because I use the Profit First system and I have all the cash I need (and more!) saved to pay my taxes.