Creating Money Systems Beyond Profit First

More systems in your business = less stress and more efficiency.

You’ve already got a solid system for cash flow management if you’re using Profit First. And setting target allocation percentages for each of your accounts is part of a system to help you achieve your broader financial goals. What other systems should you create and maintain to keep your money working for you?

Schedule it.

For starters, systems operate on schedules to be successful. Have you heard of #MoneyMonday or #FinanceFriday? This is a trend you should get on board with. It’s about blocking time every week to manage your money—or even to educate yourself on topics related to wealth and financial health.

We can’t recommend enough that you schedule a regular money date with yourself every week. If dealing with your finances causes stress and confusion, postponing it will only add to that stress and confusion. Build a habit of working with your money on a regular basis to make it automatic and easier.

Schedule enough time to complete your basic bookkeeping, plus add time for the extras as needed. I block off one hour every Friday, except for the days I do payroll—then I block off three hours. 

Create a Bookkeeping System.

Bookkeeping is an essential business activity that tracks and records how and where you take in and spend money. It’s more than just the organization of your financial data—although this is crucial for tax purposes. This data also guides you in making smart decisions to maintain, grow, and course-correct your business. 

Here’s one way you can think of it. Your Profit First OPEX account sets a limit on what you can spend, while your solid bookkeeping system can illuminate what you’re spending too much on.

If you’re doing your own bookkeeping, we’ve already suggested you use software rather than trying to create and manage multiple Excel spreadsheets. It’ll make your life much easier.

On a weekly basis, bookkeeping should include entering business transactions and capturing receipts. It’s much more manageable to snap pics and properly categorize the four or five expense receipts you have from this week rather than waiting to document a pile of 300 receipts in January. How can you even remember what it is that you bought at Costco for $134.97 last February? (We covered some basic dos and don’ts for maintaining receipts in a previous article.) 

On a monthly basis, you need to reconcile your accounts. We like to do this on the first Monday or Friday of the month, for the month prior. (Don’t forget to schedule extra time in this weekly money date to do the monthly stuff.)

You should also review your profit and loss statement—your overall summary of revenue and expenses—every month at the very least, whether or not you use Profit First. With the monthly P&L statement, think about what you were expecting to happen with your money versus what actually happened. Did you have a spending plan or a budget and did you stick to it? Where do you need to make adjustments for next month?

Run any key reports that are relevant to what you’re trying to accomplish or evolve in your business at any given time. For example, if you’ve recently embarked on a marketing push, you’d probably want to run a monthly report on the effectiveness of your marketing spend (are you gaining new clients at a rate to justify the expense?).

Your financial coach can be super helpful in identifying which reports to create and how to interpret them, depending on your business goals. 

Create a system to review your client pricing strategy.

Business owners should regularly assess this key factor of incoming revenue.

Pricing strategy in fitness and wellness businesses is often based on purchasing an hour of time or bundles of hours (packages). When clients want to increase their participation, that often translates to buying more bundles or buying a different package altogether. You should have a system to evaluate what products and packages are contributing to client retention and growth. Reports, report.

Review your pricing strategy annually at the very least. But, if you decide not to adjust your pricing this year, then consider revisiting the idea every quarter of the coming year, until you’re ready to make an adjustment. (Two years is a long time to wait between pricing adjustments.)

If your business uses a different pricing structure, you should analyze your time/money ratio per client every month. The first couple of months you’re working with a new client is expected to be more time-intensive, but there are always those who continue to be high maintenance beyond this getting-to-know-you period. You can track your team’s hours with that client and evaluate the trend after three months or so. Then have an internal conversation about whether you need to make a pricing adjustment to reflect your effort.

Don’t forget your quarterly Profit First reassessments.

You need to examine your Profit First system every quarter at least, so be sure to schedule this on your calendar as well. Everything is interrelated.

By the way, all of the above is pretty much what you should be doing with your personal finances too. Take a #FinanceFriday to look at how your investments are performing. Your weekly money date is a great time to research things related to retirement strategy and diversifying your portfolio. The stuff you probably would never get around to if you didn’t schedule it.

Shannon Simmons

Shannon has been consulting with small businesses for over 10 years. After 2 years in public accounting she saw a need to work for small business owners to teach them how to grow financially healthy businesses. She has built on her Master of Accountancy degree from Manchester University by becoming a Certified Profit First Professional and a Certified QuickBooks ProAdvisor. When she’s not meeting with entrepreneurs or assessing their businesses, she enjoys time with her husband and 2 children serving in their community, playing and watching sports, marveling at nature or reading a good book.

>