Many customers who have read the book will ask the question, "In the book, it presents both basic and advanced Profit First systems. How are they different an which method is better?
The basic method of Profit First suggests establishing four accounts (Profit, Owner's Pay and Tax) in addition to keeping your current checking account for deposits and to pay bills. If three new accounts feels like to much,, you can start with just two accounts: your current checking account and add a Profit account. This basic method is a good way to "ease" into Profit First.
The advanced method of Profit First suggests establishing minimally five accounts: Income, Profit, Owner's Pay, Tax and Operating Expenses. Additional accounts are suggested for specific needs ( Payroll account for employees, a Drip account for distributing income over time, etc.) The advanced method is the superior approach since it separates deposits from any outbound cash flow (writing checks, etc) and has additional accounts, making it very clear what money is available for what purpose.
If you have further questions or want help implementing Profit First in your business, please schedule a time with one of our Certified Profit First Professionals to uncover your businesses profit!
When you are doing lots of business but not seeing more on the bottom line, ask yourself, are your profits in focus? Then consider converting to Profit First.
A penny saved is a penny earned and every dollar you move to a Vault account is safer from being spent unwisely. Put part of your profit allocation in Vault.
Read and understand an example of Real Revenue being used in a business to get a better idea of what it is and why it is so important in the Profit First method.