Profit First Business Strategy

A collection of articles related to implementing Profit First Business Strategy for your business.
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Profit First for Plumbers

Profit First Business Strategy

You went into the plumbing business expecting to make a profit from your hard work. If profit is what is missing, Profit First for plumbers is you best choice for making things right. Profit First is a way of managing your business finances that assures a profit from the very start. The system helps you find and eradicate the hidden costs that typically rob you of profits. And, it improves budgeting and how you handle your cash flow.

How Does Profit First Work?

The basis of Profit First is an adjustment in the way you do your bookkeeping. The standard bookkeeping formula is this:

Incoming revenue minus expenses equals profit (or loss)

This way of doing things gets the numbers right but it ignores some basis financial issues in your business. It is way too easy to find yourself working hard at the plumbing trade and not seeing a profit. This typically happens because you are taking low-paying work and have cost overruns in both on-the-job plumbing and the office side of your operations. In short, this way of doing things always seems to leave profit in your plumbing business up to chance.

Profit First takes the standard bookkeeping formula and turns it around like this:

Incoming revenue minus profit equals expenses

When you use Profit First for plumbers, you always take a profit, typically on the tenth and twenty-fifth of each month. And, as you might have already guessed, you need to do something about your incoming revenue and your expenses to make this work. Some of this is pretty basic. You look at your cash flow, when you receive money and when you pay bills. Keeping a close eye on your cash flow helps contain the expenses of the moment before address anything else. The next thing is to look at the profit potential of the work you are taking and the costs associated with doing that work. The third thing is to look at how you are running the business side of your operations to find the hidden costs that are eating up profits.

How to Make Profit First for Plumbers Work for You

The key to making Profit First work in your plumbing business is confronting Parkinson’s Law. Parkinson’s Law was stated by Mr. Parkinson, a former British civil servant in the middle of the 19th century. He said that work tend to expand to occupy all available time. That is, if you assign someone a task and a due date, they will almost always take up all of the assigned time to get the work done. Over the years other corollaries have been added such as this. The amount of money used for a project will always equal the amount budgeted (or more). These tongue-in-cheek observations are true and are the bane of many a small business. To make Profit First work for your plumbing business, you need to tackle and defeat the effects of Parkinson’s Law.

Beating Parkinson’s Law in Your Plumbing Business

The basic reason why there are cost overruns in so many businesses is because the actions of staff are “invisible” to managers and owners. To make the Profit First system work, you need to be able to see what is going on in the financial part of your operations. At Exigo Business Solutions we advise our clients to use bookkeeping tools like QuickBooks in order to better-manage their finances. With QuickBooks custom reports you can see the details as well as the big picture. This allows you to track expenses. Then, when you better see your financial picture, you can address budgeting, timelines for assigned projects, and all of the otherwise-hidden details that have been derailing your profits.

Using Fix This Next to Help Out Profit First

If your plumbing business has problems that are difficult to track down, an excellent approach is the Fix This Next system. With this approach you learn how to find the problems in sales, profits, and organization at the core of your business. Then, you will learn how to set up simple and efficient systems to let you track those problems so that what gets fixed stays fixed.

To find out more about how Profit First for plumbers can help your plumbing business guarantee a profit, contact us at Exigo Business Solutions in the Kansas City area.

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Profit First Strategies helps business owners experience profit.

Profit First Strategies

Profit First is a system that helps you produce profits in your business the first month and always. Using this approach to running a small business you can make profit a habit and not a remote possibility. The Profit First approach starts by rewriting the usual bookkeeping formula so that profit is taken and put in the bank with every bookkeeping cycle. The system follows through by instilling discipline in your budgeting and cash flow management. Read our articles to learn the basics of Profit First and Profit First Strategies that you can use this approach to make you business more successful and your business life more efficient and easier.
Profit First helps you experience profit.

Profit First Business Strategy

A collection of articles related to implementing Profit First Business Strategy for your business.
Ronald B. Allen
CEO, Profit First Professional, Fix This Next Founding Advisor
Principle of an accounting firm that’s committed to educating business owners on their financial health, providing a trans-formative strategy and helping them experience their profit!