Many small business owners take distributions on a monthly or even quarterly basis. The size and frequency will be based on how well the business is doing and, therefore, how much money is available. So, why do you need owner’s pay and profit accounts? You may think that your business is doing great, but perhaps it could be doing better. You may be pleased with your profits, but perhaps you could be earning more. As Profit First Professionals we want to explain why you still need an owner’s pay and profit account even if you take your pay in distributions.
There is, perhaps, a tendency to think that only a failing business needs to institute Profit First, but any business can benefit. And, if you have a profitable small business, following the Profit First method will result in even more profits as you improve budgeting and cash flow management.
Many times a business is successful because it has great products and services, is dominant in its market niche, and everyone works really hard. Problems only become apparent when there is a business downturn caused by economic conditions like a recession or the entry of a strong competitor in the same market niche.
By routinely taking your profit first, you will learn to keep a closer eye on where you are spending money and the results you are getting from the various parts of your business. And, don’t fall into the trap of believing that you don’t deserve to make so much money or that the money will always be there. Times may not always be so good. We are reminded of this possibility in Genesis 41:30 when Joseph interprets the pharaoh’s dream.
Behold, seven years of great abundance are coming throughout the land of Egypt, but seven years of famine will follow them. Then all the abundance in the land of Egypt will be forgotten and the famine will devastate the land. The abundance in the land will not be remembered, since the famine that follows it will be so severe.
At Exigo Business Solutions, our passion is helping your business prosper. We would prefer to help you understand why you are doing well during good times and how you could do better. And, we can help when conditions are not so good and every penny counts. That is why we train our clients in the use of the best small business software, QuickBooks, with our ProAdvisor Services. It is why we advise our clients to use time and money-saving apps like using Receipt Bank to create digital receipts to save time and money. It is why we train them in the Profit First method.
When a business is not doing well, it is important to cut out waste by better budgeting and cash flow management. But, the amount of wasted time and money may be even more substantial in a profitable business. After all, when there is a lot of money coming in there is a tendency not to look too hard at expenses or time spent on projects that are not generating income.
So, why do you need an owner’s pay and profit account? You need these to keep your business on the right track at all times and to maximize your profit during good times and bad.
If you still have questions or are interested in implementing Profit First in your business, visit our website, ExigoBusiness.com, or contact us at (816) 394-6818.
Click here to watch the YouTube video about why you need an owner’s pay and profit account.