New Profit First users look at the need for multiple bank accounts in the Profit First methodology and expect a lot more bookkeeping work. So, they ask, is Profit First really worth it?
The answer is, yes! But, the answer has two parts.
First of all, the amount of additional time required to reconcile accounts in the Profit First Methodology is negligible. In fact, in many ways, this approach is more efficient than using just one or two bank accounts. In the Profit First approach, you only need to reconcile deposits and transfers from the income account. The operating account is where all payments and expenses come from. For all other accounts, there is a simple transfer in or out on both the tenth and the twenty-fifth of each month. This system is rather easy to reconcile.
The second reason why Profit First is worth it has to do with the sum total of benefits that Profit First offers your business. Just knowing at a glance how money is allocated for each and every purpose has a significant effect on your business and its financial health.
You can have a great business idea and work your tail off trying to bring that idea to fruition. But, you may still be looking for that elusive profit. You can take the Profit First approach, turn standard bank balance bookkeeping on its head, and see a profit with the first money that you make.
The greatest benefits that many small business owners see with Profit First are a substantial improvement in budgeting and a better job managing cash flow. When you are working hard to come up with ideas and implement them, it can be all too easy to lose track of how much time is being spent by your employees on various tasks and how much money is being eaten upon a given project. When you take your profit first, you end up paying better attention to budgeting, cash flow, and wasted time and effort on unprofitable efforts.
The key to switching to the Profit First way of doing things is that you simply turn the bank balance booking routine around, take profit first of all, and then learn to budget and manage cash flow in such away as to more effectively control costs. This approach takes a change of mindset but does not really take more time. And, in the end, with profits in the bank, it is worth it!
So, there are no excuses!
Begin Using Profit First.
Set up multiple bank accounts.
And, do it now!
If you still have questions or are interested in implementing Profit First in your business schedule a meeting with a Certified Profit First Professional today!