Today is April 1st and you know what that means. Not April Fools. End of Quarter 1 is a great opportunity to assess your self-pay. We know your biggest priority is growing and sustaining the business, so you may think all revenue must be invested back into the business. While you may be used to hearing that, it may come at a sacrifice to your personal well-being. Paying yourself can help you to prevent burnout and get a clear picture of your business needs.
The accounting formula we’re used to is Sales – Expenses = Profit. This leaves you vulnerable to hoping there’s enough left over for self-pay. The Profit First formula centers the well-being of the business by prioritizing Profit. The PF formula is
Sales – Profit = Expenses
Beyond Owner’s Pay, PF also helps to assess the financial health of your business via the allocation method. The book, Profit First by Mike Michalowicz, recommends establishing 5 business bank accounts:
Once you have your bank accounts, decide what percentage of your revenue you’ll allocate to each account regularly; we recommend twice monthly. If you haven’t already, what better time than the Quarterly Review to improve your cash flow? Cash flow is key to your business growth and personal income, so don’t wait to start experiencing the benefits of shifting your accounting mindset!
Need help improving your cash flow? Contact us to discuss how Profit First Cash Flow Consulting can support you and your business! Want a preview of how Profit First can support your business? Check out our Profit First Instant Assessment! Remember, sharing is caring, so share with friends who might benefit from a Profit First assessment.
#cashflow #cashflowconsulting #accounting #businessowner #businesssupportingbusiness #womanowned #latinaowned #latinxowned #smallbusinesslove #smallbizlove #consulting #business #entrepreneur #profitfirst #pocbusiness #pocbusinessowner #financialconsultant #bookkeeping #smallbusiness #financialfreedom #nofinancialstress #financialstress #busyentrepreneur #latinaownedbusiness #businessgoals #businesscoach #bizcoach #stressfreefinances #businessfinance #smallbusinesstips