Ep 8 Chapter 6 – Putting Profit First Into Motion

 

Putting Profit First Into Motion

 

Putting Profit First Into Motion: Rev Up Your Profit Machine

 

Description:
It’s time to take action and put the Profit First system into motion! This episode walks you through the practical steps of implementing the Profit First system in your business. From setting up your allocation rhythm to making the first distributions to your accounts, we’re breaking down the exact process to help you turn your business into a profit-generating machine.

You’ll learn how to handle pushback from accountants, set realistic percentages, and start taking quarterly profit distributions. We’ll also cover strategies for cutting costs, building financial reserves, and rewarding yourself as your business becomes more profitable.

 

What You’ll Learn:

  • How to structure your bank accounts and set up allocation nicknames.
  • The importance of starting small and ramping up allocations gradually.
  • Strategies for cutting unnecessary expenses to align with your goals.
  • How to set up a rhythm for allocations and use your operating expense account to manage spending.
  • The process for taking quarterly profit distributions and celebrating your success.

 

Highlights:

  1. Get Buy-In from Your Team:
    • Discuss the Profit First system with your accountant and bookkeeper to ensure alignment.
    • Share this podcast with them to help explain the why and how behind the system.
  2. Start Small and Build:
    • Use Day 0 percentages to determine where you are today. Then, add 1% to profit, tax, and owner’s compensation while reducing operating expenses by 3%.
    • Remember, this is a gradual process—don’t rush to hit your targets immediately.
  3. Create a Rhythm:
    • Set a schedule for allocations, whether it’s bi-weekly (10th and 25th), weekly, or monthly. Choose what works best for your business.
    • Move your tax and profit allocations to vault accounts at another bank to reduce temptation.
  4. Cut Costs Intelligently:
    • Review expenses and aim to cut 10–20% by eliminating unnecessary services, downgrading plans, or renegotiating contracts.
    • Engage your team to identify areas for savings and incentivize them with bonuses for their contributions.
  5. Quarterly Profit Distributions:
    • On the first day of each quarter (January, April, July, October), take 50% of your profit account as a distribution.
    • Use these distributions to reward yourself, fund retirement accounts, or reinvest in building wealth outside your business.
  6. Rainy Day Funds and Adjustments:
    • Use the remaining 50% of the profit account to build cash reserves or pay down debt.
    • Adjust your percentages at the end of the year based on actual tax obligations and savings goals.

 

Action Step:
This week, take the following steps:

  1. Set up nicknames for your bank accounts, including your current allocation percentages and target goals.
  2. Begin your allocation rhythm and make your first transfers into the Profit, Owner’s Compensation, and Tax accounts.
  3. Commit to reviewing and cutting expenses to free up funds for future allocations.

Links and Resources:

  • Profit First Allocation Spreadsheet: [Insert link to spreadsheet from Episode 6]
  • Contact [Host Name] for help with implementation: [Insert email/contact]
  • Learn more about Profit First: [Insert link]

 

Final Thought:

The hardest step is starting, but once you do, you’ll build the financial muscles needed to create lasting wealth. Celebrate your wins, cut costs wisely, and keep moving toward your targets one small step at a time. This is how you create a profitable, sustainable business—and it’s worth every effort.

 

Hi, I’m the Profit Answer Man Rocky Lalvani! I help small business owners simplify their financial reports to make more informed business decisions with fewer hassles. We utilize the Profit First system created by Mike Michalowicz

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Profit Answer Man Facebook group: https://www.facebook.com/groups/profitanswerman/

My podcast about living a richer more meaningful life: http://richersoul.com/

Music provided by Junan from Junan Podcast

Any financial advice is for educational purposes only and you should consult with an expert for your specific needs.

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