Grow Your Business with Profit First Formula
Earning a profit is easy, but maintaining it is hard. That’s true when most of the money we earn is spent on covering the expenses. But that’s how it works with regular accounting methods. The formula for profit is simple:
Sales – Expenses = Profit
The concept of Profit First
It’s time to change your perception of what profit means. Human psychology plays a vital role here. Profit First is all about thinking innovatively and turning around the age-old principle of profit to benefit our business more. Under this concept, the equation is reversed by literally putting profit first:
Sales – Profit = Expenses
By putting profit before expenses, we are essentially changing our old mindset that we will only take what is left after covering our costs. This tiny tweak is groundbreaking as it enables us to reduce our costs. Since we are left with less money to spend, we are bound to find more creative ways to make things work, even if on a tighter budget. But it doesn’t mean that we need to compromise on our product or service quality. All we need to do is think out of the box and use what money is available.
How can Profit First benefit your business?
There are various advantages of using this principle in your business. Some of them are:
No need to worry about financial decisions: Once this principle is set in place, you don’t need to do anything; it works by itself. You are not making any economic changes but only changing the mindset through which you run your business.
No need for constant monitoring: After applying this principle, you don’t need to run any additional reports or do any extra reviews besides those you should do annually or quarterly regardless, making it cost-efficient.
You can see growth happening: You will be able to see and measure a real increase in your business after applying this formula. It won’t just be in the books but would scale your finances.
Increases sustainability: This isn’t a one-time thing. You can see sustainable growth in your business, and over the years, it can change your business’s life.
It’s not just for business, but personal finances, too: If you think it’s only your business that will benefit from this principle, you are wrong. It will help you manage your finances, also.
One thing to be aware of
Every business wants to grow, and we give everything we have to achieve the milestones we have set for ourselves. But we often fail to realize the cost of reaching those goals. Focusing on growth without earning enough profits can be your downfall. Applying the profit first method is crucial to get sustainable gains that you can then invest in development. The whole thing looks simple on paper. If you find implementing it difficult, seek help professional accounting bookkeeping company.
About Venus Michael
At Venus Michael Account-Ability, we have profit first professional to we offer state-of-the-art Profit First cash management services. You don’t have to worry about a thing. Let us handle it all. You can reach out to us at 512-791-3747 or schedule a complimentary consultation by submitting our online form.