Profit First is a cash management system. Going back to Parkinson’s law the observation is that work expands to fill the time available for its completion.
The same goes with your finances!
For years we have been taught the formula for determining a business's profit is
Sales - Expenses = Profit.
It is simple, logical, and clear. Unfortunately, it's a lie. The formula, while logically accurate, does not account for human behavior.
The old formula for determining a business's profit is Sales - Expenses = Profit. It is simple, logical, and clear. Unfortunately, it's a lie. The formula, while logically accurate, does not account for human behavior.
With this old formula, profit is a leftover, a final consideration, something that is hopefully a nice surprise at the end of the year. Alas, the profit is rarely there, and the business continues on its check to check survival.
Sales - Expenses = Profit
Sales - Profit = Expenses
With Profit First you to flip the formula to Sales - Profit = Expenses. Logically the math is the same, but from the standpoint of the entrepreneur's behavior, it is radically different. With Profit First, you take a predetermined percentage of profit from every sale first, and only the remainder is available for expenses
In addition to full-service bookkeeping, Venus Michael's profit first professional is one of a select few bookkeepers that is certified to provide Profit First Cash Management services.
The Profit First ECROP (Evaluation, Conversion, and Roll Out Plan) is designed to help you lead your client through a year-long Profit First engagement. This document will walk you through the entire ECROP process, step by step.
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