Do you want your business to achieve financial goals with Profit First but are not sure where to start?
The problem is, we all have a tendency to have both vague and constantly changing financial goals. One day we’re aiming for this, the next for something different as our internal goalposts are literally always changing. In this environment, it’s difficult to find a focus, concentrate and move towards a target. The end result is that we may not really get anywhere.
If this is you, think about how much time and effort you put into your business and then consider what you want from it. Isn’t it wrong for this time and effort to be diluted whilst you don’t get what you want? What if there was an easier way to ensure you could reach your goals.
There’s no doubt reaching your goals can be tough, simply because business is hard and the ability to plan and execute is constantly challenged by external factors. A few months ago no one had ever heard of coronavirus, now it’s threatened almost every business. In this situation, what can we do?
From working with many businesses, I’ve seen that the path forward may come from adopting simple plans that are easy to start, lead to a sense of achievement and result in the type of steady, incremental change that brings transformative results. This is the type of plan that implementing Profit First falls into, such that you will have a high chance to achieve financial goals with profit first. Why is this?
Profit First makes you define a target
Many businesses never achieve great financial results because they simply aren’t aiming for anything, so they never move purposely forward to a defined end point. Profit First makes you define an aim for your profit account and once you have done this, you are much more likely to achieve a desired positive outcome. Our behaviour and actions follow what we give our attention to so once we define a target, we are more likely to achieve what we want.
Profit First makes your target achievable and linked to the present
It’s easy to have lofty and distant goals that are so far in the future that we never take regular and frequent action. Profit first makes you define an achievable goal linked to the present and to take action towards this goal each week. This means we are working towards something tangible immediately and in doing so, we are consistently taking positive action to achieve a desired result.
Profit first helps you narrow your target to one objective
A lot of different goals for one business is common, as we try to achieve a variety of outcomes that we hope will create a better whole. The problem with this is that we diffuse our attention and actions towards different and possibly incongruent goals. As we flip between objectives, our list of goals starts becoming nothing more than a wish list. Profit first overcomes this by narrowing your goals to one key objective, having money in a profit account. When we focus on one objective, we better focus our attention and actions towards it, leading to much higher probability of reaching this target.
Profit first helps you define a target that doesn’t move
Moving the goalposts is a common phrase and happens so often that it often makes our goals meaningless. We try to achieve something and before you know it, we either try to reach something further or something different. Profit first helps us defines a clear goal that has far less chance of being moved. In this environment, is far easier to focus on this goal, move towards it purposefully and attain it.
Profit First puts in place a simple system to achieve the target
Reaching your financial goals can seem like climbing a mountain and as a result, action isn’t taken. However, starting and managing Profit First couldn’t be easier. You only need a separate bank account and to make a commitment to transfer at least 1% of sales to this account once a week or fortnight. That’s it. There’s no detailed requirement and no reason to overthink it.
You can add to your system as you go, but the key principles of paying profit first and reducing the size of spending ‘buckets’ can be implemented very simply and with one extra bank account and weekly transfer.
Profit First ensures you start straight away
Many goals are never reached because the first step is never taken. Plans seem too difficult, there appear to be too many things to do and it can all seem too hard. The ethos of Profit First is that profit is a habit and starting now is the best way to achieve your goals. Once you commit to Profit First, you are committing to starting today and in doing so, you are immediately getting closer to your aim.
Will I achieve financial goals with Profit First?
Before implementing Profit First, many businesses talk about financial stress. consistent cashflow problems and a lack of structure. Once you implement Profit First, your financial management will feel more in control, you will become more profitable immediately or better able to pinpoint why you aren’t and you will be able to relax more, knowing that finances are being taken care of. Over time, financial management will seem easy, you will be able to focus more on growing your business and you achieve financial goals with profit first.
What if I am still unsure of how to get started?
It’s common to be unsure of how to get started because of Australian taxes. For example, how does Profit First work with GST and superannuation? How does it work if I use a company or a trust? How does it work if I’m behind in ATO payments or creditors?
If you are unsure, book in a time for a call with me with this link to my calendar. In this call, I will answer your questions about setting up Profit First so that you have direction and clarity. This call is at no charge. I’ve helped countless businesses with Profit First and am sure that I can help yours too.
Alternatively, if you want to do more research, take the course on Profit First at https://www.morrisonabs.com.au/online-courses/. This course will give you a solid grounding in how to manage Profit First for GST, payg, super etc. Whatever your choose, either of these options will start your journey to profitability.