Laura explains that Profit First is a behavioral program, an envelope system for saving. Set up bank accounts and apportion your funds for specific purposes.

You can DIY if you understand the core principles. OR you can pay someone, like Laura, to set it up for you.

How to do it:

  1. Read the book/listen on Audible
  2. Go to Profit First website and look at the free resources.
  3. Set up your multiple bank accounts.
    • Profit
    • Expenses – split into two
    • Tax and Gst
    • Salary
    • Income account

Pay subcontractors separately.
Profit first is done after you’ve put aside the money for that. Knowing what is NOT your money is very important in business.

Profit First helps you to build a buffer. Aim for three months’ worth. Then, try to increase the buffer to a six-month level.

Start from the beginning with your brand new business. Start off with 1% profit.

Foreign accounts – You can run profit first on the foreign accounts separately if you are earning in two different currencies/countries. The percentages would be the same.

Challenges:
People make changes too quickly.
Understand what your expenses are.

This only works if you’re running a profitable business. Profit First will make you think about your prices and your expenses.

You have to be accountable for your earnings and spendings. Changes in YOU are often required.

Category: Money

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