Hey guys, Nathan here.

Today, I want to dive into a financial strategy that has been a game-changer for countless small and medium-sized businesses – Profit First.

You might be wondering, “What exactly is Profit First, and why is Nathan so passionate about it?” Well, I’m here to answer those questions and show you why this system is the key to transforming your business’s financial health.

 

What is Profit First?

First things first (pun intended), let’s break down what Profit First is all about. It’s not just another accounting method; it’s a revolutionary way to manage your finances that puts profitability front and centre.

Traditionally, businesses follow a model where they prioritise expenses, taxes, and everything else, hoping that there’s something left over for profit. The problem? Often, there isn’t much, if anything, left for profit, and this can lead to financial stress and even business failure.

Profit First flips this model on its head. It starts with the fundamental principle that profit should come first, not last. With Profit First, you allocate a percentage of your income to profit from every deposit you receive. This simple shift in mindset and approach changes everything.

 

Why I’m Passionate About Profit First

You might be wondering why I’m such a big advocate for Profit First. It’s not just because it’s a buzzworthy term in the financial world. It’s because I’ve seen its incredible impact on businesses, and I believe it’s the path to financial success for small and medium-sized businesses.

When I started NGR Accounting, I was on a mission to help businesses not just survive but thrive. And that’s precisely what Profit First does. It can transform your business from just getting by to truly thriving.

But it’s not just about the numbers; it’s about the people behind those numbers – you. I’ve seen the relief and joy on my clients’ faces when they realise that their hard work is translating into real, sustainable profit. It’s about peace of mind, security, and the freedom to grow your business without financial worry.

 

Benefits for Small to Medium-Sized Businesses

Now, let’s talk about why Profit First tailor-made for small and medium-sized businesses (SMEs) like yours. These businesses face unique challenges, and Profit First addresses them head-on.

Cash Flow Management:

SMEs often struggle with cash flow issues. Profit First’s system ensures that you always have enough cash to cover your expenses and taxes while still setting aside a healthy profit. It’s like a financial safety net for your business.

Stress Reduction:

Running an SME can be stressful, especially when finances are tight. Profit First takes the guesswork out of your finances. You’ll know exactly where your money is going, which eliminates financial stress and uncertainty.

Financial Stability:

SMEs need a solid financial foundation to grow. Profit First establishes that foundation by making profitability a non-negotiable part of your financial strategy. This stability is crucial for long-term success.

Growth Opportunities:

Profit First not only secures your business but also provides the financial freedom to explore growth opportunities. Whether you want to:

• expand your product line,
• open a new location, or
• invest in marketing

Profit First gives you the means to do it.

How to Get Started

Now that you’re excited about Profit First, you might be wondering how to get started. Well, the good news is that it’s not as complicated as it may seem. Here are the first steps:

Assessment:

Start by assessing your current financial situation. Understand your income, expenses, and debt. This will be your starting point.

Setting Up Accounts:

Open separate bank accounts for your different financial purposes:

• Profit,
• Owner’s pay,
• Taxes, and
• Operating Expenses (OpEx).

Target Allocation Percentages (TAPs):

Determine the Target Allocation Percentages (TAPs) that will go into these accounts. This will depend on your specific financial goals and needs.

Consistency:

Stick to the plan consistently. Make these allocations with every deposit you receive.

Regular Review:

Periodically review your financial accounts to ensure you’re on track and adjust as needed. Even better, get a Profit First Professional (like myself) to coach you through your business journey!

and… That’s just the beginning of your Profit First journey.

 

In upcoming blogs, we’ll delve deeper into each step and provide you with more insights and tips. So, stay tuned for more Profit First goodness that will transform your business’s financial landscape.

 

Profit First isn’t just about making money. It’s about securing your business’s future, reducing stress, and giving you the freedom to focus on what you do best – growing your business.

– Nathan Rigney, The Profit Generator

If you have any questions or want to learn more about how Profit First can work for your specific business, don’t hesitate to reach out to us at NGR Accounting. We’re here to support you on your journey to financial success.

If you have any questions, please feel free to contact NGR Accounting at 02 9011 6669 or via email at info@ngraccounting.com.au

 

FULL DISCLAIMER:

The information provided by our firm is of a general nature and does not consider your specific financial circumstances, needs, or objectives. The information is not intended to be relied upon as specific advice and should not be treated as such. Before making any financial decisions, we recommend that you seek professional advice tailored to your specific circumstances.

Whilst every effort has been made to ensure the accuracy of the information provided, we do not guarantee its accuracy, completeness or suitability for your intended use. We are not liable for any loss or damage resulting from your reliance on the information provided.

Our firm is not responsible for the content of any third-party websites that may be linked to or from our website. The inclusion of any links does not imply our endorsement of the website. It is your responsibility to evaluate the accuracy, completeness and usefulness of any information provided by these third-party websites.

By accessing or using the information provided by our firm, you acknowledge and accept the terms of this disclaimer.

 

Updated: 28th September 2023

JM