Profit First - at its core are four fundamental concepts: Use Smaller Plates, Serve Sequentially, Remove Temptation, and Establish Rhythm. Let's unravel these concepts and explore how they collectively shape the financial success of businesses.
1. Smaller Plates: Imagine a feast where a variety of smaller plates (bank accounts) are served, each representing a distinct financial goal. Smaller Plates, in the context of Profit First, advocates breaking down financial targets into manageable, bite-sized portions. Smaller bank accounts for cash (plates) limit the amount of money available to fulfill the requirements for the key segments of the business. By focusing on smaller, attainable goals, businesses can build momentum and set the stage for sustainable financial growth.
2. Serve Sequentially: The Serve Sequentially concept has you layer your financial goals in a deliberate order. By prioritizing profit first, followed by owner's compensation, taxes, and operating expenses, you create a structured financial strategy. This sequential serving ensures that each financial component is given the attention it deserves, contributing to the overall health of your business.
3. Remove Temptation: In the world of Profit First, removing temptation involves creating intentional barriers to accessing certain funds. By allocating money into separate offsite accounts, you can eliminate the temptation to dip into funds earmarked for profit and taxes. This not only ensures the availability of resources for their intended purposes but also cultivates financial discipline.
4. Establish Rhythm: Establishing a rhythm in cash management is about creating consistency and predictability in managing your money. Profit First requires a set rhythm for allocating your cash for its specific purpose. This rhythmic approach ensures that you stay attuned to their financial health by knowing what is in each purpose specific account every time you look at them or move money into them. You can adapt to environmental changes, and continuously refine your strategy for optimal results.
In conclusion, Profit First's core concepts offer a unique recipe for financial success, blending intentionality, structure, and discipline. By utilizing Smaller Plates, Serving Sequential, Removing Temptation, and Establishing Rhythm, you can navigate the complexities of financial management with clarity, purpose, and a renewed focus on sustained profitability. Embrace these concepts, and usher in a new era of financial empowerment for your business.
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Stay healthy,
Greg Libbrecht and the team at Platinum Business Services