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Profit First: Redefining the Traditional Accounting Formula

The traditional accounting formula, Sales – Expenses = Profit, has long been the cornerstone of business operations. However, this formula often leads to a cycle of increasing expenses and diminishing profits, as businesses prioritize immediate needs over long-term financial stability. In this blog we look at an improved approach to formulating profit!

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Profit First

Methodology

The Profit First methodology challenges this traditional approach by flipping the formula to Sales – Profit = Expenses. This simple shift in mindset has profound implications for small businesses, transforming them from profit-seeking entities to profit-generating machines.

The Small Business Matters report shows 43% of small businesses are making zero profit.

Profit becomes the primary focus

Under Profit First, profit is no longer an afterthought. Every sale generates profit, which is then allocated into designated accounts for specific purposes: Profit, Tax, Owner’s Comp, Operating Expenses, (these are the minimum accounts). This structured approach ensures that profits are prioritised and protected from being consumed by ever-increasing expenses.

With Profit First, business owners gain control over their finances, breaking free from the reactive cycle of chasing expenses. Instead, they become proactive in managing their cash flow, ensuring timely bill payments, tax compliance, and employee compensation.

Benefts of Profit First

The benefits of Profit First extend beyond financial stability. By prioritizing profits, businesses can invest in growth opportunities, attract and retain top talent, and build a sustainable foundation for long-term success.

Countless business owners worldwide have embraced Profit First, experiencing a range of tangible benefits, including:

Are you ready to transform your business?

If you’re ready to transform your business from a profit-seeking entity to a profit-generating machine, Profit First offers a proven approach to achieving financial stability, growth, and peace of mind. You can become 1 of the thousands of businesses around the world who have embraced Profit First and are reaping the rewards of a healthy, profitable enterprise.

Unleash the transformative power of Profit First and propel your business to new heights of financial success. First Accounts is dedicated to empowering small businesses like yours with Profit First implementation and coaching, unlocking a world of benefits.

Get Started Today.

Download a free chapter of the Profit First book and start your journey to more profit!