How Do You Eat An Elephant?

Now that you’ve got your different accounts, including one just for profits, you can start allocating the money as it hits your main income account. But do you immediately start taking as much profit as you think your business should be making? Well, like many things, good profits don’t happen overnight. Slow and steady wins the race, which is how you should approach your profits.

There is indeed an ideal percentage that should be allocated towards profit, and reaching this 'magic number' is your ultimate goal. But first, you have to define your target percentage. One effective method is to benchmark against other companies in your industry. Public companies are required to share their financial reports, and you can determine their % profit from publicly available information. There are also industry reports for sale. This not only provides a clear benchmark for your own business but also instills a sense of control and empowerment in your profitability journey.

Now that you know where you’re going, how do you get there? By starting with one step or, more accurately, one percent. Start growing your profits by allocating just one percent of what your company makes to the profit account and then reducing your operating expenses by one percent. If you think this isn’t much, remember this is a marathon to consistent profitability, not a sprint.

You don’t want to overzealously take twenty percent as profit at the start, only to have your business struggle and be forced to use all those profits to rescue it. You’d be back at square one with zero profits and probably a lot less enthusiasm for the process.

Also, you won't stay at one period long. At the end of every quarter, increase your profit allocation to bring it closer to your target and reduce your operating expenses by the same amount. Over time, these small adjustments will pay off in a big way.

And that’s how to eat an elephant. One Bite at a time.

If you want to implement Profit First and need help, DM me. I am bringing on new clients.