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You know that feeling when someone talks about a Tesla, and for the next few days you notice EVERYONE is driving a Tesla. Or insert any other car, color, number, etc.
That happened to me with the book Profit First by Mike Michalowicz. My husband hired a new account, who just happened to be Profit First certified. Then, one of my favorite podcasters did a two part series on her first six months incorporating the Profit First method. Then as Jess and I researched banks to use that would work for our partnership in different countries, we settled on Relay Bank + Money Management, a PROFIT FIRST OFFICIAL PARTNER.
So I caved. I bought the book, and binged it in two days. I felt personally called out when he mentioned how business owners of all sizes are basically living invoice to invoice, and when they are cash heavy just reinvested into the business. And ultimately describing why small businesses fail.
As a photo booth owner, it's tempting to buy the new booth, the flower walls, the next new thing. There is literally always something to buy, but that doesn't mean you should.
Before we chat about the profit first method, let's discuss what traditional businesses do. Traditional companies take their gross income (total revenue), minus expenses, and get their profit. Traditional businesses put GROWTH as their top priority. Which has lead to many small businesses failure. In order to GROW, businesses keep reinvesting into the business, including their profits and personal funds.
Profit First reframes this, they take gross income (total revenue), minus PROFIT, and get their expenses. This method prioritizes owners being paid, and a profitable business! Profit First separates your revenue into five different categories: income, owner compensation, taxes, operating expenses, and profit. We love using relay - and they have a super easy system to set this up seamlessly in there dashboard!
Between flower walls, new booths, backdrops, props, audio guestbooks: its so easy to try and “keep up with joneses' ' the PF method takes off so much guessing on what you can afford, what you owe for taxes, etc.
For those just starting out, I highly recommend implementing this into your business. My biggest piece of advice for owners is start setting up your business like you plan to sell (even if you never want to). When starting out you dont need to be dogmatic about the percentages, the author says 1% in each bucket. But the sooner you can get in the habit of these numbers you will see so much more success.
Don't quit your job of living paycheck to paycheck, just to live event to event.
If you want any easy way to play around with numbers we created a super easy spreadsheet where you plug in your monthly revenue and it tells you EXACTLY how much to transfer into each of the categories.
Click the download link to create a copy for your business.
That happened to me with the book Profit First by Mike Michalowicz. My husband hired a new account, who just happened to be Profit First certified. Then, one of my favorite podcasters did a two part series on her first six months incorporating the Profit First method. Then as Jess and I researched banks to use that would work for our partnership in different countries, we settled on Relay Bank + Money Management, a PROFIT FIRST OFFICIAL PARTNER.
So I caved. I bought the book, and binged it in two days. I felt personally called out when he mentioned how business owners of all sizes are basically living invoice to invoice, and when they are cash heavy just reinvested into the business. And ultimately describing why small businesses fail.
As a photo booth owner, it's tempting to buy the new booth, the flower walls, the next new thing. There is literally always something to buy, but that doesn't mean you should.
Before we chat about the profit first method, let's discuss what traditional businesses do. Traditional companies take their gross income (total revenue), minus expenses, and get their profit. Traditional businesses put GROWTH as their top priority. Which has lead to many small businesses failure. In order to GROW, businesses keep reinvesting into the business, including their profits and personal funds.
Profit First reframes this, they take gross income (total revenue), minus PROFIT, and get their expenses. This method prioritizes owners being paid, and a profitable business! Profit First separates your revenue into five different categories: income, owner compensation, taxes, operating expenses, and profit. We love using relay - and they have a super easy system to set this up seamlessly in there dashboard!
Between flower walls, new booths, backdrops, props, audio guestbooks: its so easy to try and “keep up with joneses' ' the PF method takes off so much guessing on what you can afford, what you owe for taxes, etc.
For those just starting out, I highly recommend implementing this into your business. My biggest piece of advice for owners is start setting up your business like you plan to sell (even if you never want to). When starting out you dont need to be dogmatic about the percentages, the author says 1% in each bucket. But the sooner you can get in the habit of these numbers you will see so much more success.
Don't quit your job of living paycheck to paycheck, just to live event to event.
If you want any easy way to play around with numbers we created a super easy spreadsheet where you plug in your monthly revenue and it tells you EXACTLY how much to transfer into each of the categories.
Click the download link to create a copy for your business.