How Profit First Saved my Business

“All I had to do was follow the system”

A lot of you will have heard my praising of having good, reliable, systems in place in your Business. 

I was fortunate enough to present to Business Women Albury Wodonga earlier this year on the topic of how systems have saved my business, repeatedly, over the last 7 years when life got in the way, and crises intervened.

The PURPOSE of having systems in your business is to help create freedom.  There are three freedoms we talk about in the coaching community –

  • Mind Freedom,
  • Money Freedom; and
  • Time Freedom.

Everything that you do in your business, and every system you set up, should be working towards one of those three freedoms.

The year that is 2020 (still a few weeks to go, if I don’t blink I might actually get to see it) has been nothing short of traumatic for the world at large.

Businesses have had to fold, economies have crashed and no-one is sure what is to become of the world in the months to come.

One thing that I can be sure of in my Business, is that my systems have continued to work for me during the pandemic and uncertainty that has been COVID-19 in 2020 and they will continue to do so in the future.

After running through my annual business planning in January, I realised that I was getting pretty fed up with the feast and famine cycle my business seemed to continuously roll through.  No matter how organised I was or diligent with prudent spending, my cashflow forecast only ever seemed to give me a few months before it had bad news.  

This was an ongoing issue, continually stressing about money in my business was slowly bringing me to my knees.  I was ready to quit.  My mental health became fragile and my Inner Critic was spending more time in the front seat than in the boot where she belonged.

On top of the Bushfires that razed my home region, I was nearly at breaking point.  Knowing myself – I needed a new project to inspire and assure me that I was a capable adult.  More than capable.

I decided to have one last shot and gave myself 6 months to turn the finances around.

A number of my Profit First friends will relate – I picked up Mike Michalowicz’s book – that had been on my bookshelf for about a year – and finally read through the whole thing.  It’s a common experience, we don’t pick up the tools or investigate a solution until we need it most.

At this point in the business, I didn’t see any harm in having a go.  There was only an investment of my time needed, nothing financial.

I had a chat with an old friend of mine, who out of shame I had not been in touch with for some time, who was actually a coach and Certified Profit First Professional.  She helped to clear up any queries I had and we’ve kept firm contact since.

I got real and ran my business through the assessment, got my allocation percentages sorted and set up the bank accounts.

Within a week – I was all set to go implementing Profit First in my business and was beginning to feel the pangs of excitement about how this new System would work for me.

I stripped down my expenditure, pulled my profit and loss apart with tweezers and culled all the luxuries that had crept into my subscription pile.  The business got lean.

Shortly after, the whispers of COVID-19 became shouts and screams.  March 2020 saw the world shut down, the virus had reached nearly all corners and the pandemic became our new normal.  Birthdays were cancelled, international holidays were cancelled. We all hunkered down to see what would happen next.

I was more concerned at this point about supporting my clients, ensuring that they kept their heads above water, both mentally and financially, and came out the other side of COVID.  At the time of writing this, they’re all still with me, and for that, I am eternally grateful – for their sakes, not mine.

While busy managing Cashflow Boosts and Jobkeeper Reimbursements, BAS, Bookkeeping & Financial Counselling, I continued to follow the Profit First system, allocating funds every fortnight to their relevant bank accounts and left the system to essentially take care of itself.

When I sat down to work through my own figures for the June 2020 quarter I was shocked to see that the business had somehow accumulated nearly $20,000 across my accounts. 

I had sufficient funds JUST in the Owners Comp account to pay my wages for the next 3 months. I had a massive buffer in my GST & PAYGW account thanks to the Jobkeeper and Cashflow Boost payments – which was all redistributed through the business to bolster other areas.

I don’t remember ever having that much in any of my business accounts.

Financially, my business had flourished during a time I felt I was not going to survive.  I had continued to work for the love of my clients and desire to see them through, despite having reduced their fees to cover just their system subscriptions in some cases.

At the time of writing this, there is now about $30,000 in provisions and operating allowances.  Mind-blowing isn’t it?  Just from managing money in a systemised way.

I suddenly had total Mind Freedom around my finances.  And to a degree, am also experiencing Money Freedom in that I’ve been able to increase my salary from the business – with minimal impact on future stability.

Profit First, once implemented, has taken care of itself, all I had to do was follow the system.

I believe wholeheartedly that any business can thrive using this system.  So much so that I decided to undergo the Profit First Certification Program so I could become a Profit First Professional and help other small business owners implement the system.

Would you like to learn more about Profit First?