How does Profit First work?

We are told that we need willpower to reject temptation. That cake, that cigarette, spend the last £100 in your bank account. And all too often we break and we fail and we hate ourselves for our weakness.

But there is a growing body of evidence that our brains don’t work that way. We have many urges, generated to fulfil different requirements, some which work together and some which are in opposition to each other. Like our long term desire to lose weight versus our short term desire to eat that beautiful cake. Which desire wins out at anyone time isn’t a function of willpower but rather which requirement is the strongest.

So to make major changes you need to build your strength in the areas that you want to win and weaken the ones you want to lose. And the way we do that is by building habits.

There used to be a “stop smoking” ad that showed gloopy fat oozing from the cigarette. It helped me stop because as I reflected on that image it was strengthening the long term “don’t have a fag” part of my brain.

And if you can’t stop spending that last £100 in your bank account, if £90 is for your tax bill or your rent or whatever, lock it away. Put it in a separate bank account with a different bank and don’t install the app for it. Because that way, you’re weakening the “short term spend it” urge by giving it more work to do.

That last one is the heart of the #profitfirst method. You have one account you can spend from. Then you have separate accounts for your tax bills, your own pay and your company profit. Whatever is in your main account is yours to spend. Whatever is in the other accounts is locked away. Making a profit does not take willpower.

Understanding your roadmap

The most important things, when looking at a map, are knowing where your destination is and where you are now.

Without “you are here” how can you plot your route to where you want to go?

If you need the same for your business I’m offering 2 hour Cashflow Assessments.

We look at the cash within your business (because while accounting profits are nice, nothing beats cash in the bank) and use that to design a plan, getting you, and the business, to where you need to be.

Because once the cash is flowing to the right places you can concentrate on freeing up your time and finding higher value clients.

If you’re interested, click here to book your time.

Judith said “it really works, giving a clear return on investment you can actually see”

Dealing with risk

The other day, on LinkedIn, I asked for a bit of help.

To be honest, I kind of knew what the answer was; I had mapped out the various possibilities and was pretty confident about which way to take things. I asked because I wanted to make sure I hadn’t missed any possibilities.

But while I didn’t expect the number of responses I got, I did find something really interesting in there.

A big chunk of the responses were “you should go for it, follow your heart” with the odd “just do XYZ to cover yourself”. While a whole load of other responses were “we’re about to hit economic uncertainty, don’t take a chance, be careful”.

Because everyone has a different appetite for risk. For some people, playing it safe is the only choice. But others prefer to roll the dice and see what happens.

Which is why, when I’m writing a proposal for a potential client, I always give three options. Because I don’t know how they feel about risk.

So there’s a lower priced option that carries a bit of risk – normally variable pricing or fewer guarantees. A higher priced option that has little risk. And something sat in between.

So when a client complains about the price, you’ve probably misjudged their risk profile. Give them options and you might find they are perfectly happy.