Time is money and money is time. So if you get the money flowing to the right places within your business, you can use it to free up your time.
To do this, I use the Profit First method of cash management. I’m trained and certified by Profit First Professionals to guide business owners into maximising their profits.
Now, to many of us, profit is a dirty word. I used to think so. And, if you’re some fat-cat, sipping piña coladas on a yacht whilst thousands of crying children work in your factories, then profit really is a dirty word.
But that doesn’t apply to you or me. To people like us, profit means freedom. Freedom to make choices, freedom to hire people who love doing the stuff we don’t like doing, freedom to invest in systems that free up our time.
The Profit First system is really simple. In fact, you’re already probably familiar with it – you may know it as the Envelope System. In the olden days, when our great-grandparents got paid in cash, they would divide up their money into envelopes. This one for rent, this one for heating, this one for food. And whatever was left over, we could take down the pub and spend on beer. The clever bit was, it didn’t matter if we had one pint or eight … because the money for the important stuff was locked away in those envelopes. And breaking the seal to access that money was a big deal – you had to be sure if you wanted to use the rent money for beer.
Profit First is the same, but for your business. For food, rent and heating, read tax, pay and profits. For envelopes, read bank accounts. And for breaking the seal, read doing a transfer. The principle still applies. And the results it gets are amazing.
Now I’d love to take credit for Profit First, but the concept comes from the book by Mike Michalowicz.
Mike is the entrepreneur behind three multimillion dollar companies and is the author of Profit First, The Pumpkin Plan and what BusinessWeek deemed the entrepreneurs cult classic, The Toilet Paper Entrepreneur. He is a former small business columnist for The Wall Street Journal, speaks internationally on entrepreneurial topics, and is the creator of the Profit First method. Mike is an active adviser on Profit First to me and my company.
And Profit First really works.
This simple system can take your spending from guilty to confident, from uncertain to positive.