Profit First – Sounds good doesn't it!

In business, we’re often told to pay ourselves first, but we are never taught how.

Profit First rethinks traditional accounting by prioritising profit before expenses.

We take income, prioritise a percentage for profit, and use whatever’s left as our budget. If there’s not enough, we have too many expenses and need to make cuts.

Please let me explain.

Business owners calculate profit using the equation below

Profit = Income – Expenses

Both income and expenses are variable and your profit is fixed by the above equation. What Profit First does is re-arrange the equation, so you determine your expenses based on your income and profit.

In other words,

Income - Profit = Expenses

This shift in focus helps you to change your mindset, so that profit becomes something you plan for rather than something you hope for.

What is Parkinson’s Law?

Author C. Northcote Parkinson theorised that the demand for a resource (whether time, money etc.) changes to meet the supply.

For example, if someone is given two weeks to do a project, it takes two weeks.

If the same person is given eight weeks to do the same project, it takes eight weeks.

It works the same with expenses

If someone has a £10,000 budget to complete a project, they will spend it.

If they only have a budget of £1,000, they will focus on making the most of it while still delivering the project.

There are clearly limits but most businesses are spending far more than they need.

Why Choose a Certified Profit First Professional?

A Certified Profit First Professional, like us, has undergone rigorous training and practical coaching to become experts in implementing Profit First methodology.

Among over 20,000 accountancy practices in the UK, we're one of a handful of Profit First Certified Professional Accountants.

You will benefit from our expertise to build profit-first strategies for your company in a tax-efficient manner.

Win both ways

The Profit First method injects profit and cash into your business from the outset, ensuring you, the business owner, are rewarded both as an 'Owner' and an 'Owner Operator' tax-efficiently.

Discover Profit First with Naylor Accountancy Services, where we ensure profit isn't just an event but a habit, guiding you every step of the way to financial success.