Profit First

Profit First – the easy way to manage cashflow

Are you having cashflow difficulties in your business, we’ll have a deal for you. No, I don’t have any steak knives to go with. Today, I want to have a chat to you about a system of managing your money that is easy for small businesses.  The simple term is Profit First and what it’s doing is we’re harnessing human behavior.

Normal business behaviour is: If you’ve got a bank account with money in it, and you’ve got bills to pay, then you’re going to pay them. If you’ve got a money, a bank account with no money in it, and bills to pay, then you’re going to work out some kind of way to get the money in to pay it.  Nothing abnormal there.

In our business, we’ve all got bills & expenses that we need to pay on a regular basis. We’ve got our operating expenses, we’ve got our tax, we’ve got wages to the owner, and we should have a profit that is paid to the owner. Utilising the  Profit First Method, what we do is we allocate money each week or each fortnight to five different bank accounts

This is the very, very short Cliff’s version. If you want to know more about it, get in contact because there’s a lot more in detail to this, I’m just going to explain it very quickly.

Five bank accounts:

  • First Bank Account is your income account. This is where all your sales money goes into.
  • Second is your profit account. That’s for you, the business owner, and you deserve a profit on the money that you’ve invested in your business. If you bought shares in ANZ, and or Commonwealth Bank, you would expect them to pay a dividend to you twice a year. Well guess what? Their business and your business? Same same, just slightly smaller in size.
  • Third one is your owner’s pay. If you’re working in the business, you deserve to be paid a fair remuneration for the work that you do the same as every other staff member and contractor that you have.
  • Fourth bank account is your tax account. This is where you put money for Income Tax, I usually suggest people also put in staff PAYG, Super and GST into this account as well.
  • Fifth bank account is for your operating expenses. This that’s what you’ve got that’s left to run your business. It’s for your overheads. It’s your materials, it’s your staff wages, it’s your phone bill, it’s your rent, it’s all those little expenses that we have.
  • If you’ve got a business that’s got a high wage bill or a high materials Bill, you can have the sixth account and put away for them as well.


The action required is quite simple. We look at our bank account once a week or once a fortnight and we split it into those other four bank accounts. Unfortunately it’s the percentage (not fixed dollar amount) that is the secret sauce.

Now you can read the book, Profit First if you want to. Or there’s a link on our website to a course on profit first if you want to implement yourself, but my suggestion to you is get in touch with me. Because I’m a profit first accredited trainer. I can sit and have a look at your business and work out what the percentages need to be in the long term to get you A to B and work out what we need to adjust all the way through to get you there.

Profit First takes away the temptation of spending. It looks away those tax profit owners’ wages in separate accounts. So that really all you’ve got your operating expenses account to run your business. Trust me, it absolutely works.

To expand your knowledge, we invite you to visit our YouTube channel by clicking the link below. Don’t miss the opportunity to subscribe and stay informed about our latest uploads.

YouTube link:

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.