This article contains the revolutionary secret to beating the ever growing statistics of Business’ not making it after their first couple of years. These five simple steps will change the future of you and your business forever.
Step 1 – Stop the leaks and take your profit FIRST!
This might surprise you, but the Profit equation you were taught is wrong.
Sales (minus) Expenses (equals) Profit does not work.
If it worked you’d have more money in your account than you could poke a stick at!
But statistics (and daily emails) says tells us that cashflow is tight, and profit is a distant memory.
Why doesn’t the Old Profit Formula work?
Because of an economic principle called Parkinson’s Law.
Parkinson’s Laws says that “an available resource will always be used up”.
For example, when you eat a meal.
You fill up your plate.
Then you eat everything on the plate.
It’s human nature. (Especially if you’re a kiwi like me!)
It’s how we’re brought up.
It’s Parkinson’s Law.
So in the OLD Profit, you sell sell sell & the money (food) goes into one bank account (plate).
Then we incur all the expenses we think we need to incur in order to deliver on our promises.
Rent, Payroll, Taxes, Subscriptions, Marketing …
It’s all gone.
No, or little profit leftover for all your hard work.
It wasn’t a magic trick.
It’s Parkinsons Law.
All available resources will be used up!
Or using the plate analogy, we fill our plate; we eat until the plate is empty.
Sometimes whether we we’re hungry or not!
So knowing that it is very, very hard to change human behavior (ever tried and failed a diet? I have!)
We simply recommend eating from a smaller plate.
The New Profit formula is Sales (minus) Profit (equals) Expenses.
Commit now that a certain percentage of EVERY DOLLAR that comes in goes into a separate bank account at a separate bank.
Start with just 1% if you have to.
Putting Your Profit First is more about the habit than the amount.
Start now no matter how big or small the amount.
AND we encourage you to do a self-analysis in these 5 areas of your business. Rate yourself between 1 and 10. 10 being you are Extremely happy with where things are at, 1 being you just are in desperate need of help.
- Revenue – How happy are you with your current revenue?
- Profit – How happy are you with how much profit you have sitting in your profit war chest?
- Expenses – How happy are you with the percentage of tax you are paying?
- Expenses – How happy are you with your current owner’s salary?
- Expenses – Operational Expenses (Wages, Rent & Subscriptions) – How happy are you with your current level of expenses?
Up next, Step 2 – Control the Tap, Get Paid Faster.