Q: How can I make my business more profitable?
“That’s the million dollar question, right?” Rachel Siegel says with a smile.The owner of Go Figure Accounting and author of Profit First for Optometrists knows a thing or two about profit.
“Most business owners learn to operate using the conventional formula of Sales – Expenses = Profit. In that scenario, profit is what’s left over. We use instead what’s called Profit First, a methodology that prioritizes profit from the outset: Sales – Profit = Expenses.”
This subtle shift forces business owners to put profit at the forefront, making it a non-negotiable part of every financial decision. The process is straightforward but powerful: set up separate bank accounts for profit, taxes, operating expenses, and owner’s pay. When revenue arrives, allocate a percentage to each account based on predetermined targets, ensuring you’re not just hoping for profit—you’re guaranteeing it.
By using this method, you’re not just hoping for profit—you’re guaranteeing it.
“Profit First also imposes healthy discipline on your spending. With a limited amount available for operating expenses, you’re naturally inclined to scrutinize every dollar spent. This helps curb the temptation to dip into funds reserved for taxes or profit, reducing financial stress and surprises,” says Rachel.
“By prioritizing profit, you build a stronger, more resilient business that can weather economic downturns and invest in future growth, providing a clear, actionable path to long-term profitability and success.”
