1% Profit Strategy

Let’s get started with the 1% Profit Bank Account Strategy.

It’s a simple and powerful way for building a healthy, profitable business.

It is also a great first step for anyone implementing the Profit First® cashflow system into their business, especially for when it feels like there is no profit left over at the end of the month.

Here's how the 1% Profit strategy works:

1. Open a separate "Profit" bank account

2. Transfer 1% of all income (less GST) into this Profit bank account.

3. Do this consistently, no matter how small the amount seems.

Why Does It Work?

The process is proven to work. You may have already been using this strategy in another area of your life, like with your health or your time!

Just like going on a diet, one of the first steps is to clear out your cupboards and fridge to remove temptation. That's exactly what we are doing here.

We are intentionally removing temptation, by physically separating the cash profit, so it is not mistaken as being available for expenses.

Why 1%?

• ·         1% is small enough that you won’t feel it.

• ·         You learn to run your business on 99% of your income.

• ·         You condition yourself to prioritise profit without waiting for “someday.”

In the book Profit First®, author Mike Michalowicz describes the different target profit percentages for increasing annual revenue totals. For more information, send us an email to [email protected] and as a certified Profit First firm, we can provide you with this table as well, a great alternative if you haven’t yet read the book.

For Example:If your business brings in $10,000 this month:

• ·         Transfer $100 (1%) into your Profit Account.

• ·         Run your business on the remaining $9,900.

Cashing Out Your Profit:

• ·         Frequency: Every 3 months (quarterly).

• ·         Amount: Take 50% of the balance in the Profit Account.

• ·         Purpose: This is your owner’s reward. Use it to celebrate your hard work and success.

Remember: Do NOT reinvest it back into the business.

The purpose of the distribution is for your Personal Enjoyment, to:

• ·         Reward the business owner (you)

• ·         Reinforce the behaviour of prioritising profit

• ·         Remind you why you’re running a business

Example Spending:If your Profit Account has $4,000 at the end of the quarter:

• ·         You take $2,000 out (50%) as a profit distribution.

• ·         The remaining $2,000 stays in the account as a cash reserve or emergency fund.

The exciting part is the growth of the Profit Account, even if in the following Quarter you added the exact same amount of deposits (another $4000 to the account):

• ·         You take out 50% of balance ($2,000+$4,000) as a profit distribution, $3,000.

• ·         The remaining $3,000 stays in the account as a cash reserve or emergency fund.

So what does it mean if this account is not growing?

Yes it’s an instant red flag, you don’t need to wait until your financial reports are prepared, this is live, bank balance accounting, letting you know something is not working in your business and needs your attention. now!!

Summary:

How I Can Help You

This method for has helped businesses globally to grow profitably, because the foundation of this strategy is based on human behaviour.

For support, accountability or an easier, more time-saving way to get started, click below on the Jade Coaching logo (green triangle) and book a call with me.

Together, we’ll create a financial system for the long-term success of your business.