Core Principle of Profit First: How to Remove Temptation
Jun 24, 2024
Once an entrepreneur starts funding the Profit and Tax Accounts, these funds begin to accumulate. Over time, as the cash grows, you might be tempted to reinvest it all back into the business. Please don't do that! Plowing all your profits back into the business will only drive your overhead up and completely undermine the purpose of the Profit First method.
If you're finding it hard to resist using the funds in the Profit or Tax Accounts when your Operating Expense Account is running low, setting up 'No Temptation' accounts will be your best strategy. These accounts should be at a bank across town, making them harder to access.
The No Temptation Accounts should be simple savings accounts without online banking access or a bank card. Make it as difficult as possible to reach this money. By removing easy access, you reduce the temptation to dip into these funds when your mind starts to wander.
If your Operating Expense Account is sounding the alarm, it might be time to reassess your business's financial health. You're not alone in this—many entrepreneurs have faced the same challenges. Remember the Profit First formula:
Sales (cash coming in) - Profit (pay yourself & set aside, no temptation) = Expenses (frugal, innovative, and resourceful)
Follow this formula, and an incredible thing happens: the Profit Account releases a profit distribution to you, the owner, at just the right time. It's bonus time! This is what your business was meant to do from the start, and with Profit First, it's now a reality.
I help dentists in achieving this freedom through the Profit First system. If you’re curious to learn more about balancing profit and growth, visit www.profitfirstdentist.com and tap the 'Free Resources' tab to download the first two chapters of my book for FREE! Don't forget to subscribe to my YouTube channel for all the latest tips and financial strategies for managing the business side of a dental practice. Let’s explore how you can grow your practice wisely and sustainably!
-Barb Stackhouse, RDH, M.ED.
Mastery Profit First Professional
"I’m Barb Stackhouse, author of Profit First for Dentists. You might recognize me as the professional behind the Profit First approach for dental practices. I’m passionate about helping dentists implement this effective cash flow system, which is why I wrote the book. My goal is for more dentists to read it and integrate this system into their practices because it genuinely works."
-April Stroink, BComm, RHU, EPC, PFP
Advanced Profit First Professional
With over 25 years of financial expertise, April Stroink helps in transforming the financial health of dental practices across Canada. As an experienced Profit First coach, April is committed to helping you increase your profits, optimize your cash flow, and achieve financial peace. She believes that your business should enrich your life—enabling you to create the life and business of your dreams without compromise.
