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Why Does Sequence Matter with Profit First?

Uncategorized Jul 09, 2022

Today I’m sharing about the principle of Sequence and why it matters.  It’s the second Core principle of Profit First for Dentists. 

First let’s talk about the Primacy Effect to help us understand why sequence is so important.  The Primacy Effect tells us we have a cognitive bias toward information presented first rather than later.  We do the same thing with items on a list.  If you’re a list maker, you’ll understand.  The things at the top of the list get done first and you delight in checking them off. This is great news for Profit First.  The sequence of how we do things does matter even when it comes to your money. 

If you’ve listened to my previous topics in this series, you’ve heard me talk about GAAP which stands for generally accepted accounting principles.  The basic equation for GAAP is Sales – Expenses = Profit. This has caused entrepreneurs including dentists like you to place expenses before profit. The reality is we’re always waiting for the leftovers and wondering if there will be any profit left.  This is not a good plan to operate on. It’s actually exhausting. 

If you feel like you’re always grinding it out at the chair, producing and collecting more, only to find your income stagnating at the same level, you know what I’m talking about.

Now that we know sequence matters, wouldn’t it make sense to put Profit First in this equation?  All we need to do is flip the equation to Sales – Profit = Expenses.  Seriously, it's that simple. Instead of waiting around for the leftover profit, how about setting up your business to pay yourself first? 

Now, to be totally transparent, it does take some work up front to make sure you get all these allocation percentages correct.  You do still have bills to pay.  Your Operating Expense account must get funded, however, now you’ve decided to fund your Profit First.  This one shift will automatically put your brain in a state of resourcefulness.  Less money in the bank account equals less spending.  It’s human behavior. 

What about you?  Is it time to take advantage of the Primacy Effect and the Profit First for Dentists method?   

Remember to come back next week to learn more about the third principle of Profit First for Dentists.  I’ll be sharing about how to remove temptation.  You won’t want to miss it.  For now, go have yourself a great week!



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