Anyone using "Profit First" accounting?

[turbotadd]

Curious if anyone on the forum is successfully using the "Profit First" accounting system. I read the book, and in theory it sounds great and matches how I compartmentalize my personal finances. I'm struggling with how I would implement it and get the right amount in the "materials" envelope, as it wouldn't be a fixed percentage all the time, or a fixed dollar amount. If anyone has experience they'd be willing to share, I'd appreciate it.
Thanks

 

[Comatose]

I think I read that book years ago too?

 

[Superbowl]

It's a great solgan, but slogans only sell software, they don't create profit.

 

[metal-ica]

I had intentions of doing this but never implemented it.

 

[idacal]

so that's all I have to do is put profit first, huh? you have to make a profit before you can keep it. profit is after all expenses doesn't matter how you account for it. all I know is if your not paying income taxes at the end of the year you are not personally making profit. business may be making and eating it, but it is not coming to you. just my 2 cents on creative accounting

 

[lacewood]

Jumped head first into it several years back, best thing we even did. Started off really simple as described in the book, opened the various accounts and set up profit at 2% and Tax at 2% and have adjusted as we went - have been very conservative with bumping the percentages up as we have went along. Has been an amazing tool for us. His other books have also offered very good business tips that we have used as well. Our accounts look like this

Income - all checks/payment go in to this account
Profit - Savings account only
Tax - Savings account only
Merchandise - we specify and sell merchandise, when we get an order the money goes into income, percent into profit, percent into tax, balance into Merch account. We reconcile this account quarterly and any extra money goes directly into the profit account
Operating - Checking account. Pretty well dialed in at this point to cover all operating expenses.

Start of every quarter we take half the profit out of this bank and share as profit distribution, remaining half stays and continues to grow
Tax payments go out - if any excess half goes into profit into the secondary bank

Sounds complicated - even typing it out seems complicated, but once in the groove it is a great tool. Helps immensely that we have a great bookkeeper of course that bought into the idea

 

[the_r1_kid]

Yep I watched this lecture about Profit first and implemented it in my shop.

Simple and works great. Allows me to get a handle on real operating expenses/cash reserves rather than all of it in one account.
All money flows into my "Operating expenses" checking account account. Every week or so I will distribute it out to to my other accounts "10% - Owner profit" "10%- profit" "15% Taxes". Its that simple. I always know where my real operating capital is at.

 

[EmGo]

I never have, but I've had a few customers who did. First they paid themselves, then they paid the mortgage, then they bought the girlfriend a car, then they went on vacation, then if there was any left they maybe paid me.

Mostly I tried to minimize those types.