Profit First: A Game-Changer for Coaching Business Owners

As a business owner, your passion lies in helping others achieve their goals. But while you’re busy guiding others, it’s equally important to ensure your own business is financially healthy.

That’s where the Profit First system comes in—a revolutionary approach developed by Mike Michalowicz that guarantees profitability from day one.

What Is Profit First?

The Profit First methodology is simple yet powerful. Instead of the traditional formula:
Sales - Expenses = Profit,

Profit First flips the script to:
Sales - Profit = Expenses.

This mindset shift ensures you’re prioritizing profit and managing your expenses accordingly. Here’s how it works:

Key Steps to Implement Profit First:

  1. Set Up Multiple Bank Accounts:
    Create separate accounts for Profit, Owner’s Pay, Taxes, and Operating Expenses (OPEX). Each serves a distinct purpose.

  2. Allocate Funds by Percentage:
    As revenue comes in, distribute it into these accounts based on predetermined percentages. This helps you maintain profitability and ensures you pay yourself and set aside taxes.

  3. Make Profit a Habit:
    By taking profit first, you create a sustainable business that builds your wealth and secures long-term growth.

Tailoring Profit First for Coaching Businesses

While Profit First is a great framework, coaching businesses can benefit from a few custom tweaks. Here’s how to adapt it for your specific needs:

  1. Create a Coaches’ Pay Account:
    If you have multiple coaches on your team, set up a separate account for their pay. Rather than a flat salary, consider compensating them per member or client. In my experience, allocating around 15% of your revenue for coaches' pay is a good starting point.

  2. Set Up a Commissions Account:
    If your coaches or sales team earn commissions, separate those funds into a dedicated account. This keeps you organized and ensures you have the funds ready when commissions are due.

  3. Account for Sales Tax:
    Sales tax can be a significant burden if unprepared. Set aside sales tax as soon as revenue comes in to avoid surprises when tax season arrives.

  4. Calculate Real Revenue:
    After accounting for coaches' pay, commissions, and taxes, what’s left is your "Real Revenue." This is what you’ll allocate across your Profit First accounts—Profit, Owner’s Pay, Taxes, and OPEX—giving you a clear financial picture and helping you make informed decisions.

Why Profit First Works for Coaches

By customizing Profit First for your coaching business, you gain several key benefits:

  • Predictable Cash Flow:
    With clear categories for every dollar, you can accurately predict and manage your cash flow.

  • Increased Profitability:
    Prioritizing profit ensures you remain profitable as your business grows.

  • Better Financial Control:
    Dedicated accounts force you to stay on top of your financial health, giving you confidence in your business decisions.

Find out why the Profit First system is essential for any business owner.

With tailored accounts to run your financials, you can take control of your finances, increase profitability, and boost your take-home pay.

If you’re a coaching business owner ready to implement Profit First, but need guidance setting up accounts or calculating percentages, I’m here to help. Let’s work together to make every dollar count and build a thriving, sustainable business.

Schedule A Call
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This profit first calculator was developed for businesses that want to utilize the Profit First model created by Mike Michalowicz. It takes the current Profit first model and allows business owners to quickly identify the splits for their 10/25 rules.

Tel: (604) 409-4040

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Here's how to use Profit First Calculator

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