Make it Rain by stopping the leaks

“Money isn’t everything, but having a mountain of it sitting around is handy.”

Step 1 – Stop the leaks

This might surprise you but the Profit equation you were taught is wrong.

Sales (minus) Expenses (equals) Profit does not work.

If it worked you’d have more money in your account than you could poke a stick at!

But statistics (and daily emails) says tells us that cashflow is tight and profit is a distant memory.

Why doesn’t the Old Profit Formula work?

Because of an economic principle called Parkinson’s Law.

Parkinson’s Laws says that “an available resource will always be used up.”

For example, when you eat a meal.

You fill up your plate.

Then you eat everything on the plate.

It’s human nature. (Especially if you’re a kiwi like me!)

It’s how we we’re brought up. It’s Parkinson’s Law.

So in the OLD Profit you sell sell sell & the money (food) goes into one bank account (plate).

Then we incur all the expenses we think we need to incur in order to deliver on our promises.

Rent, Payroll, Taxes, Subscriptions, Marketing …

And BOOM!

Like magic.

It’s all gone.

No or little profit leftover for all your hard work.

It wasn’t a magic trick.

It’s Parkinsons Law.

All available resources will be used up!

Or using the plate analogy, we fill our plate, we eat until the plate is empty.

Sometimes whether we we’re hungry or not!

So knowing that it is very, very hard to change human behaviour (ever tried and failed a diet? I have!)

We simply recommend eating from a smaller plate.

The New Profit formula is

Sales (minus) Profit (equals) Expenses.

Commit now that a certain percentage of EVERY DOLLAR that comes in, goes into a separate bank account at a separate bank.

Start with just 1% if you have to.

Putting Your Profit First is more about the habit than the amount.

Start now no matter how big or small the amount.

Join me next week as I share with you Step 2 – Control the Tap, Get Paid Faster.

Revenue – How happy are you with your current revenue?
Profit – How happy are you with how much profit you have sitting in your profit war chest?
Expenses – How happy are you with the percentage of tax you are paying?
Expenses – How happy are you with your current owner’s salary?
Expenses – Operational Expenses (Wages, Rent & Subscriptions) – How happy are you with your current level of expenses?

We run a Become a Cash Rich Business [Workshop] and for just $99 you can –

Know your numbers (am I bleeding profits? If so how much and where from?)
What healthy look like (for my turnover how much should I be paying – Profit, Owners Pay, Taxes and Operational Expenses?
For my current numbers, how do I get healthy again? (a simple step by step method to get on top of your numbers, build a 3 month cash reserve and put your profit first)