Maximizing Profit: The Essential Guide to Implementing the Profit First Methodology
Ready to make profit a priority from day one? In this episode, I’ll walk you through the practical steps to implementing the Profit First system in your UK business—no jargon, just straightforward advice you can action right away.
I’m Deb Halliday, certified Profit First Professional, and I’ll show you how setting up five dedicated bank accounts—for Income, Profit, Owner’s Pay, Tax, and Operating Expenses—can bring structure and clarity to your cash flow. We’ll talk about why this simple habit is a game-changer for business owners who want to reduce money stress and build lasting financial health.
You’ll learn how to allocate your income into each account, why it’s so important to adjust your percentages for your unique business needs, and why the Tax account is especially crucial if you’re VAT-registered. I’ll share practical tips for choosing the right banks and setting up your accounts, plus advice on starting small—allocating even just 1% to profit can make a big difference over time.
If you’re ready to take control of your finances, avoid the usual cash flow headaches, and finally make your business work for you, this episode is for you.
Takeaways:
- Why putting profit first is the secret to a healthier, less stressful business
- How to set up and use five key bank accounts for better cash management
- The power of allocating specific percentages to each account, twice a month
- How to handle VAT and tax obligations with confidence
- Why even a small profit allocation is a powerful first step
Links mentioned:
debhalliday.co.uk
Companies and resources featured:
Lloyds, Barclays, Starling, Monzo, Mike Michalowicz, HMRC
Transcript
Welcome to Profit first with Deb Halliday.
Speaker A:That's me.
Speaker A:I'm Deb.
Speaker A:I'm a Profit first professional and trainer, author of how to Build a Financially Healthy Business, founder of the Accounts Ladies, an award winning accountancy practice and the Accounts Office Training Academy.
Speaker A:This is the show for business owners who want to stop stressing over money, keep more cash, pay themselves more and build a business that truly thrives.
Speaker A:Just a quick note, Profit first is a licensed methodology.
Speaker A:Everything here is designed to help you implement it in your own business.
Speaker A:If you're interested in helping others with Profit First, I'll share how you can apply to become certified too.
Speaker A:Let's get started.
Speaker A:Because your business should work for you, not the other way around.
Speaker A:Welcome back to Profit first with Deb Halladay.
Speaker A:I'm Deb Halliday and today we're getting practical how to set up your Profit first system to make your UK business profitable.
Speaker A:From day one.
Speaker A:Grab a cuppa and let's dive in.
Speaker A:Last episode we talked about why Profit first flips the traditional business formula, taking profit before expenses.
Speaker A:Today we'll set up the system.
Speaker A:The core idea is simple.
Speaker A:You'll use multiple bank accounts to manage your cash flow.
Speaker A:Think of it like envelopes for budgeting, but for your business.
Speaker A:Here's how to start.
Speaker A:First, open five bank accounts with a UK bank.
Speaker A:Most high street banks like Lloyds, Barclays or digital ones like Starling work great.
Speaker A:Label them.
Speaker A:Income, profit, owner's pay, tax and operating expenses.
Speaker A:When money comes in, say a 5,000 pound client payment, it goes to the income account.
Speaker A:Then twice a month, Mike recommends the 10th and 25th.
Speaker A:You allocate percentages to each account.
Speaker A:What percentages start small.
Speaker A:Mike Michalowicz suggests target allocation percentages, taps.
Speaker A:But as a UK business, you'll tweak these.
Speaker A:For example, profit 5 to 10% to build your cushion.
Speaker A:50% for sole traders or directors salaries.
Speaker A:Tax 20 to 30% to cover pay or corporation tax operating expenses.
Speaker A:The rest may be 30 to 40%.
Speaker A:For a UK twist, that tax account is critical.
Speaker A:If you're VAT registered, you're setting aside 20% of relevant sales for HMRC.
Speaker A:For example, a graphic designer charging £10,000 plus VAT allocates £2,000 to the VATC account right away.
Speaker A:No more last minute tax scrambles.
Speaker A:You might be thinking my bank charges fees for extra accounts.
Speaker A:Fair point.
Speaker A:Digital banks like Monzo or Starling often have low or no fees.
Speaker A:And you can set up pots instead of separate accounts.
Speaker A:The key is separation.
Speaker A:Keep profit and tax untouchable Review your real revenue.
Speaker A:Look at your last three months income excluding VAT and calculate your current percentages.
Speaker A:If you're spending 90% on expenses and keeping 0% for profit, don't worry.
Speaker A:Start with 1% for profit and adjust monthly.
Speaker A:Over time you'll trim expenses and grow that profit percentage.
Speaker A:This week, Open at least one new account for profit and transfer 1% of your next invoice.
Speaker A:It's a small win that builds momentum.
Speaker A:Next episode, we'll tackle common mistakes UK businesses make with Profit First.
Speaker A:Subscribe now and let's keep your business thriving.
Speaker A:Thanks for tuning in to Profit first with me, Deb Halliday.
Speaker A:If you found today's episode helpful, please subscribe, leave a review and share it with another business owner who needs to hear this.
Speaker A:For more resources, courses and to connect with me, head to debhalladay.co.uk and remember, when you put profit first, you build a business that reduces the stress while it supports your goals and dreams.
Speaker A:See you next time.
Speaker A:SA.
