Navigating Cash Flow Challenges: A Step-by-Step Approach to Profit First
Ready to take control of your business finances and finally put profit first? In this episode, I’m breaking down the core principles of the Profit First methodology and showing you how these simple shifts can help you stay on top of your cash flow, reduce stress, and build a business that truly works for you.
I’m Deb Halliday, Profit First Professional, and I’ll walk you through how the Profit First system helps business owners move from financial firefighting to feeling confident and in control. We’ll talk about why traditional accounting often leaves profit as an afterthought—and how flipping the formula helps you prioritise your own financial goals.
You’ll learn how to set up multiple bank accounts for profit, owner’s pay, tax, and operating expenses, and why this structure is so effective for UK business owners. I’ll share practical tips for setting up your accounts, finding the right banks (including options like Starling, Monzo, and Tide), and creating a simple, sustainable routine for allocating your income—ideally twice a month, in line with your business’s natural financial rhythm.
By the end of this episode, you’ll have a clear action plan: open a dedicated profit account and start allocating a small percentage of your income to it. It’s a small step that can make a massive difference to your peace of mind and your bottom line.
Takeaways:
- Discover how Profit First can transform your approach to business finances.
- Learn the power of allocating funds to specific accounts for profit, tax, owner’s pay, and expenses.
- Get step-by-step advice for setting up your accounts and building a routine that works for you.
- Understand why rhythmic, twice-monthly allocations make cash flow management easier.
- Take action today—open a profit account and start building a more resilient business.
Links mentioned:
financiallyhealthybusiness.co.uk
debhalladay.co.uk
Companies and resources featured:
Accounts Ladies, Accounts Office, Profit First, HMRC, VAT, Starling, Monzo, Tide, Santander, NatWest, Lloyds, Barclays
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 Halliday.
Speaker A:I'm Deb Halliday, your UK Profit first professional.
Speaker A:And today we're diving into chapter two of Profit First.
Speaker A:How Profit first works.
Speaker A:If you're tired of living, check to check.
Speaker A:This episode will show you a simple system to take control of your cash flow.
Speaker A:Grab a notebook and let's get started.
Speaker A:Last episode we talked about taming the business beast.
Speaker A:Today we're learning how Profit first flips traditional accounting to make profit a priority.
Speaker A:Mike Michalowicz got the idea from a diet trick.
Speaker A:Smaller plates.
Speaker A:If you use a smaller plate, you eat less because you fill it with what fits.
Speaker A:Profit first does the same for your business money.
Speaker A:Instead of one big bank account where you spend everything, you use small plates, separate accounts to control cash flow.
Speaker A:The Profit first formula is simple.
Speaker A:Sales minus profit equals expenses.
Speaker A:You take profit first, then run your business with what's left in the uk.
Speaker A:This is a lifesaver.
Speaker A:With HMR C deadlines, VAT and rising costs, you need a system to avoid cash crunches.
Speaker A:Here's how it works.
Speaker A:Set up four bank accounts.
Speaker A:Profit, owner's pay tax and operating expenses.
Speaker A:Every time money comes in, you allocate a percentage to each.
Speaker A:Let's say you're a London graphic designer earning £5,000 from a client.
Speaker A:You deposit it into an income account, then split it.
Speaker A:5% to profit, 250, 30% to owners pay.
Speaker A:A CAM is 520% to tax, 1,000 pounds and 45% to operating expenses, 2,250 pounds.
Speaker A:The tax account covers income tax so you're never caught out.
Speaker A:The profit account builds a cushion and owner's pay ensures you're paid consistently.
Speaker A:Make sure you remove any VAT first and put into a VAT pot.
Speaker A:It's not your money, so it should not be included in the rest of your allocations.
Speaker A:But what if my bank charges fees for extra accounts?
Speaker A:Great question.
Speaker A:In the uk, digital banks like Starling, Monzo or Tide offer free or low cost accounts.
Speaker A:You can use pots within one account.
Speaker A:If fees are an issue, the key is separation.
Speaker A:Keep profit and tax untouchable.
Speaker A:Mike suggests setting profit and tax accounts at a second bank like Santander or NatWest to avoid temptation.
Speaker A:Chapter two also introduces the rhythm.
Speaker A:Allocate funds twice a month on the 10th and 25th.
Speaker A:This keeps you disciplined, like eating regular meals to avoid binging.
Speaker A:For UK businesses, this rhythm aligns with VAT quarters and payroll schedules.
Speaker A:You'll also pay bills from operating expenses only, forcing you to get leaner.
Speaker A:Your Action step Open at least one new account for profit this week if if you're with Lloyds or Barclays, ask about low fee options.
Speaker A:Transfer 1% of your next invoice to profit.
Speaker A:It's a small win.
Speaker A:Visit financially healthybusiness.co.uk Next episode we'll tackle chapter three facing the naked truth about your finances.
Speaker A:Subscribe now and share this episode with a fellow UK business owner.
Speaker A:Let's make profit first work for you.
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.
