Profit First: A Revolutionary Approach for UK Entrepreneurs
Profit First is a revolutionary methodology that transforms the traditional approach to business finance by putting profit at the heart of your financial strategy. I’m Deb Halliday, a certified Profit First Professional, and in this episode, I break down the core principles from Mike Michalowicz’s influential book—offering a lifeline for small business owners facing cash flow challenges.
This episode explores the fundamental tenets of Profit First, encouraging a complete shift in how you manage your business finances: profit comes first, not last. By establishing a simple system of allocating funds across dedicated accounts, you can ensure consistent profitability and reduce the stress of financial uncertainty. My aim is to provide you with actionable insights and practical steps to help you implement these principles, guiding you towards a more financially healthy business.
In the first episode of ‘Profit First with Deb Halliday’, we take a close look at this transformative framework and its relevance for UK business owners. I highlight the common financial pressures faced by entrepreneurs—fluctuating income, rising expenses, and the ever-present tax obligations—and explain how the Profit First approach can offer clarity, control, and confidence.
You’ll learn about setting up multiple bank accounts for profit, owner’s pay, taxes, and operating expenses—a practical system that encourages discipline and helps prevent overspending. Drawing on the guidance of Mike Michalowicz, I’ll show you how to integrate Profit First into your daily business routine, providing a clear roadmap to lasting financial well-being.
Throughout the episode, you’ll discover:
- Why prioritising profit before expenses is a game-changer for business owners
- How four simple bank accounts can transform your approach to money management
- The real-world impact of Profit First, with examples tailored to the UK business landscape
- Actionable steps you can take right now, no matter your business size or experience
I also acknowledge the unique challenges UK businesses face, such as managing VAT and tax obligations, and promise to address these nuances throughout the series. My goal is to demystify financial management and empower you to take control of your business finances with confidence.
Takeaways:
- Profit First helps you put profit before expenses, transforming your financial management
- Setting up four distinct bank accounts is key to success with Profit First
- The methodology is accessible to all business owners—no accounting background required
- Profit First is especially beneficial for UK businesses, helping you stay on top of VAT and tax
- Actionable steps are provided to help both new and established businesses achieve financial health
Links referenced in this episode:
financiallyhealthysbusiness.co.uk
debhalliday.co.uk
Companies mentioned in this episode:
Profit First
Accounts Ladies
Accounts Office Training Academy
Mike Michalowicz
financiallyhealthysbusiness.co.uk
debhalliday.co.uk
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 because your business should work for you, not the other way around.
Speaker A:Hello and welcome to the first episode of our podcast, Profit first with Deb Halliday.
Speaker A:I'm Deb Halliday, a certified Profit first professional based right here in the uk and I'm thrilled to kick off this series with a book review of Profit first by Mike Michalowicz.
Speaker A:If you're a small business owner, freelancer or entrepreneur struggling with cash flow, this episode will show you why Profit first is a must read and how it can transform your UK business.
Speaker A:Grab a cuppa and let's dive in.
Speaker A:Imagine this.
Speaker A:You're running a thriving bakery in Bristol, a tech startup in Manchester, or a freelance design business in Cardiff.
Speaker A:Your sales are decent, maybe £100,000 a year, but you're always stressed about paying bills, VAT or even yourself.
Speaker A:Sound familiar?
Speaker A:That's where profit first comes in.
Speaker A: Published in: Speaker A:It's a mindset shift that turns your business from a cash eating monster into a money making machine.
Speaker A:Mike's core idea is simple yet revolutionary.
Speaker A:Flip the traditional accounting formula.
Speaker A:Instead of sales minus expenses equals profit.
Speaker A:Profit first says sales minus profit equals expenses.
Speaker A:You take Profit first, then run your business with what's left.
Speaker A:Why is this a big deal?
Speaker A:Because Traditional accounting, called GAAP, leaves profit as an afterthought in the UK with VAT at 20%, corporation tax at 19% and rising costs then approach, let's leaves many businesses scraping by even when sales look good.
Speaker A:In the introduction, Mike shares his own wake up call.
Speaker A:After losing millions from his second company, he hit rock bottom when his daughter offered her piggy bank to help the family.
Speaker A:That moment inspired Profit First.
Speaker A:The book's first five chapters lay out the foundation.
Speaker A:Chapter one, Taming the Beast, compares businesses to monsters that grow uncontrollably eating cash, Mike introduces the survival trap chasing sales to cover expenses only to end up with no profit.
Speaker A:Chapter 2 How Profit First Works explains the system.
Speaker A:Set up four bank accounts, profit owner's pay tax, operating expenses and allocate percentages of every deposit is like using smaller plates to eat less.
Speaker A:Smaller accounts force you to spend less.
Speaker A:Chapter 3 the Naked Truth offers the instant assessment to face your financial reality, comparing your actual numbers to healthy targets.
Speaker A:Chapter 4 Choose your own Adventure helps you customize allocation percentages for your industry.
Speaker A:Chapter 5 Day 1/4, 1 year, 1 and forever provides a step by step plan to start small, allocate twice monthly and take quarterly profit bonuses.
Speaker A:You might be thinking why should I care about another business book?
Speaker A:Here's why profit first stands out for UK businesses.
Speaker A:It's practical, not theoretical.
Speaker A:Mike's storytelling, like his 15 million pound company owner with plastic lawn furniture, shows even big businesses struggle without profit.
Speaker A:Focus the the book's strength is its simplicity.
Speaker A:No accounting degree needed.
Speaker A:It's like a budgeting system for your business, tailored to human nature.
Speaker A:In the uk, where HMRC deadlines and VAT returns add pressure, Profit first ensures you're ready for taxes and still take home profit.
Speaker A:What makes the book a game changer?
Speaker A:It's actionable.
Speaker A:Mike gives clear steps like setting up accounts and cutting 10% of expenses that you can start today.
Speaker A:It's also universal working for new startups or established firms.
Speaker A:My only critique.
Speaker A:Some examples are US Centric, but as a UK Profit first professional, I'll bridge that gap in this series with local tips.
Speaker A:Your Action step Get a copy of Profit First.
Speaker A:It's on Amazon UK or Audible.
Speaker A:For busy entrepreneurs, skim the introduction and Chapter one this week to understand the monster in your business.
Speaker A:Visit financiallyhealthysbusiness.co.uk for a free PDF of the Profit First Core chapters.
Speaker A:Our next episode will dive into what it means to work with a Profit first professional.
Speaker A:Thanks for tuning in to Profit first with me, Deb Halladay 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.
