Ep. 130 Mastering Profit First: A Comprehensive Guide to Allocating Funds for Financial Success
- Danielle Mulvey
- July 19, 2023
In today's episode, Danielle Mulvey guides us through the fundamental process of allocating funds in the Profit First system. Additionally, she highlights the contrast between Profit First and Advanced Profit First. Danielle provides an extensive overview of the three phases and the twelve steps that lead to financial success. It's important to note that Profit First is not a "set-it-and-forget-it" approach. The podcast also includes answers to viewers' questions. Make sure to have a pen and paper handy, as valuable tips are shared in today's episode.
IN THIS EPISODE:
[02:42] Danielle explains why you should do your allocations twice a month
[04:48] There are five common Profit First accounts, and it’s essential these accounts are opened.
[07:48] Danielle answers a viewer's question about the necessity of having a financial accounting system to go along with the banking accounts.
[09:31] What is the difference between Profit First and Advanced Profit First, and what other accounts are required
[14:25] Danielle answers the viewer’s questions about how to add a reserves account to purchase inventory, and she explains the difference between the cost of goods and operating expenses
[20:09] Danielle explains how to implement Profit First step by step
KEY TAKEAWAYS:
If you don’t open the five bank accounts suggested by Profit First, you don’t have a business. You have a hobby.
Advanced Profit First is strongly advised when you pay sales tax or when you have the cost of goods.
Don’t overspend on marketing. Only spend what is allocated in the marketing account.
