Profit First is a cash-flow management system that dental practices can implement easily to improve their financial security and the health of their practice. You can register for our Free Webinar, “Become A Profit Maximizer” by clicking here!
The system operates on the premise of paying yourself first while also putting away money for profit and taxes before you pay your operating expenses. This is counter-intuitive to normal human behavior where money comes in, you pay expenses, you keep whatever is left over. This is the traditional accounting formula:
Sales – Expenses = Profit
With the Profit First system, you are turning that formula on its head to pay yourself first.
Sales – Profit = Expenses
DON’T CHANGE HABITS, LEVERAGE THEM
Many dentists try to force themselves to become more disciplined in their fiscal management by pure willpower. But just like a muscle, willpower can be drained. And in a moment of financial stress or bigger than expected expenses, it’s human nature to break fiscal rules and spend the money you’ve saved.
The Profit First principle does not try to change your habits (that is nearly impossible to do), Profit First works with your existing habits. By first allocating money to different accounts, and then removing the temptation to “borrow” from yourself, your practice will become fiscally strong and you will benefit from regular profit distributions.
BANK BALANCE ACCOUNTING
Most dentists don’t have the time or gumption to read the different accounting statements necessary to manage the financial aspect of their business. Most resort to “bank balance accounting,” where they check their bank balance every day and make financial decisions based upon what they see. It’s natural to consume what is available in your bank account. Profit First encourages bank balance accounting by first allocating money to profit (and other accounts) so that you see the actual portion of deposits that are available for expenses and can then automatically adjust spending accordingly.
Are you ready to get started with Profit First? Download these free resources today: