One of the biggest challenges we see with business owners is not knowing where their money should be going each month. We have worked with many clients who were bringing in good revenue but still felt stressed because they were unsure how much to spend, how much to save for taxes, and whether they were actually making a profit. Once we helped them implement a simple allocation system, everything started to feel more clear and manageable.

Mike Michalowicz’s Profit First model flips traditional accounting on its head. Instead of Sales minus Expenses equals Profit, you think Sales minus Profit equals Expenses. This small shift makes profit a priority, not an afterthought.

Here is how to think about it:

Profit First Set aside 5 to 10 percent of every deposit into a profit account before you pay anything else. This money belongs to your business growth and your compensation. It is not optional.

Owner’s Compensation Pay yourself consistently from a dedicated account. Many businesses start with 30 to 50 percent of revenue allocated here, adjusted as your business matures.

Taxes Set aside 15 to 30 percent of every payment into a separate tax savings account. This ensures you are prepared when taxes are due without scrambling at year end.

Operating Expenses Whatever remains after the above allocations covers your business costs. This includes software, subscriptions, rent, marketing, and contractor payments. For most healthy small businesses, this target should fall between 30 and 50 percent of total revenue. If your current spending exceeds this range, it signals a clear opportunity to review expenses or focus on increasing revenue to bring the ratio down.

For example, if your business brings in 8,000 in a month:

• 400 to 800 goes to profit
• 2,400 to 4,000 goes to owner’s compensation
• 1,200 to 2,400 goes to taxes
• 2,400 to 4,000 remains for operating expenses

These percentages adjust over time as your business grows. The key is consistency and discipline.

When you start allocating your money this way, it becomes much easier to make decisions because every dollar has a purpose. You stop wondering if you can afford something and start knowing whether your business can sustain it.

We understand the pressure of managing cash flow while building something meaningful. You do not have to navigate this alone.

If you want help organizing your numbers and creating a system that works for your business, we would love to work with you. Reach out to learn how we can help you stay on track with your business finances and make better financial decisions.