How to kill two birds with one stone Using Profit First to Achieve Your Strategic Objectives

| Categories: Building Strategy , Business Tips , Profit First , Profit First Coaching

Blog by Fuel Accountants

 

 

Did you know we can kill two birds with one stone? Well, I’m about to tell you how!!

One of THE biggest challenges facing small/medium businesses (SMB’s) centers around tactical cash flow management and achieving strategic objectives.

How can you balance short term cash management with long term strategy? We do have a solution for that. It’s called our Profit First Cash Management System (PFCMS).

When our clients (and us, too because we use this system in our business) employ Profit First, we can manage short term cash requirements, and at the same time, store cash to meet long term strategic goals.

How do we do that? Simple!! 

  • First we define the long term goals of the business. Will you be expanding the business? Replace current big ticket items like technology or equipment, etc. 
  • Next we determine how much will be needed to fund those objectives, and when they will need to be funded.
  • Finally, we build the timing and amounts into your PFCMS allocation percentages.

And that’s it. You now have a business expansion plan with a funding mechanism in place. That wasn’t so bad, was it?

Here is an example:

  • Let’s say you want to expand your business offerings. And in order to do that, you will need to add two employees, one in sales, and one in operations.
  • We all know that adding employees also means you’ll need to add technology, a desk, etc.
  • You will also have a ramp up period in which you’ll be spending money before the additional revenue comes in from the expansion.
  • Now that we know the amount needed and the timing to have it, add a “Business Expansion Bank Account.” 
  • Finally, we look at your existing PFCMS percentages, and add the appropriate allocation percentage to start adding funds to this new account.

Now you can sit back and let the system work for you and fund that expansion as you go back to your business as usual.

If you’re not taking advantage of using our PFCMS in your business, give us a call. We can help you get started!!

 

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