What should I do with my Profit First,
Profit Account balance?
I remember one time we were traveling through Las Vegas. When we checked in, the hotel we were staying at gave us each a roll of coins for the slot machines. I’ve never been much interested in gambling so I just fed my coins into the slot machine, and soon they were gone. My wife, on the other hand, won several dollars on her machine. I said, “Hey that’s great! Let’s go get some food!” No way, she thought she could do better. So she fed all her winnings back into the slot machine, and sure enough, soon they were all gone.
If you’re not intentional, your business can become just like that slot machine. When you get some winnings, it’s tempting to put it back into the business and gamble a bit on winning even more. But that’s not often what happens.
It is important that you quantify and do something useful with your business winnings (YOUR PROFIT)!
Ok, so you’ve been working our “Profit First Cash Management System (PFCMS)” for a few months, and now you’ve accumulated some funds in your “Profit Account.”
Now what? Hey, we’ve got some good ideas for you!!
You already know that we use our PFCMS as an excellent tactical cash management tool. But we also can use it as a strategic execution tool. How?
Well, after designing your company’s strategic objectives, it behooves you to determine what funding might be required to bring them into reality. And that’s where your profit account comes in. When it comes time to execute a strategic objective, you should already have the funding mechanism in place by having the funds available in your Profit Account.
Any Other Ideas for your Profit Account?
Oh yes! Here are some specific ideas for you to consider:
- Fund business expansion
- Buy or replace fixed assets
- Pay down business debt
- Pay down personal debt (student loans, credit cards, car loans, home mortgage, etc.)
- Add money to your retirement account
- Go on vacation
- Create an education fund for kids/grandkids
The point is that you should take your winnings off the table and employ them elsewhere. If they stay in your business, they will tend to get carelessly spent.
