Profit First to the Rescue
There was a time when every mention I made of Profit First may have drawn an eye roll or a chuckle from my team or those who know me. Why? Because they had heard it a thousand times before. Heard what, you ask? Oh, just my OBSESSION with the Profit First methodology and how geeked I was to talk about it (to anyone! to everyone!) because from the moment I implemented it in my business, I could see the magic happening.
Why I’m Bringing Up Profit First Again
I’m bringing Profit First up now, for a very specific reason. In case you missed it, I shared last week that “I was Robbed…Literally”. Yes, my business, Custom Ideation, was the unfortunate target of bank fraud and lost a significant amount of money to a scam. And, candidly, one of the only reasons the business can survive the loss is due to my diligent adherence to the Profit First method.
Why This Method Clicked for Me
Let me roll this back a moment and admit something: accounting was actually one of my least favorite subjects in grad school. To me, it was weird math and never made logical sense. When I discovered that Profit First took a non-traditional approach and departed from the ‘accounting math’ that befuddled me, I was intrigued. The math and analysis laid out by the author Mike Michalowicz made PERFECT sense to my brain, and I immediately got to work setting up the system he described. Within just a few months of following this approach, I had a much clearer understanding of my business’s money, which provided a strong foundation for making confident decisions about the business.
What Profit First Actually Does
At its core, Profit First turns the usual accounting formula on its head. Instead of Sales - Expenses = Profit, it works from the idea that Sales - Profit = Expenses. In other words, profit is not some magical leftover you hope is there at the end of the month; it becomes a priority from the start. With this approach, you separate your money with intention - setting aside percentages for profit, owner’s pay, taxes, and operating expenses so that every dollar has a purpose. What I loved about that approach is that it made the money make sense. It gave me structure, clarity, and healthier boundaries around spending, while helping me understand what the business could actually support. Over time, that translated into less financial anxiety, better clarity, and a much stronger foundation than I would have had otherwise.
It also meant that all my eggs weren’t in one basket.
Why the Separation Matters
The Profit First methodology doesn't just separate money into different buckets within your bank accounts - it moves profit and tax funds to an entirely separate bank. Out of sight, out of mind, and as it turns out, out of reach of the scammers. Because I had been consistently moving those funds to another bank, they were completely inaccessible when the fraud occurred. That separation, the cornerstone of the methodology, is what saved my business. Those accounts are now the bridge carrying me through as I rebuild and recover from the losses.
What Helped Me Make a Recovery Plan
In response to this unfortunate event, I crafted a “Bank Fraud Recovery Plan” and shared it with Laura Tackett of Agile Accounting, who is well-versed in Profit First and has been an incredible strategic partner and financial advisor to my business. Laura suggested a few thoughtful tweaks, and now, I am forging ahead and continuing to apply the Profit First approach as I work on rebuilding. This plan is helping me keep cash flow strategic, expenses under control, and the business steady as I reestablish our financial footing.
Why I Believe in It So Strongly
What I know for sure is this: Profit First did not prevent my business from losing money to scammers, but it absolutely changed what happened next. It gave the business a layer of protection, a plan for what comes next, and the breathing room to keep moving forward when things could have gone very differently. For all the times I may have sounded a little over enthusiastic preaching my love for Profit First, this is exactly why - I have seen firsthand what it can do for a small business. I am grateful for its magic, and I want everyone to know!
If I’ve piqued your curiosity, I’d love to have a conversation about Profit First. It really is a system I believe in and love to talk about.
