Welcome to This Week’s Profit First Accountant Newsletter! Estimated Read Time: 8 Minutes It’s Stephen Edwards from Gro Profit First Accountants, and welcome to this week’s Profit First Accountant Newsletter. Introducing The Gro Academy Welcome to The Gro Academy—this is your introduction to Profit First. Now, this is designed for two types of people. Firstly, if you’re completely new to Profit First, the aim is that by the end of this, you’ll clearly understand what it is, why it matters, and how it can genuinely improve your business. Secondly, if you’ve decided to work with us, or you’re about to, then this is your starting point. We’ll be implementing this with you step by step, but what I want to do here is give you some quick wins so you can get started straight away. Either way, there’s value here. Because the reality is, most business owners don’t necessarily have a knowledge problem—they have a structure problem. They might be generating revenue, they might even be growing, but there’s no clear system behind the money. And that’s where things start to fall apart. That’s exactly what Profit First is designed to fix. The Story Behind Profit First Profit First comes from a book by Mike Michalowicz. He built and sold a successful business for millions and believed he had the formula cracked. But when he reinvested into multiple businesses, everything went wrong. He lost the money. There’s a moment he talks about where his daughter gave him her piggy bank because things had got that bad. And that’s when he stepped back and asked: Where do business owners actually go wrong with money? What he discovered was simple but powerful: Turnover is vanity, profit is sanity. Just because your revenue is growing doesn’t mean your business is healthy. What Is Profit First? We’re all taught the same formula: Sales – Expenses = Profit On paper, it makes perfect sense. But in reality, what happens is: Expenses come first Profit comes last And when profit comes last, it often doesn’t happen at all. Profit First flips that: Sales – Profit = Expenses Now, at first, this can feel a bit unrealistic or even too simple. But if you think about it logically—especially if you were starting a business from scratch—it actually makes perfect sense. If your goal is to earn £40,000 and you expect to generate £100,000 in revenue, then naturally you’d say: That leaves £60,000 for expenses. That’s Profit First in action. The Real Problem (And Why Most Businesses Struggle) One of the biggest issues is behaviour. If you’ve got £10,000 sitting in your bank account, it feels like you can spend £10,000. So what happens? Costs expand Spending increases Profit disappears This is why so many businesses—despite decent revenue—are still struggling with cash flow. In fact, the majority of businesses are surviving on some level, and cash flow is usually the core issue. Profit First addresses this by putting structure and boundaries around your money. How Profit First Works (The Envelope Concept) A simple way to understand this is the envelope system. If you had £500 personally, you might split it into envelopes for: Rent Food Bills Spending Savings Each pound has a job. ...
