When in Doubt Open an Account

“When in doubt, add an account.” Profit First Professional’s Chief Profit Guide, Billy Ann Grigg, discusses the concept of adding additional bank accounts to the Profit First system when necessary. 

They highlight the importance of setting up accounts for specific purposes, such as a drip account for managing seasonal income, a payroll account to ensure you never miss paying your employees, and an account for large annual expenses like insurance or subscriptions. 

They stress the need to track the return on marketing expenses and allocate funds for education and travel. The episode emphasizes the importance of allocating funds to different accounts to ensure financial stability and clarity in business operations.

TIMESTAMPS:

• [00:45] Importance of additional accounts in the Profit First system 

• [01:47] The role of a drip account in stabilizing cash flow, managing retainers and allocation from the drip account 

• [08:09] Setting up a payroll account to ensure timely employee payments. Identifying payroll bloat and making staffing adjustments 

• [11:16] Tracking ROI on marketing expenses and setting up a marketing account 

• [16:38] Avoiding credit card expenses by having the money ready for large expenses 

• [21:24] Allocating for education and memberships 

• [22:53] Travel accounts for business trips and in-person events 

KEY TAKEAWAYS:

• Establishing dedicated bank accounts for specific purposes within the Profit First system helps maintain financial stability and clarity in business operations.

• Accounts like the drip account, payroll account, and marketing account are essential for managing seasonal income, ensuring timely employee payments, and tracking the return on marketing expenses.

• Allocating funds for large annual expenses, education, and travel helps businesses plan and budget effectively, reducing financial stress and improving overall profitability.