How do I switch accountants?
This is a well trodden path, and something accountants are used to dealing with. You provide us with the contact details for your current accountant and we then contact them to arrange a handover. It’s a process regulated by accountancy professional bodies, and it’s highly unlikely for it not to be a professional and amicable process.
How much does your service cost?
We’re proud of our completely transparent pricing. We’ll need to complete the discovery call so we can send you across a proposal which will detail each element of the service we recommend, plus any nice to haves we think you should consider. You’ll know exactly what the investment is, and the additional investment to flex up should you decide to defer some services until later.
We’re not local to you. Can you still provide us with service?
Yes. We can set up and support your team remotely. This is not a recent innovation for us, we were set up to work in this way as our name suggests. We will ideally meet up prior to making an offer of services. Occasionally this isn’t possible and we will instead arrange a face to face with in 3 months of beginning an engagement. We normally like to do this at your premises, as it helps us to understand your business if we see your operation working. You are of course welcome to our office by arrangement at any time.
Can you help me with personal finance issues?
Yes. We are also an Independent Financial Advisor, so can advise on pensions and other regulated areas. In fact, we don’t see how we can provide full value to you without considering your business and personal finances in the round, so this service is central to our work with our clients. We can alternatively work with an IFA of your choice, but we do recommend you make use of IFA services in order to ensure your interests are properly looked after.
Can you use different accounting packages than Xero?
No. We’ve decided to be experts in Xero rather than all things to all people. In our view, it’s the best package out there with a large third party market of add-ons. This means we’ll be able to fine tune it to suit your business. If you’re on a different package, we’ll manage the migration to Xero as part of the service, and provide support to your team to use it.
We just need year end accounts. Can you provide this service only?
We only produce year end accounts for companies we engaged with on an ongoing basis. If you just need a set of year end accounts, we’re not the partners for you, but we wish you every success in your business journey with a firm of accountants more suited to you.
What is Profit First?
It’s a cash management system that enhances frugality and innovation. There are four key principles that are analogous to dieting:
- Small plates: When you use a smaller plate, you take in fewer calories then you would otherwise. You start to lose weight.
- Sequencing: Start with the good stuff first. Satisfy hunger with vegetables rather than chips, leads to a healthier balance, and lower overall consumption.
- Remove temptation: Ensure the treats are inconvenient to get – you’ll eat less of them.
- Find your rhythm: Don’t wait until you’re hungry to eat, instead plan ahead to manage hunger, which avoids binging, and results in fewer calories consumed.
Profit First takes these principles and applies it to your company’s finances. The result is a leaner, fitter, and more profitable enterprise.
How does it work in practice?
By allocating income in specific percentages, to specific ‘plates’: Income, Profit, Tax, Owners pay and Operating Expenses. Money arrives in your Income account, and is then distributed to the other accounts (the % are established through an assessment of your business historic trading, and mapping this through to where the business should be in 18 months). The result is cash which is ringfenced for the running of the business. These percentages are tweaked over time, so that profit increases from say 1%, to 10% over 2 years, and OpEx decreases from say 70% to 45%.
As you’re now allocating cash to your profit account, you are starting to hard-wire profit into your business.
Payments to suppliers are made at pre-agreed intervals. We normally suggest day 10 and day 25 of each month, but this can be tweaked to work for you. The key point is that there is a predictability to your business cashflow now. Sounds good doesn’t it?
So I’ve got to decrease my costs? Big wow. I can do that without Profit First.
Of course you can and all power to your elbow if you do. But as you’re reading this, you probably haven’t done it yet. And that’s because it’s hard to do. Profit First provides a system to drive those behaviours which you know you should take, but it makes them clearer, and cuts them down into bite sized chunks, so that you get there securely and stay there. To extend the diet analogy, Profit First is embedding good habits which stick for a lifetime, as compared with a crash diet which delivers short term benefits, before all the hard work is lost as underlying habits haven’t been formed.
What if I don’t have enough money in my OpEx account to pay suppliers?
This is an early warning system that your business is incurring expenses it can’t afford. This is the point you go cut costs, get better value from vendors, and increase sales. Cutting costs is the low hanging fruit (hands up for those unused subscriptions anyone?). Get better value from your existing costs, so if you’re tied into a software product, what else can you get out of it. And then increase those sales – profitably of course.
Sounds like a lot more bookkeeping.
There are inter account transactions to post, but that’s all. We use Xero and set up rules so these transfers are processed automatically in the software.
How do I get started?
With an Instant Assessment. This requires analysis of the company’s P&L and balance sheet, and a review of the owners’ personal tax returns. From this, the current allocation percentages to the accounts mentioned above can be ascertained. Then we take industry benchmarks to establish what those percentages should be for a high performing company, and map the difference each quarter over 6-8 quarters. Now we can see the gap, and get started on closing it.
If our business is suitable for Profit First, how long does it take to complete the implementation?
Each client works at their own pace, and each implementation takes weeks. Integral to the approach is a one step at a time philosophy to ensure a high rate of success. You wouldn’t run a marathon with no lead up, and implementing Profit First is no different.
My business is already profitable. Can Profit First help me?
Yes. Your business will progress more quickly to the advanced strategies.
My business is loss making and has debt. Can Profit First help me?
Yes. 100%. It’s designed to help business’ chip away at debt effectively, whilst embedding those high value, profit making habits. Carrying debt isn’t a reason not to implement Profit First, it’s an urgent reason to start today.
Should Profit First be implemented retrospectively?
No. It should start the next time you get a receipt.
Profit First is American. Will it work for UK companies?
Yes. The book is US focussed but the principles are entirely workable in the UK. We have tweaked it where appropriate to make it UK centric, e.g. advising on the best UK banks to use. We use it ourselves, so we are walking the walk!
Can Profit First be used to assess a company for sale?
Yes. A Profit First Instant Assessment will shine a light into that company.
Can Profit First be used for start-ups?
Yes. Even better to get those good habits hard wired from day one.