How We Prioritized Profit First in Our Business

For years, we ran our business the way most people do: money came in, we paid expenses, and whatever was left (if anything) was profit. The problem? There was rarely anything left.

We were growing. Bringing in more revenue each year. But somehow, we never felt like we were getting ahead. We’d have a great month and immediately reinvest everything back into the business. Then a slower month would hit and we’d wonder where all that money went.

Sound familiar?

The issue wasn’t that we weren’t making money. It was that we had no system for actually keeping any of it. No clarity on what was profit, what was needed for expenses, or what we could actually afford to pay ourselves.

Then we read Profit First by Mike Michalowicz and everything changed. The concept is simple: instead of treating profit as leftovers, you take it first. Before you pay anything else.

It forced us to run a leaner, smarter business. And honestly? It’s one of the best decisions we’ve made.

Here’s exactly how to implement it in your business.

Set Up Multiple Bank Accounts

You need five separate business accounts at the same bank:

1. Income – where all revenue lands first
2. Profit – money that stays in the business for emergencies and growth
3. Owner’s Comp – what you pay yourself
4. Tax – money set aside for quarterly taxes
5. Operating Expenses – what you actually spend on running the business

Use the same bank for all accounts so transfers are instant. And name them clearly—”Profit,” “Tax,” etc.—not “Business Checking 1, 2, 3.”

We use Novo for our business banking because they make it easy to open multiple accounts without fees. You can set everything up online in about 20 minutes.

Determine Your Allocation Percentages

Every time money hits your income account, you’ll split it up based on percentages. The book provides recommended percentages based on your annual revenue—smaller businesses will have different allocations than larger ones.

The key: your percentages should always add up to 100%. Every dollar that comes in gets assigned somewhere. Nothing sits in the income account.

Here’s an example of what this might look like:

If you have $5,000 come into your income account, you might split it like this:

• Move $250 to Profit (5%)
• Move $2,500 to Owner’s Comp (50%)
• Move $750 to Tax (15%)
• Move $1,500 to Operating Expenses (30%)

Your specific percentages will depend on your revenue level and business needs. The book has detailed charts to help you figure out your starting point, and you’ll adjust from there based on what actually works for your business.

Schedule Regular Money Transfers

Choose one day each month to move money from your income account into the other four accounts. We do it on the last day of the month. Some people do it twice a month. Pick what works for you and set a calendar reminder.

On transfer day, look at your income account balance. Use a percentage calculator (Google has one—just search “percentage calculator”) to figure out the amounts based on your chosen percentages.

Your income account should be empty (or close to it) when you’re done. Every dollar goes somewhere.

Spend Only From Operating Expenses

This is the rule that changes everything: you can only spend what’s in your operating expenses account.

Want to buy a new tool? Check the operating expenses account. Money there? Go ahead. Not enough? You either wait until next month or cut something else.

This creates clarity. You’re not guessing if you can afford something or “borrowing” from next month. You know exactly what you have to work with.

And here’s what happens: you get really intentional about what you spend money on. You start asking, “Does this actually help my business?” instead of just buying things that sound good.

Pay Yourself Consistently

Here’s what we did wrong at first: we moved money into owner’s comp and then just… left it there.

The point of owner’s comp is to pay yourself. Regularly. Like an actual job.

Decide how often you’ll pay yourself—weekly, biweekly, monthly—and transfer that money from your owner’s comp account to your personal account. Every single time, on schedule.

This is not optional. This is not “if there’s enough.” You already took the percentage. The money is yours. Pay yourself.

What Changes in Your Business

After a few months of using Profit First, here’s what changes:

You know your numbers. Not in a vague “things seem okay” way, but in a “here’s exactly what’s happening” way.

You stop living month to month. That profit account grows. The tax account grows. You have a cushion.

You make better decisions because you understand what you can actually afford versus what just sounds nice.

And honestly? You stress less. Money isn’t this confusing, overwhelming thing anymore. It’s just a system you follow.

Final Thoughts:

Don’t overcomplicate it. You don’t need fancy software or complicated tracking. Bank accounts, a percentage calculator, and a calendar reminder. That’s it.

Your percentages will change. What you start with isn’t what you’ll stick with forever. After three months, look at your accounts and adjust. Maybe you need more in operating expenses. Maybe you can bump up profit. The system is flexible.

It feels weird at first. The first month, you’ll probably panic about the “small” amount in your operating expenses account. That’s normal. Stick with it for three months before you judge whether it’s working.

The book is worth reading. We’ve given you the basics here, but the book goes deeper into the psychology and the why behind the system. Grab it if you want the full context and the detailed percentage charts based on your revenue level.

Start Small, Start Now

You don’t have to be perfect at this. You don’t have to have everything figured out.

Just open the accounts. Pick your percentages. Set your transfer day. And start.

Three months from now, you’ll have more clarity about your business finances than you’ve ever had. And that clarity? It changes how you run your entire business.

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Looking for more ways to streamline how you run your business? Check out our Showit templates and resources designed to help you work smarter.