Erika Jones, CFO, CCTAProfit First Professionals · Certified Fractional CFO and Profit First Professional

What are 'TAPS' in Profit First? Episode #3 'Under The Covers'

22 Oct 2019 · 0 min

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0:14

In this brief Q&A, Speaker A asks about "taps" in the context of the Profit First financial system. Speaker B explains that TAPS stands for Target Allocation Percentages, which are benchmark percentages derived from the fiscally elite companies across all industries. These percentages represent ideal allocation targets for profit, owner's pay, taxes, and operating expenses. The speaker emphasizes that businesses should not start at these target levels; instead, they should begin with their current allocation percentages and gradually adjust upward over time, aiming to reach the TAPS within a year or two. The exchange clarifies that TAPS function as goal percentages rather than immediate starting points.

So under the COVID can you tell me about taps? What does it mean? How do I use it?
So there's tapping where you can tap your body. There are people actually do this. It's not that. Taps in profit first terms is an acronym for Target Allocation Percentages. These are percentages that I did some research as I was writing the book to determine what the fiscally elite companies do, the healthiest of all companies in all industries. So it's not industry specific, it's in any industry. And reveal these in the book. And as a implementer of Profit first, and I hope you do it, these are simply targets you can set for your business to achieve one day. The mistake that people make is they say, I need to start at the taps. Do not do that. These are what the fiscally elite do. We're going to start wherever you are today. So maybe you've never had profit before. We'll start low and then we'll grow it slow toward ultimately hitting those taps, maybe in a year or two from now. But that's what we're targeting, not where we're starting.
Perfect. So it's like a goal.
Yep. All right, back under the covers.