Mike Michalowicz answers whether existing cash in a business should be reallocated when adopting Profit First. The answer: leave it as is or move it to the OPEX account for simplicity. Apply Profit First percentages only to new money coming in after you start the system.
Welcome to Ask Mike. I am Mike Michalowicz, the author of Profit first and the Pumpkin Plan. This question came in from Ryan Moore, who has read both books. He started off the Pumpkin Plan, scaled his business. Now he's looking to implement Profit First. But he's got a challenge. He has money in the business right now. What do you do with your existing money? Ryan asks. It's real simple. Just let it play out in your business how you've always been using it. You can simply move it to your OPEX account if you wish and just store it there. But every deposit going forward you do find. The Profit first system goes into income. Then it gets allocated out any money you had prior to implementing Profit First. Just play it out as you were before. That's it.
