Mark Moss breaks down the Profit First system: split revenue into Tax (10-50%), Operating Expenses (percentage of revenue), and Profit (10-50%). Set fixed expenses as a dollar amount until you hit $100,000, then switch to percentage. Automate it with GetSequence and pay yourself before the business.
So for example, the tax bucket, as I said, it could be anywhere from say 10 to 50%. My operating expenses, I should understand that my operating expenses should stay a percentage of my revenue. And so whatever that percentage is in comes here. Now for the fixed expense, maybe it's not a percentage, maybe it's a fixed expense until I get $100K in this account, then it goes to percentage. So you can set a rule like that, but there's an app I use, it's called GetSequence, and you can map all this out and set all these rules automatically. And so I have a profit account filling up. This is based off of the book Profit First, which is I want to make sure that I'm paying myself first, just like the government gets paid first. I want to get paid first. And so I'm also putting aside this profit account here, and this could be whatever you think you can pull, 10 to 50% of profit out of your business, and that money starts collecting here. The way that I do this is I have myself my payroll. You need to have payroll of your own business, of course, for tax reasons. And then I have profit that comes out that's distribution.
