How do I implement Profit First if I have debt in my company?
Let's have a little chat about debt.
Have you taken on extra debt to get through the ups + downs of the COVID economy? One of the big discussion points among the Profit First Professionals community when the pandemic first led to shutdowns + stimulus packages was "do we advise our clients to take on extra debt or draw down on credit lines?". It's pretty counter to the DNA of Profit First where we really encourage our clients to become debt-free. Yet, these were unusual times + cash is paramount to getting through.
Some of my clients did have debt or took on extra debt. Yet, with the implementation of the Profit First cash flow management system, they are now paying down that debt. We have created a "debt killer" bank account whereby they take a set percentage of their weekly revenues + allocate that to their debt killer account. Next step is to transfer the debt killer balance to their credit card ($3.5k in 3 weeks for one client), or their line of credit ($1.5k extra! in 2 weeks for another client).
An objection I often hear is: "My business has debt. I can’t be profitable until I pay off all my debt." To which I say "Wrong! In fact, the only way to pay off debt (which is simply past expenses that you haven’t paid for yet) is to be profitable. You must currently make more than you are currently spending, so that you have current profits. Then you use those profits to pay off your debt (past expenses)."
Have you been hesitating about implementing Profit First in your business because of the debt you have? Book a complimentary strategy call with me so we can map out a plan.