🏆 Welcome to This Week’s Profit First Accountant Newsletter!

🕐 Estimated Read Time: 8 Minutes

It’s Stephen Edwards from Gro Profit First Accountants, and welcome to this week’s Profit First Accountant Newsletter.

Welcome to The Gro Academy—this is your introduction to Profit First.

Now, this is designed for two types of people.

Firstly, if you’re completely new to Profit First, the aim is that by the end of this, you’ll clearly understand what it is, why it matters, and how it can genuinely improve your business.

Secondly, if you’ve decided to work with us, or you’re about to, then this is your starting point. We’ll be implementing this with you step by step, but what I want to do here is give you some quick wins so you can get started straight away.

Either way, there’s value here.

Because the reality is, most business owners don’t necessarily have a knowledge problem—they have a structure problem.

They might be generating revenue, they might even be growing, but there’s no clear system behind the money. And that’s where things start to fall apart.

That’s exactly what Profit First is designed to fix.

Profit First comes from a book by Mike Michalowicz.

He built and sold a successful business for millions and believed he had the formula cracked. But when he reinvested into multiple businesses, everything went wrong.

He lost the money.

There’s a moment he talks about where his daughter gave him her piggy bank because things had got that bad. And that’s when he stepped back and asked:

Where do business owners actually go wrong with money?

What he discovered was simple but powerful:

Just because your revenue is growing doesn’t mean your business is healthy.

We’re all taught the same formula:

Sales – Expenses = Profit

On paper, it makes perfect sense.

But in reality, what happens is:

And when profit comes last, it often doesn’t happen at all.

Profit First flips that:

Sales – Profit = Expenses

Now, at first, this can feel a bit unrealistic or even too simple.

But if you think about it logically—especially if you were starting a business from scratch—it actually makes perfect sense.

If your goal is to earn £40,000 and you expect to generate £100,000 in revenue, then naturally you’d say:

That leaves £60,000 for expenses.

That’s Profit First in action.

One of the biggest issues is behaviour.

If you’ve got £10,000 sitting in your bank account, it feels like you can spend £10,000.

So what happens?

This is why so many businesses—despite decent revenue—are still struggling with cash flow.

In fact, the majority of businesses are surviving on some level, and cash flow is usually the core issue.

Profit First addresses this by putting structure and boundaries around your money.

A simple way to understand this is the envelope system.

If you had £500 personally, you might split it into envelopes for:

Each pound has a job.

Profit First works the same way—but using bank accounts or pots instead of envelopes.

When money comes in, you allocate it into different categories so you always know:

At a minimum, you should have:

All revenue comes in here. Nothing gets spent directly from this account.

This is your reward as the business owner.

This is not your wage—this is a separate pot that builds over time and is typically taken as a bonus quarterly.

This is what you live on.

It’s your regular income—the equivalent of a salary.

Money set aside so you’re never caught off guard by a tax bill.

This is what’s left to run the business.

This should always be separate.

Mixing VAT with your main account is one of the most common causes of cash flow stress.

The key idea here is:

Profit, Owner’s Pay, and Tax are all for you as the owner.

Most people cover the first two.

Very few consistently build a separate profit pot.

Let’s say £1,000 comes into your business.

Instead of seeing £1,000 to spend, you split it.

For example:

You do this weekly or fortnightly.

And over time, this creates a rhythm.

You stop guessing and start knowing.

Once this system is in place, your behaviour changes.

You become:

We’ve seen businesses:

It doesn’t eliminate challenges—but it makes them far easier to manage.

If you’re not ready to fully implement everything yet, start here:

Line by line.

Ask:

Most businesses will find immediate savings here.

Even just 1%.

It’s not about the amount—it’s about building the habit.

If you’re VAT registered, this is one of the biggest wins you can make immediately.

Use a bank that allows multiple pots (Starling, Monzo, etc.).

Keep it simple—but keep it separate.

Move your profit into an account that isn’t easy to dip into.

Out of sight really does mean out of mind.

Most business owners are working incredibly hard—but not always seeing the rewards.

Some are:

Profit First is about changing that.

It’s about creating a system that helps you:

Because ultimately, that’s what this is all about.

If you’d like help implementing this in your business, feel free to reach out:

[email protected]

Until next week—keep putting Profit First.

Stephen Edwards
Profit First Accountant & Business Coach

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