Habits Lead to Success: Profit is a Habit
It’s that time of year. You’ve been working like crazy to take advantage of Q4. I’m seeing lots of talk in the forums about changes in Amazon and algorithm changes, etc., which may feel a bit overwhelming. Add to that, the holidays, bringing additional fun (and pressure) to make the experience special for your family. How do you get through it all? I think it comes down to habits.
Evaluate Your Habits
It’s been shown that our habits each day make up our behaviors. When our habits are in alignment with our goals, their consistent performance are the biggest factor in achieving those goals. This is why athletes and musicians practice, practice, practice!
As you prepare to look at your year-end numbers and evaluate your performance, look deeper and evaluate your habits. Are your daily behaviors setting you up to meet your goal? This is one of the reasons I find Profit First to be so helpful. With all the uncertainty in business, the consistent approach to money management makes it a habit. I don’t have to think about what to do daily because I spent time earlier developing that strategy. Now it is time to execute the strategy.
Perform a Profit Assessment
By performing a Profit Assessment, I developed the allocation percentages that set my baseline and give me the Target Allocation Percentages that I will use during the quarter. The rhythm around how I manage my money in my business is consistent and is handled every two weeks. This doesn’t take a lot of time because I made the decisions when I first completed my Profit Assessment. It becomes a 15-minute task, at most.
The allocations from incoming funds into the unique buckets basically sets my spending levels. Setting aside my profits, paying myself and reserving funds for taxes, are habits that make managing my personal and family life easier. Taking a quarterly distribution from my Profit Account gives me a reason to celebrate my efforts in my business. It rewards me and my family for some of the entrepreneurial obsession that we all experience that takes us away from family at times.
Live Within Your Means
The allocation dollars to Operating Expenses sets my budget, and I live within my means. Sure, that can get difficult each period, but it puts some boundaries around my business that lets me know almost immediately when the money coming in or going out is not in alignment. Dealing with these issues early keeps me from burying my head in the sand and living in the land of hopes and dreams. It puts me in the driver’s seat to resolve the issue while it’s a molehill, not a mountain.
Create a Framework for Habits with Profit First
Managing money is never simple. Profit First is a simple system and it won’t resolve all the money issues. It will, however, put a framework and habits around your money that make your attention to your money more deliberate and consistent. And with these early warning bells in place, it ensures that your habits are setting you up for success.