One of the ways to keep people out is to make stuff too complicated. That’s how I felt about business finances. It’s complicated for no reason, and only a select few who can do the mental gymnastics of understanding our country’s ridiculous tax code and generally accepted accounting principles can navigate.
The problem is that for small and growing businesses, generally accepted accounting principles may leave you broke and blind to how your business is really performing.
Your profit and loss statement can show a profit, even though your bank balance is zero. And your accountant will have the nerve to congratulate you with a straight face.
About four years ago, I rejected generally accepted accounting principles and switched to the Profit First method of managing revenue. In traditional accounting, you collect revenue, pay all your bills, then you get the leftovers. Those leftovers are your profit. Profit First flips this method upside down.
Here’s a brief description of how Profit First works
In short, Profit First is the envelope system, but with bank accounts.
You have at least 7 business bank accounts. The first is your income account. All revenue gets deposited there. The second account is for materials and subcontractors.
On the 15th and 25th of the month, the income gets divided up into the materials/subcontractors and the other five accounts. Each account gets a certain percentage of the revenue that’s left after you put aside what’s needed for materials/subcontractors.
Here’s a list of the accounts and some examples percentages:
| Profit account (This account gets its percentage first, hence the name) | Gets 25% |
| Payroll account | Gets 25% |
| Owners Pay account (Because you need to be paying yourself something) | Gets 10% |
| Operating Expenses | Gets 15% |
| Taxes | Gets 10% |
Before I started doing this, my business was strapped for cash, no matter how hard I worked. Now, I am able to take a quarterly bonus to do things like launch websites dedicated to helping Black Christian families.
Scriptures About How To Manage Your Business
Proverbs 6:6-11
Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler,
yet it stores its provisions in summer and gathers its food at harvest. How long will you lie there, you sluggard? When will you get up from your sleep? A little sleep, a little slumber, a little folding of the hands to rest— and poverty will come on you like a thief and scarcity like an armed man.
Luke 16:11
So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches?
Proverbs 10:4
A slack hand causes poverty, but the hand of the diligent makes rich.
Take your profit first
My financial advisor, Susanne Mariga, is a Black woman and one of the Profit First Advisors. She has an amazing book that’s specifically for Minority Business Enterprises.
When you always have money set aside for profit, you can tithe and sow into different areas as the Holy Spirit directs.
You can pay cash for land and real estate, so you don’t have to say the word “loan.”
I always know where my company’s revenue, profit, and expenses stand. My financial reports are simple, especially since my business has no debt. My bank account tells me how profitable my business is.
Successful, Black-owned businesses are critical for us to build communities that honor Christ and don’t bow down to satanic world systems.
Here’s a video of Susanne explaining the Profit First method. Leave your questions in the comments, and I will respond.
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