Are you paying yourself consistently in your business? This is an issue that many entrepreneurs face. For me, Profit First truly shifted the way I do business. Listen in as I share how implementing Profit First allowed me to become the CEO of my photography business and pay myself consistently while also giving greater purpose to my work.
One question I’ve heard when coaching business owners is: Will Profit First work for photographers? And creative service pros like coaches? I’m proof that it does and today I’m going to share more about the journey of how I implemented this into my own business.
This conversation originally took place on my friend Val Marlene’s podcast.
Listen to this episode now:
Search for episode 114 of Called to Both on your favorite podcast player!
Getting Started with Profit First
Becoming a business owner was a calling for me, driven by the need to provide for my family and the desire to do creative work for a living. However, I dreaded checking my bank account and often avoided my finances. Then a trusted mentor suggested I read Profit First. I had heard the book mentioned numerous times and eventually decided there must be a good reason for it.
Implementing the Profit First method was a game-changer for me, and now I encourage my clients to read it too. It transformed the way I view myself from being just a visionary creative to feeling like a true CEO of my business.
What I love most about the Profit First method is how it organizes my money, assigning money to specific purposes. Although it was an adjustment to get used to at first, and I didn’t initially understand the need for a separate account for business profits, it has become a major part of my financial management.
Now, I can use those profit distributions (different from owner’s pay) for something special for my family, which is incredibly rewarding.
Getting Your Spouse on Board with Profit First
Early in my business I remember my husband asking if we could transfer any of the money my business had made to our personal bank account. I was forced to admit I wasn’t sure. I was hesitant because I wasn’t sure what types of things I needed to budget and plan for.
I wanted to feel confident around my finances so this was a major push for me to read Profit First.
When I shared some of the concepts with him, my husband was immediately supportive of the Profit First method. He read the book himself and even helped me set up all the necessary accounts.
Not only did this help my husband see the success I was building in my business but it’s also happened for my clients too. Over time, seeing the consistent income my clients can pay themselves often helps their spouses understand and appreciate the method.
Profit First can make the financial aspects of your work more tangible to your family.
Dividing Yourself From Business with Profit First
One of the greatest benefits I’ve experienced with the Profit First method is that it has helped me create a clear separation between myself and my business. Having the dedicated accounts for my pay and a separate one for my owner’s pay specifically establishes a healthy boundary and prevents me from becoming too enmeshed in the business.
This boundary allows me to view my accounts objectively and ask critical questions like:
- How long can the business go without making money?
- Can we afford a coach? Or another education investment.
- Can we afford to outsource some things or hire a VA?
The Profit First method makes it much easier for me to make informed decisions for my business, particularly when it comes to investments. Instead of relying on my feelings, I can base my decisions on concrete financial data.
My Own Profit First Percentages
When I first started using the Profit First method, my operations percentage was much higher than recommended, around 60%, while my profit percentage was low, only about 1% (while the book recommends 5%). My owner’s pay percentage was also smaller than it should have been, which really highlighted the scalability issues in my business.
Seeing these numbers helped me to know it was time to raise my prices, and make some hard choices about some software and investments I had planned to spend on.
For the first year or two, I made gradual adjustments to my percentages until I reached a more balanced distribution. Currently, my percentages are:
- 40% operations
- 40% self pay
- 5% profits
- 15% tax
I still aim to reduce my operations percentage further and increase my self-pay percentage.
*Edit: Since this podcast recording, I have adjusted my Owner’s Pay: increasing it an additional 5% and lowered operations by 5%, getting me even closer to the book’s model.
Three Common Misconceptions About Money
First, many creatives struggle with a poor money mindset, believing they shouldn’t charge for their creative passions or the things they’re gifted in. This mindset leaves you exhausted and broke. Remember, you deserve to be compensated for your talents.
Second, creatives often limit their pricing because they feel it’s wrong to charge too much. The Profit First method can help remove the moral dilemma from charging for your work, making it easier to set fair prices.
Finally, many photographers assume that the first few years of business will be more expensive than the later years, but that’s not true. Business expenses don’t necessarily decrease over time, which is why the Profit First method can provide significant peace of mind. It teaches you to live and spend sustainably from the start.
Money Advice
Start paying yourself every two weeks — even if it’s a small amount. You need to master cash flow if you want your business to be around for a long time.
If you’re enjoying the content we’re creating on the podcast and want to connect with others who are called to both, make sure you come join us in the PhotoBoss Facebook Group!
Mentioned in this Episode:
Creative Income Cure with Val Marlene
Connect with Joy:
Instagram: instagram.com/joyymichelle
Youtube: youtube.com/channel/UC-Ou6jRKxcjMrVMxWxLO_fQ
Facebook: facebook.com/joymichellephotography
Coach with Joy: joymichelle.co/coaching
If you decide to use any of the links above and buy through them, I’ll receive a small commission back. All of those affiliate income commissions really add up over time and help generate revenue to help support this podcast.
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