Why Your New Year’s Resolution Should Be “Profit First” in 2025

If you're like most small company owners, you've undoubtedly said it a thousand times before: "This year, I'm going to finally increase my revenue!"

That's a good desire; who doesn't want to see more numbers on their statements? But what if we told you there's something much more important than increasing your revenue?

It's called profit, and putting it first should be your top New Year's objective in 2025.

Wait, aren't revenue and profit the same?

In one word, nope.

• Revenue refers to the amount of money collected from sales before expenses are incurred.
• Profit is the remaining amount after accounting for operational costs, salaries, taxes, and personal expenses.

High revenues may be thrilling. It looks fantastic on a headline or a conference stage. However, unless you are a VC-backed tech company with a long runway, you cannot rely only on income. Real companies need real earnings to live and develop.

Why "Revenue At All Costs" might be a trap

Assume your company generated $500k in revenue last year but spent $520k on costs. That puts you in the hole by $20,000. Not a pleasant place to be.

While it's tempting to pursue that large sales number, remember this:

• Increasing spending without a clear route to profitability might be ineffective.
• Profitability and cash flow are inherently linked. If your spending exceed your incoming funds, even briefly, you may have significant setbacks such as missing payroll, late vendor payments, or worse.

What Does a "Profit First" Mindset Look Like?

The idea is simple: pay yourself (and your profits) first.

• Instead than relying on monthly or quarterly profits to pay costs, plan ahead of time and budget accordingly.
• This changes your mentality from "I hope there's something left over for me!" to "I'll take my cut first, and make sure I don't overspend on the rest."

Practical Profit Tips First

1. Create a second "Profit" account: When income arrives, instantly transfer a specific proportion to this account.

2. Pay your bills with what's left over: You'll be compelled to operate a leaner, more efficient organization since there's less to burn.

3. Make incremental changes: Begin small, maybe 1% to 5%, and progressively expand as your company adjusts to functioning more effectively.

New Year, New Financial Mindset!

If you've ever felt like you're on a revenue hamster wheel, going faster but never gaining ahead, this is your cue to get off. The new year is an excellent opportunity to take a fresh strategy that emphasizes your bottom line above vanity metrics.

"But My BusinessNeedsto Spend Money to Make Money"

Sure, some expenditure is inevitable, particularly if you want to grow. The difference is that you are strategic about your expenditure and ensure that it does not endanger your long-term profitability.

For a tech business aiming for a billion-dollar value, short-term income may be the most important factor.

Consistent profitability is crucial for small and medium-sized businesses to maintain stability, growth, and peace of mind.

How We Can Help You Prioritize Profit

Implementing a "profit first" approach might be challenging. But this is precisely why having an experienced financial partner is so important.

• We'll help you create realistic earnings objectives. No guessing, just data-driven insights.
• We will teach you ways to reduce expenditures. Because every dollar saved goes into the profit account. 
• We will hold you responsible for achieving your goals and increasing your bottom line.

Make "Profit First" Your 2025 Mantra

Reimagining your finances may not be as dramatic as introducing a new product or tripling your social media followers, but it will accomplish something much more important: it will safeguard your company's future.

Are you ready for a game-changing fiscal year?

Let's start 2025 by creating a lucrative, sustainable firm that is unwaveringly focused on your bottom line.

Contact us to set up a time to talk about if "profit first" should be your most important New Year's goal yet.

Here's to a new year in which your money account reflects your hard work. Cheers to profit first, and also to you!