Maximise your business profits in 2025: Advanced Profit First techniques

One method gaining immense popularity among small business owners is the Profit First Method, a cash management system designed to ensure profitability from day one.

For 2025, we're diving deeper into Profit First automation to help your business thrive.

What Is the Profit First Method?

At its core, the Profit First Method flips the traditional accounting equation. Instead of Sales - Expenses = Profit, it prioritises profit first:

Sales - Profit = Expenses

By allocating a portion of revenue to profit before covering expenses, this system enforces financial discipline and ensures that your business's profitability becomes a non-negotiable priority.

Why You Need Automation in 2025

The business environment in 2025 is more competitive and technology-driven than ever. Costs are rising, customers expect more value, and the need for streamlined operations has never been greater. By refining your Profit First approach, you can:

• Increase financial clarity.
• Mitigate risks associated with economic fluctuations.
• Reinvest strategically to drive growth.
• And most importantly, save time and money...

Let's explore the advanced strategies you can implement today.

1. One-click setup, including Target Allocation Percentages (TAPs)

While the Profit First Method suggests baseline TAPs (e.g., 5% profit, 50% owner's pay, 15% taxes, 30% operating expenses), these should be tailored to your business's unique needs and goals. To customise:

• Analyse historical data: Review the past 12 months' financials to identify trends in income and expenses.
• Set stretch goals: Gradually increase your profit allocation by 1-2% every quarter.
• Factor in industry benchmarks: Compare your allocations to similar businesses in your sector to identify potential inefficiencies.

2. Leverage multiple bank accounts

Segregating funds across dedicated bank accounts ensures discipline and prevents misuse of allocated funds. Beyond the standard accounts (Profit, Owner's Pay, Taxes, and Operating Expenses), consider these additional accounts:

• GST: Set 10% of revenue aside automatically within Thriday
• Subcontractors: If you outsource work to contractors, some of the revenue received belongs to them. Setting this aside once revenue is received means you know exactly where you stand.
• Superannuation: As a small business owner, you may not be 'required' to pay superannuation, but it can be very tax effective, and it never hurts to have money set aside for later in life.

3. Implement quarterly profit distributions

Something Mike Michalowicz talks about a lot is the importance of paying yourself. As a business owner, you're the one who's made the hard choices, taken the risks, and put in the effort to get the business to where it is. That profit should be yours to do with what you see fit.

Instead of reinvesting all profits into the business, consider quarterly distributions to reward yourself and your team. This reinforces the habit of valuing profits and motivates everyone to focus on profitability goals.

• How to do it: At the end of each quarter, pay 50% of your profit account balance to your personal account.
• Why to do it: I talk about the psychology of this here: https://www.thriday.com.au/features/auto-allocations 

4. Automate Profit First allocations

Manual allocation can be time-consuming. Leverage Thriday to automate:

• Bank Rules: With Auto Allocations in Thriday you can set up simple rules to distribute a percentage of your revenue to a specific account wither immediately or to a set schedule.
• Accounting Software: Tools like Thriday can streamline your Profit First set up and your business.

~95% of your business accounting is automated if:

✅Your business income is coming into Thriday

✅Your expenses are going out of Thriday

✅You're saving your receipts to Thriday

✅and you've saved your assets and liabilities in Thriday

Your cash flow will be more organised than ~99% of small businesses if

You automatically allocate a set % of all revenue to dedicated bank accounts for:

✅Profit

✅Owner's pay

✅GST

✅Tax

✅and operating expenses

Thriday automates all of this. 🤖

You earn interest on every dollar in your Thriday accounts. 📈

It takes minutes to set up. ⌚

It's that simple.5. Audit Your Expenses Ruthlessly

5. Operating expenses often creep up over time. Conduct a quarterly expense audit to:

• Identify ALL non-essential costs.
• Negotiate better terms with vendors.
• Transition to more cost-effective tools and services.

Pro Tip: keep tabs on recurring expenses and eliminate unnecessary ones. They may seem cheap as line items but they add up over the year.

6. Use data to drive decision-making

In 2025, data is your business's best friend. Use it to:

• Forecast revenue and expenses more accurately.
• Identify your most profitable products or services.
• Understand customer behaviour and adjust your strategy accordingly.

7. Stay accountable with a Profit First Coach

If you struggle to stick to the Profit First Method, consider hiring a coach or joining a mastermind group. They can provide:

• Objective insights into your financial health.
• Strategies for overcoming challenges.
• Motivation to stay the course.

8. Plan for tax efficiency

Tax obligations can take a significant chunk of your revenue. Stay ahead with:

• Regular consultations with a tax advisor.
• Leveraging deductions and credits specific to your industry.
• Setting aside at least 15-20% of tax revenue to avoid year-end surprises.
• Setting aside 10% of revenue for GST using Thriday's allocations feature

Thriday has a team of registered tax agents and done-for-you plans to suite any business.

Conclusion

Maximising profits in 2025 requires more than implementing the Profit First Method—it demands a proactive and adaptive approach to financial management. By incorporating these advanced techniques, you can build a business that is not only profitable but also resilient, growth-focused and hyper-efficient.

Ready to take control of your finances? Start applying these strategies today and watch your business flourish in 2025!

‍