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Episode 77

Why you cant just have one bank account

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About this episode

Hey there, it’s Katie Bell welcoming you back to another insightful episode of Treat Your Business. If you’re ready to revolutionise the way you handle your finances, you’re in the right place. Today, we’re diving deeper into the Profit First approach and how it can transform your business.

In this episode, we explore the four principles of Profit First, a revolutionary method that flips traditional accounting on its head. we break down the fundamental steps to achieve financial mastery in your business, starting with the concept of separating your funds into different “plates” or accounts.

  1. Multiple Plates, One Buffet: Just like you wouldn’t serve all your food on one giant plate, you shouldn’t keep all your business funds in a single account. Learn how dividing your money into different accounts can help you gain clarity and control over your finances.
  2. Pay Yourself First: Discover why prioritising your own pay is essential for maintaining a healthy work-life balance and sustaining your business long-term. I explain why this principle is non-negotiable and shares strategies to implement it effectively.
  3. Removing Temptation: By setting up a structured rhythm for managing your money, you can remove the temptation to overspend and ensure that funds are allocated where they’re needed most. Learn how to establish a consistent schedule for transferring funds and gain insight into managing expenses.
  4. Building Profit: Explore practical steps to start building profit in your business, even if you’re starting from scratch. We share strategies for allocating funds to different accounts, setting aside money for taxes, and ultimately, reaping the rewards of a profitable business.

Key Takeaways:

  • Implementing the Profit First model can provide clarity and control over your finances.
  • Prioritise paying yourself to maintain a healthy work-life balance and sustain your business.
  • Establishing a structured rhythm for managing money removes the temptation to overspend.
  • Start building profit in your business by allocating funds strategically and setting aside money for taxes.

Join us next week as we delve into the specifics of allocating percentages to each account and fine-tuning your financial strategy for success


This podcast is sponsored by the team at HMDG


  • 0:00-Introduction to Profit First
  • 2:04-Setting Up Multiple Bank Accounts
  • 3:32-Treating Your Money Like a Buffet
  • 4:04-Prioritising Your Personal Finances
  • 5:15-Enforcing a Rhythm in Money Management
  • 7:22-Identifying Profitability Issues
  • 12:35-Announcing Monthly Masterclass
  • 14:34-Preview of Next Week’s Episode


Treat Your Business EP77

[00:00:00] Katie Bell: Profit is not intended for reinvestment. I’ve heard people say, I have a profitable practice, but I’m reinvesting all my profit into the business. That is code for saying I’m spending everything I have. If your profit margin is thin, you won’t be able to move on opportunities. You won’t be able to fire for ahead of where you need to be before your team crumble under too much workload.

[00:00:28] Katie Bell: Sound familiar? Today we are going to continue our conversation from last week. Pause now, go back to last week’s episode if you’ve not listened to me, and we are going to explain the four principles of profit first. So let’s go there now.

[00:00:41] Katie Bell: When I was growing up we were told we had to finish everything on your plate before you could have pudding. So whether the plate was big or small, me and my brother Tom would finish it. The same applies for your bank accounts. If you have one bank account where all your business funds sit That account serves as one large plate.

[00:01:04] Katie Bell: So your brain thinks these are all the resources available to me. So I will consume them all so that I can go and eat my Angel Delight or Vionetta. I’m now showing my age. The Profit First model suggests having many smaller plates. So you’re dividing your money into a number of accounts or pots if you’re using Monzo.

[00:01:29] Katie Bell: Profit first protects you because you can clearly see what money is earmarked for your taxes, for your expenses, for your profit that you then take a share of, the owner’s pay. So having more than one bank account is the first step to spending less. and making more profit and managing your money well. So one of the first things that the Profit First model teaches you is to just very simply set these accounts up.

[00:02:01] Katie Bell: And there are different percentages depending on the size of your business that we like to work from in terms of your operational expenditure, your profit share, your owner’s pay, your tax. And it will also depend on where you are in the world. Listen to this. The second principle is that I want you to imagine that you treat your money like a buffet where you, where it’s served sequentially.

[00:02:32] Katie Bell: For example, order matters. Okay. Your brain can only focus on so many things at one time, and it tends to add real significance to what it encounters first. In your practice, we take care of you first. How many of you do not do that? How many of you take care of all of your bills, all of your team, all the payroll, all your freelancers, and then you figure out, have I got anything left to pay myself?

[00:03:04] Katie Bell: Your business must allow you to sustain your personal life. That is a non negotiable. When you pay yourself first, it will mean you will have to reduce your other expenses. It’s about removing the temptation. How many of you, every Christmas, I have this same conversation with my house, in my head, which is okay.

[00:03:30] Katie Bell: Next Monday, 1st of January, I’m gonna, I’m gonna stop eating all the chocolate. I’m gonna, I’m gonna eat healthy. I’m going to cut it all out. And so first of all, I’m going to eat all the chocolate first, and then I’ll be able to, I’ll be able to stay with my diet. So removing all the chocolate from the house is a prime example.

[00:03:49] Katie Bell: Out of sight, out of mind. Okay. It enforces a rhythm that your accounts and your money management is set up in a way that is Every week, every two weeks, there are ways that you move your money and certain amounts of money that you move into these pots or into these accounts. And it’s like your food prep on a Sunday.

[00:04:15] Katie Bell: When you set out an hour on a Sunday to do all your food prep for the week, it enforces a rhythm. It means that you’re going to stick to it. It removes temptation. So you transfer funds on a set schedule. And this will allow you to see the ebb and the flow of cash in your business. Rather than what happens is everything comes into your business and then you all pay your bills at all different times of the month.

[00:04:42] Katie Bell: And then you’ve got a massive bill at the end of the month to pay for payroll, but you’re never quite sure if you’ve got enough money. And then when you do pay that, you then back down to zero in your business or even minus.

[00:04:53] Katie Bell: So what you’re going to do is your if you have one account currently that everything goes in and out of, this is carnage. How do you know how much money you need to put aside for tax? How much money you are actually making? How profitable your business is? How do you know how much you as the business owner can take?

[00:05:18] Katie Bell: Ideally, you want to have as a minimum a money, a bank account that all the money comes into. Now it might be that for now the bills go out of that account, but ideally that would be different. Okay, we would move money into an operating and expenditure account. Ideally, we want a tax account. And ideally we then want a profit account and an owner’s pay account.

[00:05:47] Katie Bell: Okay. This might just feel too overwhelming. So to start with, if you listen to this and you’ve just got one account, which everything comes into, then you just want a no cost savings account. Do not pay for this. Just get a no cost savings account set up and just start moving some of your money now. So on a very basic level, you roughly want to move 20 percent of your of your money into your tax account.

[00:06:13] Katie Bell: Okay. Depending again, where you are in the world will depend on what levels of tax that you pay and how your company is structured and whether you’re a sole trader or a limited company. But for just a rough figure, 20 percent. Now you might say that’s okay, Katie, but I don’t even have profit in my business.

[00:06:30] Katie Bell: So how can I now move profit into a profit account? This is about creating a habit. This is about enforcing a rhythm. So you’re going to start by moving like 0. 5 percent of your revenue. So look at your zero, look at your QuickBooks and look at all of the cash in that week, or for the two weeks, if you wanted this bi weekly.

[00:06:53] Katie Bell: And just move half a percent into a profit account. Now, ideally that needs to be with a different bank if you lack any form of willpower, because what we don’t want you to do is move money into a profit account and then just keep spending it and moving it back. If your money goes into your tax account, your profit account, your owner’s pay account, and there is still no money left, it’s because your business is operating on a two higher operating expense level.

[00:07:22] Katie Bell: And we need to change things. Or it means that your business, your margins are too small. It might be suggestive that your pricing. model isn’t there to serve your business. It might be indicative that your team members are not profitable. For those of you who are offering massive commission structures out there, it might be suggestive that actually when you deduct your operational expenditure and your commission, your staff cost, you’re actually left with no money.

[00:07:55] Katie Bell: Or it’s costing you money to have that member of staff in the first place. That was something that one of our clients last year when we actually got clear on their numbers and we actually got clear of the ins and the outs and the team performance, we actually found out she was almost paying for this member of staff to work for her.

[00:08:14] Katie Bell: As in, she was a commission based freelancer and she was making no money. It was costing this client money to have this person in her business. Guess what? That person’s not in the business anymore. But we only know this from pulling our head out of the sand and making a real commitment to understanding our numbers in our business.

[00:08:36] Katie Bell: If, for me, an activity is not profitable, then you just need to not be doing it. Because I have never met a clinic owner with a shill load of time. I have never spoke to any of you and you have told me I have got loads and loads of time Katie. Most of you are time poor, you are trying to run your business between client appointments and we’ve got to look at what the numbers are telling us, what the Data does not lie and therefore we can make decisions based on what the numbers are telling us.

[00:09:11] Katie Bell: So the second principle is that we want to think about this kind of like removing temptation, separating these money pots out and starting to move money into each of these pots. And when I have done this in both my clinic and within Thrive, it, it transforms how you manage your money. It changes the energy around how you manage your money.

[00:09:39] Katie Bell: It says to the money, I am in control of you, you’re not in control of me.

[00:09:44] Katie Bell: It allows you to build up a pot and your accountant needs to advise what you’re doing with that profit pots. Now, one of the profit first principles is that every quarter you take 50 percent of that as your as a additional bonus for you as the owner. How great does that sound? Now it might be that is that you’re going to.

[00:10:04] Katie Bell: You’re going to use that money to invest in something else and that’s going to bring you a return on investment. Your accountant needs to help you look at your remuneration and how best that is structured. But you’ve got to have it there for that to happen. And by the way, this is after you’ve taken your regular monthly amount.

[00:10:22] Katie Bell: So remember your brain can only focus on so many things at one time and it’s, it adds significance to what it encounters first. So what if it encounters first is your big bank account with everything that goes in, all, everything in one place. That’s what you’re placing your energy and your thoughts on.

[00:10:39] Katie Bell: It’s not going to be in alignment with creating a efficient, profitable company. And how great would it be at the end of the year to already have your tax set aside and for the, for you to then go, Oh, there’s actually some left over there. It takes the stress out of it. Remember, your business must allow you to sustain your personal life.

[00:11:05] Katie Bell: It is a non negotiable. Your business must be profitable for you to create the impact on your community. Your business must be profitable for you to grow to the next level. If your business is not profitable now, getting bigger is not going to solve that. I promise you. Now, you will have heard last week that my next monthly masterclass is happening on the 22nd of May at 4 o’clock.

[00:11:35] Katie Bell: This is a free masterclass, open to anybody. Whether you are a Thrive member or not, it is for you guys. For you to, part of my mission is to make this as accessible as possible to people who really need it. And one of the biggest problems that we have in our industry is that we don’t recognize the worth and our value.

[00:11:58] Katie Bell: And none of you are taking the amount of money you should be from your businesses. So May the 22nd, four o’clock, you are going to learn essential strategies to establish boundaries, to prioritize your profitability. We are going to look at how to streamline your operations. So you can get time back, but also make more money.

[00:12:21] Katie Bell: It is about how you pay yourself first, and not last. And how you pay yourself first, and not last. And not just with what’s left over. So if you’re ready to reclaim your time, boost your profits, then it is time for a spring clean in your clinic. And this masterclass is designed just for you. The link is in the show notes, head there, register, whether you can make it or not live.

[00:12:45] Katie Bell: I would encourage you if you are really serious about taking different action in your business, then this is a priority. If I had, if my coach was running something that I knew was going to transform the money that I made in my business, I would cancel a client. I would cancel a client, I would put the kids in kids club, and I would be at this.

[00:13:09] Katie Bell: I would make this an absolute priority. So if you want to get more profit while making more time back, register now, link is in the show notes. I can’t wait to see you. We are live, we go on Zoom, and what else do we do? We do one to one coaching at the end, so there’s always some time for questions, and you get my brain for that whole hour.

[00:13:29] Katie Bell: and we make sure it’s really tailored to you and your practice.

[00:13:34] Katie Bell: Join me next week where we are going to recap on some of the money management tips, the bank accounts we talked about, the allocating the money into those pots, but I am now going to explain to you next week the percentages. So if you want to know how much money you need to move into all of those accounts, I’m going to tell you that next week.

[00:14:00] Katie Bell: Make sure you have a paper and pen, make sure you are not driving because you need to write this stuff down but it’s going to really allow you to get clear on how much money you need to be moving into those pots on a weekly or bi weekly basis so that you can start building up profit in your business.

[00:14:18] Katie Bell: I’ll see you next week.

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