‘Fake it ‘til you make it’ can feel like a guiding principle when you’re running your own business. To some extent, it works.

But if you start applying it to your finances, be careful.

If revenue looks good, but don’t translate into profit, the only thing you’ll be making is a cover letter.

The pattern is always the same: client payment arrives, expenses go out, and your paycheck becomes whatever's left over. Some months that's plenty. Most months, it's not enough.

This mindset comes from the “go big or go home” playbook of large, well-capitalized companies.

For those of us not backed by millionaire investors, it doesn’t make sense. How much you earn isn’t the problem. It's the order you pay things.

A Profit First system flips this. 

Revenue/income gets split into dedicated accounts immediately. Profit comes first. Everything else comes after.

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Elizabeth McCravy started her design studio the same way as most: trading hours for invoices. 

On paper, her business was profitable. Clients paid on time. Revenue grew steadily.

But her personal account told a different story.

Payments arrived in waves. A $6,000 deposit one week, nothing for three weeks after. She'd pay contractors first, then software costs, then tools she thought would help scale. Whatever remained became her paycheck.

Some months she paid herself $4,000. Other months, $800. Despite generating six figures annually, she felt broke.

When you run a business like this — the way most of us think you should — you doom yourself to financial insecurity. But entrepreneurship doesn’t = income anxiety.

In 2020, McCravy read Profit First and implemented it literally. She opened five business bank accounts: 

The book’s logic is simple: when profit sits in the same account as expenses, you'll spend it. Separate accounts create friction. You can't accidentally use profit money to upgrade your CRM or hire another contractor. The money stops being a single pool of “business money,” and starts being more descriptive in its purpose.

All McCravy’s inbound payments got split from the start. Profit took 3%. Owner's pay took 55%. Taxes got 8%. Operating expenses received 34%.

Within one quarter, she knew exactly what her business could spend and exactly what she could take home. No guessing. No surprise dry months.

Two years later: a template business (aka a productized service) generating consistent revenue, a podcast with 100k+ downloads, and predictable biweekly paychecks. And, I’d wager, a life with a lot less stress.

You don't need an accountant or complex software to start using the Profit First system. You need five bank accounts and 30 minutes every couple weeks.

Go to your current business bank and open four additional checking accounts. Name them clearly:

Your existing account becomes Income. Every payment from clients lands here first.

Use the Profit First framework as a starting point based on your current revenue range:

If you're generating $250k-500k annually, you might start with 10% profit, 35% owner's pay, 15% taxes, and 40% operating expenses. 

Use the numbers provided above to start, and don’t overthink them. You'll want to continue adjusting this after seeing real numbers.

Pick two days per month (1st and 15th work well). On these days, move money from Income into the other four accounts based on your percentages.

For example, if $10,000 hit your Income account since your last allocation, you'd transfer: 

This is the discipline part. All business costs come from the Operating Expenses account only. When that account runs low, you don't borrow from Profit or Owner's Pay. 

You cut costs, wait for the next revenue cycle, or rethink the way you’re doing business.

Within 90 days, you'll know your true operating costs. You'll see which subscriptions you actually need and which ones just sit there charging you monthly. More importantly, you'll pay yourself consistently, regardless of when clients pay you.

Start with one quarter. Adjust percentages as needed. The system works because it's simple enough to maintain.

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