Avoiding Common Pitfalls in Profit First Implementation

In this episode, we’re tackling the biggest mistakes business owners make when implementing Profit First—and how you can avoid them to keep your finances on track. I’m Deb Halliday, certified Profit First Professional, and I’ll walk you through three common pitfalls I see time and again with UK businesses.

First up: neglecting your tax account. It’s all too tempting to dip into those tax funds when cash is tight, but this can lead to serious headaches with HMRC down the line. I’ll share why treating your tax account as completely off-limits is one of the smartest moves you can make.

Next, we’ll talk about the importance of consistency. Profit First only works when you stick to a regular schedule for allocating your money. I’ll give you practical tips for setting up a routine—so you don’t fall into the trap of skipping allocations during busy periods and missing out on profit.

Finally, we’ll tackle lifestyle creep. As your business grows, it can be tempting to let your expenses grow too. I’ll show you how keeping a lean approach to operating costs can double your profits, with a real-life success story to prove it.

Whether you’re new to Profit First or want to tighten up your current system, this episode is packed with actionable advice to help you build a business that truly works for you.

Takeaways:

• Keep your tax account untouchable to avoid future financial stress.
• Stick to a consistent allocation schedule for best results.
• Watch out for lifestyle creep—keep expenses lean as revenue grows.
• Regularly audit your costs and cut what you don’t need.
• Prioritise tax allocations to stay ahead of HMRC.
• Make regular allocations a habit to build a stronger, healthier business.

Links mentioned:

debhalliday.co.uk

Episode Transcript

(00:09):
Welcome to Profit first withDeb Halliday.
That's me.
I'm Deb.
I'm a Profit firstprofessional and trainer, author
of how to Build a FinanciallyHealthy Business, founder of the
Accounts Ladies, an awardwinning accountancy practice and
the Accounts Office training Academy.
This.
This is the show for businessowners who want to stop stressing
over money, keep more cash,pay themselves more and build a business

(00:33):
that truly thrives.
Just a quick note, Profitfirst is a licensed methodology.
Everything here is designed tohelp you implement it in your own
business.
If you're interested inhelping others with Profit First,
I'll share how you can applyto become certified too.
Let's get started before,because your business should work

(00:54):
for you, not the other way around.
Hello and welcome back toProfit first with Deb Halliday.
I'm Deb, your certified Profitfirst professional.
And today we're diving intowhat not to do when implementing
Profit First.
Because sometimes the biggestleaps forward come from simply avoiding

(01:15):
the classic pitfalls.
Now, if you're listening justchances are you've already set up
your Profit first accounts.
Brilliant.
That's a huge step.
But as with any system, it'snot just about getting started.
It's about sticking with itand using it well.
Even the best systems can tripyou up if you're not careful.

(01:35):
So let's walk through threecommon mistakes UK businesses make
with Profit first and moreimportantly, how how you can dodge
them.
Mistake number one, neglectingthe tax account.
Let's start with the taxaccount, one of the most misunderstood
and frankly, tempting pots todip into in the uk.
VAT and corporation tax cansneak up on you before you know it.

(02:00):
I've seen it time and again.
A business owner gets a bittight on cash, borrows from the tax
account and suddenly they'refacing a 10,000 pound HMRC bill with
nothing set aside to pay it.
That's a stressful place to be.
So what's the fix?
Treat your tax account as ifit's completely off limits.
Imagine it's locked in a safeyou don't have the key for.

(02:23):
If you're VAT registered, makeit a habit to allocate 20% of every
sale into a separate VAT pot.
And always keep an eye on yourVAT return deadlines, whether you
file quarterly or monthly.
Trust me, your future selfwill thank you for the discipline.
Mistake number two isinconsistent allocations.

(02:46):
Profit first is all aboutrhythm and routine.
Mike recommends allocatingfunds on the 10th and 25th of every
month.
However, I've found thatdifferent Businesses favor different
rhythms.
If you're paid monthly,monthly allocations could work.
If you're paid throughout themonth, weekly allocations can work

(03:06):
well.
Whatever you choose, stick to it.
Why?
Because consistency buildsfinancial muscle memory.
I worked with a retailer whotried to self implement Profit first
but skipped allocations duringtheir busiest season.
They thought they'd catch uplater, but when they finally checked

(03:26):
their accounts there was zeroprofit left.
The lesson?
Life gets busy, but yourallocations need to be non negotiable.
Set calendar reminders, useautomation if your bank allows and
make it part of your businessroutine, just like invoicing or payroll.
The third pitfall is lifestyle creep.

(03:47):
As your business grows, it'sso tempting to upgrade.
Maybe a fancier office, newsoftware, subscriptions, or even
just more frequent lunches out.
But Profit first is designedto keep your expenses lean so you
keep more of your hard earned money.
One London freelancer I workedwith doubled her profit in a year

(04:09):
simply by sticking to 40%operating expenses.
Even when her revenue spiked,she resisted the urge to inflate
her spending and the resultsspoke for themselves.
What if I can't cover myexpenses with my current percentages?
This is a question I get allthe time.
What if my operating expensesaccount isn't enough to cover my

(04:31):
bills first?
Don't panic.
This is actually a sign thatyour business is ready for a tune
up.
Start by auditing your costs.
Are there subscriptions youdon't use, suppliers you could negotiate
with, or cheaper alternativesthat work just as well?
Sometimes even small tweakslike switching software or renegotiating

(04:52):
contracts can make a bigdifference over the year.
So here's your action step forthis week.
Check your tax account.
Is it growing as it should?
If not, double check yourallocations and make sure you're
setting aside enough for VATand corporation tax.
And if you find you're temptedto dip into that pot, remember that
money isn't yours, it's hmrcs.

(05:16):
Protect your future selfthanks for tuning in to Profit first
with me, Deb Halliday.
If you found today's episodehelpful, please subscribe, leave
a review and share it withanother business owner who needs
to hear this.
For more resources, coursesand to connect with me, head to debhalliday.co.uk

(05:38):
and remember, when you putprofit first, you build a business
that reduces the stress whileit supports your goals and dreams.
See you next time.