Profit First Methodology: Balancing Percentages for Your Business

Wondering how to make Profit First work for your unique business? In this episode, I’m diving into how you can tailor the Profit First methodology to fit your UK-based business—no matter your industry or size.

I’ll walk you through setting Target Allocation Percentages (TAPs) that actually make sense for your business model, so you can build real financial health and sustainability. We’ll talk about why it’s important to avoid getting stuck in “analysis paralysis” and how taking action—however small—can move you forward.

You’ll hear practical examples of how different businesses, from retail shops to freelancers, can set up their TAPs and adapt the Profit First approach to suit their own needs. Plus, I’ll share real stories (like Aisha’s journey) to show how customising your allocations can lead to bigger profits and less stress.

Whether you’re just starting out or looking to improve your financial habits, this episode will give you the confidence and know-how to get started—so your business doesn’t just survive, but truly flourishes.

Takeaways:

• Learn how to set realistic Target Allocation Percentages (TAPs) for your business
• Discover why customising Profit First is key to long-term financial health
• Avoid analysis paralysis and start making positive changes today
• Get inspired by real-world examples from different industries
• Find out how starting Profit First early can set you up for lasting success

Links mentioned:

debhalladay.co.uk

financiallyhealthybusiness

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 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 because yourbusiness should work for you, not

(00:54):
the other way around.
Welcome to Profit first withDeb Halliday.
I'm Deb Halliday, your UKProfit first professional.
And today we're diving intochapter four of Profit First.
Choose your own adventure.
This episode is abouttailoring Profit first to your unique

(01:15):
UK business.
Let's find your perfect pathto profitability.
Chapter four is like thosechoose your own adventure books we
loved as kids.
You get to decide how toimplement Profit First.
But Mike Michalowicz warns,don't get stuck in analysis paralysis.
Some entrepreneurs obsess overperfect percentages and never start.

(01:37):
Others jump in too fast withunrealistic goals.
Today, we'll strike thebalance, setting target allocation
percentages, or TAPs that workfor your UK business.
TAPs are the percentages youallocate to profit, owner's pay,
tax and operating expenses.
The instant assessment fromchapter three gave you a starting

(02:00):
point, but chapter four digs deeper.
For example, a UK retailbusiness with £500,000 real revenue
might target 5% profit, 30%owner's pay, 20% tax and 45% operating
expenses.
But a freelancer with £50,000might aim for a 15% profit, 50% owner's

(02:25):
pay, 20% Tax and 15% operatingexpenses because they have fewer
overheads.
To set your taps, start withyour industry.
Research public companies inyour sector, say, divide their net
income by revenue to findaverage profit margins.
Or ask Chat GPT for insights.

(02:47):
For UK specific tax rates,check HMRC's website or search UK
tax rates.
If you're VAT registered,remove the 20% for VAT tax before
the rest of the allocations.
It's not your money, you'vejust collected it for hmrc.
For owner's pay, calculatewhat you need to live comfortably,
plus 25% for flexibility.

(03:10):
If I'm a new business with no revenue.
Brilliant question.
Chapter four says start profitfirst from day one to build good
habits even with 1000 revenue,allocate 1% to profit, 20% to tax,
and so on.
It's like planting a seed forfuture growth.
Let's meet Aisha, a Liverpoolevent planner.

(03:31):
Her business earned £120,000,but her instant assessment showed
high expenses.
She researched UK eventplanning firms and set taps 5% profit,
50% owner's pay, 15% tax and30% operating expenses.
Aisha avoided perfectionism bystarting with 2% profit and adjusting

(03:55):
quarterly.
Eighteen months later, shesaved 5% profit and paid herself
50% life.
Changing your action step Setyour taps Review your last three
tax returns for your mostprofitable year and research your
industry's profit margins.
Adjust your instant assessmentwith these numbers.

(04:15):
Download a TAPS guide fromyour website.
Next episode will coverChapter five, Implementing Profit
first from Day one.
Subscribe now and visitFinancially Healthy Business.
Let's make Profit first workfor you.
Thanks for tuning in to Profitfirst with Me, Deb Halliday.

(04:38):
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 debhalladay.co.ukuk
and remember, when you putprofit first, you build a business

(04:58):
that reduces the stress whileit supports your goals and dreams.
See you next time.