If you have ever felt you were lost or just guessing when it came to finances for your videography or filmmaking business, I have the perfect recommendation for you.
I started making videos here and there a side job in college. I was still figuring out the whole video thing and certainly had no clue what I was doing when it came to actually managing my finances.
How much do I set aside for taxes? When should I pay myself? How much should I be setting aside for expenses? What do I do if I have a variable income?
In short, I just wanted to be more confident with my business’s finances.
I wanted to be able to quickly see how I was doing towards my financial goals without having to worry about not having setting aside enough for taxes or not being able to pay the expenses that were coming up that month.
Introducing Profit-First by Mike Michalowicz
And then, one day, I stumbled across the life-changing book called Profit-First by Mike Michalowicz. The book promises to turn your cash-eating monster into a money-making machine – and it does that so well.
Mike does a much better job at explaining the concepts in his book (he’s also quite hilarious too) so I’ll leave the details to him. I’ll leave a link to a video here too so you can get a taste of what his approach is.
But, to oversimplify, he recommends a bank-level budgeting system for your business that is centered around making different bank accounts for different categories, like income, expenses, owner’s compensation, profit, and taxes. Then, two times a month (the 10th and 25th) you will allocate the money you’ve made into the different buckets based on percentages Mike recommends.
So, you may have $1000 in income when you arrive at your first profit first allocation day. An example allocation would be 5% into the profit bucket, 15% into the tax bucket, 30% into the expenses bucket, and 50% into the owner’s compensation bucket.
This simple concept literally blew my mind when I read it the first time. It’s so simple yet, when I started doing it, I quickly found out the power of doing it this way.
I no longer had to worry about if I had enough set aside for taxes, I knew how much I could afford for my expenses, and I actually starting paying myself on a regular basis. And, the profit category has been a magical account that I am encouraged to withdraw a percentage of every quarter to give myself a little reward.
Why Do Profit-First For Your Video Business?
The Profit-First concepts apply to nearly every type of business and Mike outlines how to implement it depending on what you do. For those of us that are in the video business, he provides very clear direction and money allocations for the different buckets.
I started doing Profit-First about 6 months ago and have never looked back. My expenses have been reduced, my income has increased, and my overall happiness has skyrocketed. I used to stress about what to pay my contractors for editing, how much to set aside for myself on video shoot days and tried to forecast how much to set aside for those software subscriptions that seem to just creep up on you.
If you are wondering if Profit-First will work for your video business, I can say that it has worked for my business firsthand and I am on-pace to have my best year yet by far.
Go Learn Profit First
If I could go back and give myself one book to help my business, it would be this book by Mike. I’ve never felt more confident than I do now in my finances and am grateful for the amazing system he came up with here. I’ve taken many courses specifically on managing money for agencies and budgeting for a business but none even come close to the practicality of his teachings and, most importantly, the results I’m now getting since I started applying his principles.
If you are ready to take control of your business’s finances, then pick up this book. I’m confident it’ll help your video production, filmmaking, or any type of business as much as it has mine.
I hope this article was helpful and happy earning!