Page 112 - Business Mastery for Exponetial Profit make more work BW 15102021

If you are not an accountant like me, the idea of Profit and Loss
Statement may sound foreign to you and even if you see one, you
may not be able to fully understand it. One of the most important
feedback in business is the profit that you make time and again. If
your business doesn’t return a profit over a long period, you may
not survive for long. So, as part of the WATERFALL SYSTEM,
there is a module that helps you understand how to read your Profit
and Loss account. In addition, you will learn how it is prepared.

I want to share with you a simple method called ‘Profit First’. I
assure you that any entrepreneur can use it to reorganize their
affairs to get good results consistently over the long term. It is not
about reading a Profit and Loss statement, it is much simpler than
that.
There are two elements to the method, one is a concept called
‘Bank Balance’ cash management system. The other one is the
psychology of performance that I called ‘Panic Button’ motivation.

Let me talk about ‘bank balance’ cash management – most
entrepreneurs act based on their bank balance. If the account is
healthy with a reasonable cushion, then we are good. We are
happy and we coast along. Then the next time we check the bank
balance with all the direct debits and standing orders going out
without our knowledge, suddenly there is urgency. This urgency is
what leads to the second method:

Panic Button Motivation – Now that the bank balance has
diminished significantly from the last time we checked; suddenly,
the sense of urgency to generate money is activated. We drive
hard and make calls, go to events, create new adverts, etc.
whatever we need to do to get our bank balance to a reasonable
level. In no time, we are back to comfortable bank balance again.

We do this all year round without realizing it. It is in human nature
to behave this way not just in business but in every area of life.
The first time I encountered this concept which I have earlier
described was reading Henry Ford’s book. He realized that men
don’t perform at their best when there is no tension. His business
was significantly big with very large reserves. He reckoned that if
there is no tension at all, people would just coast along. This is
especially dangerous for a big and successful business. So, he

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