January always feels like a great reset. New year, new goals, and a new opportunity to tell your money what to do instead of wondering where it went. If you’ve thought about budgeting before but never found a system you could stick with, Profit First is a great place to start.
It’s not a traditional budget. It flips the traditional “sales – expenses = profit” equation to "Sales-Profit=Expenses" Profit comes first. It makes sure owners get paid, taxes are covered by the company and expenses are covered by what’s left. And the best part is that it works whether you’re a brand-new solopreneur or a growing small business.
Here’s a simple way to use January as your launch point:
1. Start with what you really earned last year
It’s not a traditional budget. It flips the traditional “sales – expenses = profit” equation to "Sales-Profit=Expenses" Profit comes first. It makes sure owners get paid, taxes are covered by the company and expenses are covered by what’s left. And the best part is that it works whether you’re a brand-new solopreneur or a growing small business.
Here’s a simple way to use January as your launch point:
1. Start with what you really brought in last year
Before you set any numbers for the new year, look back. Look at your total revenue for 2025. Don't over complicate it. You’re just trying to understand your baseline so you can set realistic percentages.
Then ask yourself:
- Did the money coming in feel steady or unpredictable?
- Were there months you felt stressed?
- Did you pay yourself consistently?
Profit First is easier to implement when you know the real state of your cash flow, not the ideal version.
2. Set your January Profit First percentages
If you already use Profit First, this is a good time to review your targets. If you’re new to it, start with simple buckets:
Income - all revenue
Profit - start with 1%
Owner’s Pay - set aside what you are paying yourself in payroll or figure out what your household needs to run
- Taxes - 15% is your ultimate target. If that's unrealistic, start with 5-10%
- Operating Expenses - this is what's left over
You don’t need perfect numbers on day one. Start with rough percentages that match what your business can handle. Even 1 percent to profit is better than zero. January is about building the habit.
3. Do your first allocations on January 16
Starting out, most people will do the allocations weekly. On the allocation days, whatever money is in your income account gets split into the percentages you set earlier.
This is where the magic happens. Instead of guessing how much you can spend, you have a clear boundary. You’ll see right away if your operating expenses are too high or if you’ve been underpaying yourself.
4. Look at what your bank balances tell you. This is about reality, not what you wish they were
Profit First brings reality to the surface quickly. If your operating expenses bucket feels too empty, that’s not a failure. It’s information.
Ask:
- Do I need to adjust pricing?
- Can I cut subscriptions or tools I’m not using?
- Is my team time aligned with what actually earns revenue?
Your January budget becomes a tool, not a punishment.
5. Plan one change for February
Don’t overhaul everything at once. Pick one improvement you want to make based on January’s numbers. These small tweaks add up fast.
For example:
- Increase profit from 1% to 2%
- Trim one recurring expense
- Add a percentage to Owner’s Pay
- Create a basic cash flow forecast to support your Profit First setup
6. Give yourself credit for actually starting
Most business owners wait for the “right” time. But budgeting is just a series of small decisions. Starting in January puts you ahead of most people. Profit First isn’t about being perfect. It’s about building a system that supports the life and business you want.
If you want extra help setting this up, running your numbers, or building a cash flow plan around your Profit First goals, our team can guide you through it.
