You can't improve what you don't measure. And you can't realistically implement Profit First if you don't know your starting point —not the one you imagine, but the one your numbers show.
Today I want to offer you a technique called the Instant Assessment: the first practical exercise you should do before opening any bank account or reallocating a single dollar. The goal is to diagnose your finances and, to do that, we'll calculate what percentage of your income you're currently allocating to each category.
Don't worry if the result is a little uncomfortable: we've all been there. In our practice we've seen how most owners discover they're using almost all of the business's money —leaving their own company without oxygen— or that they allocate 70% to 90% of their income to operating expenses, leaving practically nothing for themselves or for taxes. That discovery isn't the problem itself: it's the diagnosis that lets you find the solution.
Step 1 · What you need before you start
To do the Instant Assessment you need your business's financial records from the last 12 months. If you have an accountant or keep your books in some system, this data already exists —you just need to know where to look.
Last year's income statement
Total payroll paid over 12 months
Taxes paid or set aside
Step 2 · The 4 numbers you need to calculate
Once you have all the balances and figures you need, we'll calculate the distribution percentage for each account in the system. The base formula is always the same:
| Category | What it includes | Target | Your calculation |
|---|---|---|---|
| Profit | Real net profit (not reinvested) | 5% | ____% |
| Owner's Compensation | Your real salary as the owner | 50% | ____% |
| Taxes | Everything paid or set aside for taxes | 15% | ____% |
| Operating expenses | Suppliers, rent, external payroll, utilities | 30% | ____% |
The four percentages should add up to 100% of your total income.
Step 3 · A real example
Let's see what this looks like with a concrete business: a landscaping company with 3 employees that billed $1,200,000 over the last 12 months.
| Figure (last 12 months) | Amount |
|---|---|
| Total income | $1,200,000 |
| Team payroll | $480,000 |
| Owner's salary | $96,000 |
| Other operating expenses | $444,000 |
| Taxes paid | $72,000 |
| Net profit | $108,000 |
With that data, the current percentages are:
| Category | Current | Target |
|---|---|---|
| Profit | 9% | 5% |
| Owner's compensation | 8% | 50% |
| Taxes | 6% | 15% |
| Operating | 77% | 30% |
This result is typical. The owner pays themselves less than 10% of the income of the business they built, while 77% goes to operating. There's nothing wrong with the business itself —the problem is the structure. And that can be changed.
Step 4 · How to interpret your results
Once you have your four percentages, the diagnosis is straightforward. Let's look at three health ranges based on the operating percentage —the one that reveals the most about the real state of the business:
Operating > 65%
Operating 45–65%
Operating < 45%
Step 5 · From where you are to where you want to be
The system's target percentages are a long-term goal —not a first-day requirement. The key is to calculate realistic starting percentages you can sustain from today, and a gradual path of increase until you reach the target. If the restructuring feels too hard, follow a simple plan: raise each percentage by 1 percentage point every two months. At that pace:
- If you're at 1% profit today, in 8 months you'll be at 5% —which should be your minimum target.
- If you pay yourself 8% today, reaching 50% takes several stages; but each raise means more money in your pocket every pay period, from the very first month.
- For the percentages to add up to 100%, every point you raise in profit and compensation has to come down from operating. That's the creative pressure that makes the business more efficient.
Step 6 · When to repeat the exercise
The Instant Assessment isn't a one-time exercise. Repeat it every quarter with two concrete goals:
Check that the percentages are improving
Adjust if the business changed
For the Instant Assessment to be reliable, you need your bookkeeping up to date. Without current records you'd be calculating percentages on incomplete or outdated numbers —which leads to the wrong decisions.
You don't need to be an accountant to manage your business's money intelligently. You need a system that turns your current habits into better results.
That wraps up the Profit First series. If you want to review it from the start: Part 1, Part 2 and Part 3.
At DISSAU we don't just keep your bookkeeping current: we turn your numbers into decisions. We apply this cash-flow management so your business protects its profit, spends smarter and grows with real data. Talk to a specialist.
