Profit First Club Newsletter

Welcome to This Week’s Profit First Club Newsletter!

Hi everyone,

It’s Stephen Edwards from Gro Profit First Accountants, and welcome to this week’s Profit First podcast! Whether you’re watching on YouTube, listening on Spotify, or reading this via our Beehive newsletter, we’re glad to have you here.

For those who might not know me, I’m the director of Gro Profit First Accountants (formerly Cheltenham Tax Accountants). We are Profit First Certified Accountants, meaning we handle all the traditional accounting services, but our real passion lies in helping business owners build sustainable, profitable businesses. I’ve been in the industry for over 20 years, running my own firm for 12, and we have a dedicated team of about a dozen people who share the same mission.

Profit First isn’t just an accounting method—it’s a philosophy that puts business owners in control of their finances. Too many entrepreneurs live paycheck to paycheck, despite growing revenues. That’s why we advocate for a business model that not only supports your customers but also serves you and your family. After all, your business should be a vehicle to help you achieve the lifestyle you want.

Profit First Mythbuster: Cutting Costs vs. Smart Investments

One of the biggest myths about Profit First is that it’s all about cutting expenses. Many people assume that Profit First is just about slashing costs and stuffing money into different “pots,” but that couldn’t be further from the truth. Let’s set the record straight.

Profit First is NOT About Scarcity Thinking

Some believe that focusing on profit means you’re not focused on growth. That’s simply not true. We’ve just rebranded as Gro Profit First Accountants because we believe in growing profits AND growing businesses. Growth isn’t just about revenue—it’s about building a business that thrives in any economic condition and supports its owners sustainably.

Understanding Costs vs. Investments

It’s important to distinguish between essential costs and smart investments. Here’s an example:

Would you spend £500 per month if it consistently brought in £2,000 per month? Most business owners would say that’s a no-brainer, assuming the margins make sense. In this case, the £500 is not just an expense—it’s an investment because it generates a return.

Too often, business owners view all spending as “necessary costs” without evaluating whether each expense contributes to growth. On the other hand, some entrepreneurs label everything an “investment” and end up overspending on things that don’t actually generate returns.

How to Identify Must-Have Costs vs. Nice-to-Have Costs

When we conduct Profit First assessments for clients, we look at every single expense to determine its role in the business. Some examples include:

• Must-Have Costs: Essential expenses like rent, utilities, compliance (e.g., accountants), and key staff salaries.
• Nice-to-Have Costs: Subscriptions, tools, or services that don’t directly impact business growth but might make operations smoother.
• Investments: Spending that should generate measurable returns, such as marketing, sales training, or automation tools.

Even essential costs can be optimised. For example, if you’re paying £2,000/month for office space but only using half of it, could you sublet a portion to reduce overhead? Small changes can make a big difference over time.

The Role of Your Team in Profitability

Your team should be an investment, not just an expense. A well-utilised team adds value by freeing up your time, generating revenue, or improving efficiency.

For example, a receptionist may not directly bring in sales, but if they ensure customer inquiries are handled promptly, that could significantly impact conversion rates. Data shows that responding to leads within 10 minutes drastically increases conversion rates. So, while their salary is a cost, their role is an investment in customer service and retention.

Sales teams are easier to measure since their performance is tied to revenue. But even back-office staff contribute indirectly—supporting operations so that revenue-generating activities run smoothly.

Action Step: Conduct a Profit First Cost Review

If you haven’t reviewed your expenses recently, now is the time!

1. Categorise your expenses into Must-Have, Nice-to-Have, and Investment.
2. Evaluate subscriptions and services—are you actually using them?
3. Assess your team’s impact—are they adding measurable value?
4. Review your marketing spend—is it delivering a strong return?

We recommend doing this review every 3 months to ensure you’re allocating resources effectively.

Final Thoughts

Profit First is not about cutting costs—it’s about spending smarter. Growth happens when you know where your money is going and how it’s working for you. The goal is to create a business that supports both your professional and personal life without financial stress.

If you need help conducting a Profit First review, feel free to reach out. Let’s build a more profitable, sustainable business—together!

Until next time,
Stephen Edwards – Profit First Accountant and Business Coach
Gro Profit First Accountants

P.S. If you found this newsletter helpful, share it with a fellow business owner who could benefit from Profit First insights! 🚀