Stop Being Last in Line for Your Own Money

Years ago, on my hen party, I had what you could politely call a moment. The whole thing was not really what I wanted: a Chinese meal and a night at a local pub. Not exactly the send-off I had imagined, but I smiled and went along with it.

The final straw came at the bar. Someone was taking drink orders. You would think, just for one night, as the bride-to-be I would be the centre of attention. Surely, I would be asked first. But no. Everyone else got their order in, and I was asked last what I wanted. On my own hen night. I can safely say I went home to my then fiancé very upset and frustrated.

That is exactly what it is like for so many business owners. You are the one who came up with the idea. You are the one taking all the risk, working the ridiculous hours, and carrying the stress. Yet when the money comes in, you are still the one who gets paid last. Staff get paid, suppliers get paid, HMRC gets paid. By the time it is your turn, there is often nothing or barely anything left.

Why Business Owners Get Paid Last

Traditional accounting is built on a formula that looks neat on paper:

Sales – Expenses = Profit

In theory, it makes sense. You make sales, you cover your costs, and whatever is left at the bottom is profit. But in practice, it rarely works out that way. Expenses expand to fit whatever is available. You see money in the bank, assume it is there to be spent, and by the time you get around to paying yourself or setting aside profit, there is nothing left.

The maths is fine. The psychology is the problem. Business owners end up working harder and harder, yet their personal reward never grows. They feel guilty about paying themselves, convinced that reinvesting everything back into the business is the noble thing to do. In reality, they are starving themselves while everyone else is fed.

The Profit First Alternative

Mike Michalowicz saw this problem and decided to flip the whole model on its head. In his book Profit First, he introduces a simple but powerful new formula:

Sales – Profit = Expenses

This small shift is game changing. It forces business owners to treat profit as a priority, not an afterthought. Instead of hoping something will be left over, you allocate profit first and run your business on what remains.

What makes this powerful is not just the maths but the mindset. You still carry the risk, but Profit First ensures you are no longer at the back of the queue. You put yourself at the centre of your business where you belong. This is how to get paid first as a business owner.

The Four Principles Behind Profit First

Michalowicz explains the system through four simple ideas:

1. Use Small Plates

When you eat from a smaller plate, you naturally take less. The same applies to money. Instead of one big account, you split your income into smaller accounts. By working with less in each, you automatically reduce waste.

2. Serve Sequentially

Money arrives into an Income Account. From there, you move it into other accounts in a set order: Profit, Owner’s Pay, Tax, and finally Operating Expenses. By serving yourself first, you guarantee you are not left scraping up the crumbs at the end.

3. Remove Temptation

If all your money sits in one account, you will find a way to spend it. By ring fencing funds, you remove that temptation. In the UK, you do not need to open multiple bank accounts like in the original system. Modern banks such as Starling, Monzo and Revolut allow you to set up “spaces” or “pots” within one account. This makes it simple to separate funds while still keeping everything in one place. For many business owners, the main account becomes Operating Expenses, with spaces for Profit, Owner’s Pay and Tax.

4. Enforce a Rhythm

Profit First is not about moving money when you feel like it. It works because you enforce a regular rhythm. Many business owners move funds twice a month, allocating income across the different pots in one go. This rhythm builds consistency and takes away the guesswork.

Clarifying Owner’s Pay vs Profit

One of the most important shifts in the Profit First method is understanding that Owner’s Pay and Profit are not the same thing. Owner’s Pay is your salary for the role you perform inside the business, the day to day work you do to keep things moving.

Profit, in accounting terms, is simply what is left once all the costs of running the business have been covered. The mistake many owners make is assuming that “profit” automatically equals money in their pocket. In reality, profit may be reinvested or held as a reserve to strengthen the business.

Profit First makes sure both are accounted for properly. It ensures your Owner’s Pay is treated as a non negotiable priority, while also carving out true profit so your business is not just surviving but building the financial strength to grow.

How to Allocate Percentages

The beauty of Profit First is that it is flexible. Every business will have different percentages depending on its margins, stage of growth, and structure. But there are some guiding principles you can follow:

Start Small with Profit - If the idea of suddenly allocating 10 or 15 percent to profit feels impossible, begin with 1 percent. Each quarter, increase it gradually: 3 percent, 5 percent, and so on. You will hardly notice the difference at first, but it builds into a meaningful habit.

Owner’s Pay - This is not the same as profit. Owner’s Pay is your salary for the role you perform inside the business. Think about what you actually do day to day. If you had to hire someone to replace you, what would be a fair market rate for that job? You would never underpay your most important employee, and you are your most important employee. Owner’s Pay should cover the income you need, plus a bit extra as a reward for your hard work.

Tax - This is where UK business owners need to be realistic. If you are VAT registered, you need to set VAT aside separately. Beyond that, account for Corporation Tax (currently 19 to 25 percent depending on profits). And while your business does not pay your personal income tax directly, the money to cover it will ultimately come from your business. A good starting point is to set aside at least 19 to 21 percent for tax, but work with your accountant to refine this.

Operating Expenses - This is what remains after Profit, Owner’s Pay and Tax are set aside. It is the money available to run the business. The beauty of the system is that it forces discipline. If expenses are too high, the answer is not to cut into profit or underpay yourself, but to make smarter decisions about spending.

Here is how it might look in practice. Say £10,000 lands in your Income Account:

• £100 to Profit (1 percent)

• £4,000 to Owner’s Pay (40 percent)

• £2,000 to Tax (20 percent)

• £3,900 to Operating Expenses (39 percent)

These numbers are just an illustration. The real power comes not from the exact percentages, but from the discipline of moving the money and protecting profit first.

Why This Matters

Without a system, money disappears. Profit becomes a line on paper rather than cash in the bank. Business owners carry all the risk but still come last in the reward queue. With Profit First, you still carry the risk, but you are no longer last. You put yourself at the centre of your business where you belong.

Even starting with a tiny 1 percent allocation creates momentum. The small wins build confidence. Over time, the percentages grow, and so does your consistency.

Scaling without profit is like pouring water into a leaky bucket. You can keep filling it, but it will always drain away. Profit First patches the leaks. It ensures the money you work so hard for stays where it should, building a healthier business and a fairer reward for you.

From Last in Line to First in Control

If you are tired of being the one who comes last, it is time to change the system. You should not have to work ridiculous hours, take all the risks, and still be left with nothing at the end of the month.

Profit First is not complicated. It is about making a simple decision to pay yourself first and run your business on what is left. It is about recognising that profit is not a leftover, but a priority.

If you want to know whether your business is strong enough to implement Profit First, the best place to start is with the Business Performance Health Check.

This is not just about the numbers. The Health Check looks at your whole business: your systems, your strategy, your marketing, your sales, and your leadership. It gives you a clear picture of where you are today and what needs to change to create a business that pays you properly, grows sustainably, and gives you back control.

Take the Business Performance Health Check today.

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