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Industry InsightsOctober 8, 2024

Boost Your Profits With This Accounting Hack

How can I make my business more profitable? “That’s the million-dollar question, right?” Rachel Siegel says with a smile. As the owner of Go Figure Accounting and author of Profit First for Optometrists and the upcoming Profit First for Cybersecurity, she’s no stranger to helping businesses maximize profitability in complex industries. Profit First for MSPs and Cybersecurity CompaniesRachel explains […]

How can I make my business more profitable?

“That’s the million-dollar question, right?” Rachel Siegel says with a smile. As the owner of Go Figure Accounting and author of Profit First for Optometrists and the upcoming Profit First for Cybersecurity, she’s no stranger to helping businesses maximize profitability in complex industries.

Profit First for MSPs and Cybersecurity Companies
Rachel explains that many service-based businesses, including MSPs and cybersecurity firms, operate under the traditional formula: Sales – Expenses = Profit. In this setup, profit becomes whatever is left over after paying expenses. “The issue with this approach is that profit is treated like an afterthought, and for businesses that need to manage recurring contracts, technology upgrades, or security solutions, waiting for profit to materialize isn’t sustainable,” she notes.

Instead, Rachel advocates Profit First, a methodology the prioritizes profit from the outset: Sales – Profit = Expenses. In this scenario, businesses are forced to be more intentional with their spending.

Why This Matters for MSPs and Cybersecurity Firms
For MSPs and cybersecurity professionals, managing recurring costs like software licensing, infrastructure updates, and staff training can be financially draining. With profit often falling to the bottom of the list, it’s easy to lose track of long-term financial goals. Rachel explains, “Profit First ensures that profit isn’t an afterthought—it’s baked into your financial planning from day one.”

How Profit First Can Help You Scale
Rachel emphasizes that this approach is especially valuable in industries where monthly recurring revenue (MRR) is a key growth driver. “By allocating revenue to specific accounts for profit, taxes, and operating expenses as soon as it hits your account, you ensure that profit is secured first, and you never find yourself short on cash when tax season rolls around or when you need to invest in infrastructure,” she says.

MSPs and cybersecurity firms often operate on thin margins, making it critical to allocate funds wisely. The Profit First system encourages setting up separate bank accounts for profit, taxes, operating expenses, and owner’s pay. “Every time revenue comes in, you allocate a percentage to each account based on your targets. This guarantees profit rather than hoping for it at the end of the quarter,” Rachel explains.

Imposing Financial Discipline on Operating Costs
Rachel adds that for MSPs and cybersecurity firms, which often face fluctuating expenses—such as unexpected equipment failures, client demands, or rapid tech advancements—the Profit First method is a game-changer. “By limiting the amount available for operating expenses, you’re naturally encouraged to scrutinize every purchase. This curbs overspending, especially in areas like software subscriptions, training, equipment, and marketing, all while ensuring your profit margins remain intact,” she says.

This discipline is particularly important in industries where it’s easy to justify high costs for technology or staffing, often leading to cash flow issues. With Profit First, you maintain a steady, predictable flow of revenue to cover essential costs without sacrificing your profitability.

Building a Resilient Business
One of the greatest benefits of Profit First for cybersecurity firms and MSPs is the ability to build a stronger, more resilient business model. “When profit is guaranteed, you have a safety net in place. This allows you to weather tough economic conditions, invest in better tools, and even expand your service offerings without fear of running out of cash,” Rachel says.

For service providers, especially in the high-demand and high-risk cybersecurity sector, having the cash flow to invest in new technologies and certifications is crucial for staying competitive. “By using Profit First, you’re not just creating a more profitable business—you’re creating a more resilient one that can innovate and scale over time,” Rachel concludes.

By integrating Profit First into their operations, MSPs and cybersecurity professionals can transform how they handle finances, making profit a non-negotiable part of their business model while maintaining the flexibility to grow and adapt in a rapidly changing industry.

Go Figure Accounting