Profit accounts are common in many brick-and-mortar businesses. They’re often labeled and categorized as “retained earnings” and typically used for funding an expansion, an acquisition or paying future dividends to shareholders.
But as freelance professionals, we’re not typically dealing with expansions, acquisitions or shareholder dividends.
So does that mean we can just take the balance in our checking account? Why would we need a separate profit account in our bank?
In my view, profit accounts are critical to the success of freelance writing businesses.
Here are three good reasons why:
1. It’s a way to treat yourself
Let’s be honest, most of us don’t do enough to treat ourselves or our families. And when we do, we feel guilty about it.
We feel bad spending on “fun” things when we should be putting that money toward our expenses.
And yes, a good portion of what we earn will go to our mortgage, insurance, groceries, etc.
But that shouldn’t be all of it.
If we put aside even a small percentage of what we earn in a profit account every month, we can use a portion of that money to treat ourselves (and our family) guilt-free.
2. It’s a tangible way to see your business grow
I just talked about taking a profit distribution from your profit account periodically. Usually, I recommend withdrawing 50 percent of the balance every quarter.
This still leaves a balance in our profit accounts that will continue to grow over time. And that balance is a tangible, visual reminder of our success and growth.
Which is important because it’s easy to feel like we’re not making any progress, even though we actually are.
3. It’s a way to create some wealth
Most traditional brick-and-mortar businesses can be sold when the founders are ready to exit.
Not so much with freelance businesses. Most of us won’t be able to sell our businesses and cash out when we’re done.
But when we have a profit account, we’re accumulating some wealth that will be available to us by the time we hang up our hats.
Take another look at point #2 above. If you’re only taking out 50 percent of your profit account balance as a distribution every quarter, that amount continues to grow.
And over the course of five, 10 or 20 years, you could have a very sizeable balance, even after rewarding yourself every quarter!
Open a Profit Account Today
I hope I’ve convinced you that if you don’t already have a profit account for your business, it’s time to open one.
Because when you do, it can dramatically change the way you feel about your business — and your wealth.
By the way… whenever you’re ready, here are 4 ways I can help you grow your freelance business:
1. Grab a copy of my book for ESTABLISHED writers.
You’ll discover a different way to think about your challenges during this crisis. Plus you’ll get clear recommendations to get you through the storm safely … and to come out the other side stronger than ever. — Click Here
2. Download a free copy of my book for writers who are NEW TO FREELANCING.
I’ll show you the 3 things you need to do to get your business off the ground safely and land your first paying client faster. — Click Here
3. Join my implementation program and be a case study.
I’m putting together a new implementation group this month. If you’d like to work with me to grow your income quickly with better clients (and become one of my new success stories) … just hit reply and put “Case Study” in the subject line.
4. Work with me privately.
If you’re a 6-figure writer who’s trying to earn more in less time, with less stress, I might be able to help you get there faster than you think. Just hit reply, put “Breakthrough” in the subject line, and I’ll back to you with more details.