Allocate Your Profits for the New Year

As we embark on a new year, it’s a perfect time to contemplate how we can strengthen our businesses and ensure they flourish in the months ahead. One common strategy that often surfaces is the idea of reinvesting profits. While it seems like a logical approach, there’s a fresh perspective worth exploring. Particularly when your business is in its infancy and you may still rely on a day job to cover personal expenses, reimagining how you allocate your profits can be a game-changer for the coming year. 

New Year, Fresh Profit Allocation 

To appreciate the impact of profit allocation, consider this: by funneling all profits back into your business, you risk creating a dependency within it. This scenario mirrors Parkinson’s Law, suggesting that available resources tend to get used up. Consequently, profits may dwindle, and your business can begin to operate with the assumption that these funds will forever be at its disposal. 

Preparing for a Day Job Transition 

When the time arrives to transition away from your day job and start drawing a salary or owner’s draw from your business, you’ll confront the challenge of reshaping your business’s operational model. Expenses may need to be reduced to ensure there’s enough capital for your income. This process may involve identifying and cutting unnecessary expenditures that have accumulated over time. Yet, envision an alternate path—one that you could have embarked on from the beginning. 

Unlocking the Potential of Proactive Profit Allocation 

Using profit allocations for both personal and business needs from the very start, you force your organization to operate with efficiency. Such an approach fosters an innovative culture where you’re continually searching for the most effective solutions rather than relying on throwing money at problems. Allocate your profits and you’ll know when you need to get creative and when you can spend a little extra. 

Initiate Profit Allocation in the New Year 

As we step into the new year, consider this resolution: take a percentage of income and allocate your profits in a dedicated bank account, treating it as if it were your salary. When the moment comes to shift your focus entirely to your business, you’ll have a financial cushion to navigate lean periods confidently. Your business will have ingrained the practice of systematically allocating funds, bolstering your ability to make decisions without being driven by fear. 

Furthermore, adhering to this model over time empowers you to be a step ahead of funds for payroll before expanding your team. This forward-thinking approach cushions the impact of training costs and the time required for new hires to reach their peak productivity. 

Harnessing Parkinson’s Law for Your Business 

It’s also important to note that dedicating a portion of your profits to yourself can be the key to robust business growth in the new year. By aligning with Parkinson’s Law, you set the stage for organic development, ensuring that your business flourishes on a solid foundation of financial stability and sustainable expansion.  


This year, make it a point to rethink how you allocate your profits and embark on a path to a stronger, more prosperous business. Start 2024 strong with Profit First, and you’ll be able to tell the difference in your business this time next year.  

If you need help getting started or just want someone to walk you through the whole process, our Profit First coach is ready to help. Reach out to the bookskeep team today and start 2024 strong! 

Post Author Cyndi Thomason

Cyndi Thomason

Cyndi Thomason is founder and president of bookskeep, a U.S.-based accounting, bookkeeping, and advisory firm for ecommerce sellers worldwide. She has a passion for data analysis and process development. She uses that passion to educate her clients and help them structure their businesses to maximize profits.

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