Implementing a "pay yourself first" strategy while maintaining a living margin requires a disciplined approach to financial management. Here's a step-by-step guide to allocating revenue to owner’s compensation, operating expenses, profit, and taxes.

Key Performance Indicators (KPIs) are essential tools for managing and measuring the financial health and operational efficiency of your business. For both service-based and product-based businesses, managing payroll and Cost of Goods Sold (COGS) is critical to maintaining your living margin and overall profitability.

The concept of "living margin" in a business context refers to maintaining a comfortable buffer in your financial operations to ensure stability, sustainability, and the ability to handle unexpected expenses or downturns. It's about having enough financial cushion to support growth, handle emergencies, and avoid cash flow crises.

If you’re like most entrepreneurs, you might be frustrated at how little money you take home even though your business produces substantial revenue. Or you might be shocked at the end of the year when you’re hit with a huge tax bill, even though you have no money to pay it. 

If you own a small business or work as a contractor, how much do you pay yourself in bonuses or salary? And how much do you put away for taxes? Cash-flow accounting is a system that tells you exactly how much to allocate into three categories. 

This system works because it modifies your behavior and forces you to manage your cash flow differently. It will be worth it if you truly embrace the cash-flow accounting method and see the results. The monthly, quarterly, and annual tasks will get easier over time, and, most importantly, your living margin will grow exponentially.

Living margin accounting is a simple, effective way to increase margin and to begin to see your cash flow steadily grow. It may even be the most revolutionary program for transforming how you guarantee financial margin in your business.