Based directly on Shawn Van Dyke's Profit First for Contractors. Built for your current revenue stage with Day One starting allocations and Target percentages to grow toward.
In the original Profit First, Mike Michalowicz defines Real Revenue as total income minus subcontractors and materials — because that money passes straight through your hands. You never truly manage it. Van Dyke built the Contractor version specifically because your COGS ratio is high and variable, making the standard Profit First percentages misleading when applied to your top-line income.
Real Revenue is what your business actually generates — and it's what the Target Allocation Percentages (TAPs) are based on. But since calculating Real Revenue every time a check arrives is impractical, PFC converts TAPs into PTRs — Percentages of Total Revenue — so you can allocate from every deposit instantly without math.
Van Dyke's system requires five specific bank accounts. The Profit and Tax accounts must go at a separate bank — the "no temptation" bank. This friction is intentional. Making it inconvenient to access those funds forces the habit of leaving them alone.
Every PM payment, every deposit, every check goes into your Income Account first. This account is a holding tray only — money never stays here.
Twice a month, on the 10th and 25th, you move everything from Income to the other accounts using your Current PTR percentages:
Transfer Profit and Tax balances to your second "no temptation" bank immediately after allocation. Out of sight, out of mind.
Sub payouts, materials, Timemark, phone, mileage — all expenses come from OPEX only. If OPEX runs out, cut expenses. Never pull from Profit, Tax, or Owner's Comp.
You're in Van Dyke's Start-Up stage (under $250K total annual revenue). The TAPs from the Profit First table for this stage — applied against your real revenue ratio of ~29% — translate to these PTRs. Day One is where you start. Increase each quarter by 1% until you reach Target.
| Quarter | Profit | Tax | Owner's Comp | Total OPEX | What Happens |
|---|---|---|---|---|---|
| Day One (Now) | 1% | 1% | 9% | 89% | Set up accounts. First ever allocation. Proof of concept. |
| Q2 (Month 4) | 2% | 2% | 10% | 86% | First quarterly profit distribution (take 50% of Profit acct). Pay quarterly taxes from Tax account. |
| Q3 (Month 7) | 3% | 3% | 11% | 83% | Second distribution. Revenue rising = bigger absolute dollars even at same %. |
| Q4 (Month 10) | 3% | 3% | 12% | 82% | Hold Profit at 3%, continue bumping Owner's Comp and Tax. |
| Year 2 Target | 2% | 4% | 15% | 79% | Approaching full PTR targets. Business running predictably. Float buffer built. |
On the 10th and 25th of every month — and only on those days — you move all the money sitting in your Income account to the other four accounts using your current PTRs. Then transfer Profit and Tax to your second bank. Then pay whatever bills are due from OPEX. This rhythm replaces daily bank balance checking with intentional, structured allocation.
When you take your quarterly Profit distribution, that money is yours personally — for whatever gives you joy. It cannot go back into the business under any circumstance, regardless of what term you use (reinvest, plowback, etc.). If business needs money, that's an OPEX problem. Returning profit undermines the entire system and keeps you in the craftsman cycle.
Every quarter, increase your Profit, Tax, and Owner's Comp allocations by 1% each. Never skip a quarter and never step backward. Van Dyke and Michalowicz both agree: the consistency of the small steps matters more than the size of the steps. Each 1% shift is permanent — it rewires your business to operate on slightly less OPEX.
When the OPEX account runs short, you don't pull from other accounts — you cut expenses. This constraint is the mechanism that forces efficiency. It identifies waste and signals when the business can't support a cost. OPEX being tight isn't a failure; it's the system working exactly as intended. The solution is always reduce spending, not redirect savings.
On the first business day of each new quarter, take 50% of the Profit account balance as your personal distribution. Leave the other 50% as your reserve/emergency fund. Your goal is to build the reserve to cover 3 months of Total OPEX. Once that's reached, you can invest excess profit back strategically — with a defined ROI calculation.
Your current $700 float account fits inside the OPEX account in this system. It's not a separate PFC account — it's a minimum balance you maintain within OPEX to cover the timing gap between paying subs and collecting from PMs. As revenue builds and your OPEX account holds more, the float pressure disappears naturally. Target: keep $3K–5K as a rolling minimum in OPEX.