The Profit First method emphasises the importance of managing cash flow in order to ensure the financial stability and growth of a business. One way to do this is by using averages to manage your cash flow.

Using averages can help you better predict your cash flow and identify patterns in your income and expenses. By understanding the average amount of income and expenses that you typically have in a given period, such as a month or quarter, you can more accurately forecast your cash flow. This information can help you plan for and manage the ebbs and flows in cash flow, allowing you to make informed decisions about how to allocate your resources.

Additionally, using averages can also help you identify areas where you may be overspending or underspending. For example, if you notice that your expenses are consistently higher than your average, you can take steps to cut costs or find ways to increase your income. On the other hand, if you notice that you're consistently underspending in a certain area, you may be able to reallocate those funds towards investments that can help grow your business.

By managing your cash flow using averages, you can have a better understanding of the financial health of your business and make more informed decisions about how to allocate your resources. This can help ensure that your business is consistently generating profit and is on a path to long-term financial success.