Profit first book

Profit First" by Mike Michalowicz:

The concept of "Profit First" is deceptively simple: prioritize profit above all else. Yet, this approach revolutionizes the way businesses operate. Michalowicz argues that growth is only half the equation, and many entrepreneurs focus too much on expansion without ensuring profitability. This leads to a bigger, but not necessarily better, business.


The traditional approach to profit is flawed. We often view profit as an event, something that happens at the end of the year or after a big sale. However, profit must be a habit, baked into every transaction and moment of our business. It's not something we can put off until tomorrow or next quarter.


The "Profit First" system is a cash-management approach that flips the traditional accounting formula on its head. Instead of Sales - Expenses = Profit, we should be using Sales - Profit = Expenses. This means taking our profit first, before paying expenses or investing in growth.


Michalowicz emphasizes that revenue is vanity, profit is sanity, and cash is king. We can't grow our way out of profit problems; we must fix profit first, then focus on growth. Efficiency is key to sustained profitability, and by taking profit first, we're forced to think smarter and innovate more.


The beauty of "Profit First" lies in its simplicity. When we prioritize profit, we eliminate unnecessary expenses and focus on what truly matters. We can start small, transferring a percentage of our deposits into a profit account. This builds confidence and proves the system to ourselves.


In essence, "Profit First" is a mindset shift. We must run our businesses based on what we can afford to do today, not what we hope to afford someday. By prioritizing profit, we ensure our businesses are sustainable, efficient, and profitable. We can't afford to ignore this approach any longer.


Some key takeaways from the book include:


  • - Take profit first, before paying expenses or investing in growth.
  • - Profit is not an event, but a habit that must be baked into every transaction and moment of our business.
  • - Efficiency is key to sustained profitability.
  • - Eliminate unnecessary expenses and focus on what truly matters.
  • - Run your business based on what you can afford to do today, not what you hope to afford someday.

By implementing the "Profit First" system, entrepreneurs can transform their businesses and achieve sustained profitability. It's time to prioritize profit and build a stronger, more resilient business.