Profit First – Book Review
Let me give you a cliff notes version of my FAVORITE biz book of 2014… a must read if you want to keep your money.
This book, by far, is my most favorite business book of all time.
It’s called Profit First and it was written by Mike Michalowicz.
You might not know this about me, but I love numbers. In fact, after I got my business degree (20 years ago!), I thought I might become an accountant (after a tax class, I realized it wasn’t for me!).
The truth is I geek out on numbers and I’m pretty in tune with the money coming in and the money going out in my business. However, after reading this book I realized how this book makes managing business numbers and money incredibly easy.
Most business owners and entrepreneurs struggle with numbers. In fact, I did a survey recently and asked the members of my community to share their biggest business challenges and frustrations. One of the biggest challenges shared was “I am not able to pay myself, from my business, what I believe I am worth”.
If you’re living this right now, I can’t help but ask you, if you’re not getting paid what you’re worth by your own business, then what the heck are you doing it all for?
You see, most of us in business follow this general business accounting principle “Sales – Expenses = Profit”. This equation clearly shows why business owners are not paying themselves enough – because there is usually no (or little) money left over after the expenses are paid.
Here’s what I love most about the book Profit First — it turns the old “Sales – Expenses = Profit” principle around to “Sales – Profit = Expenses”. This means, when money comes in the business door, the first thing to get paid is PROFIT, then YOU. Everything else (including expenses) comes after that. Imagine that! YOU get paid before your expenses!
If you’re wondering “How much should I put aside to pay my expenses – i.e. my team members etc.”- check out page 38 of the Profit First book –it tells you exactly what to do with your business revenue. I encourage you to follow this exactly as it’s shared in the book.
A word of warning – following these guidelines may mean you need to make significant changes in the way you manage your business numbers. However, once you get started, you’ll never look back.
In the video above, I share the single piece that I implemented that made the most impact for me and my business. Click play above to hear about it.
Whether you’re new to business or have been at it for a while, this book is REQUIRED reading! Don’t fall into the trap of working your butt off and not having anything to show for it.