What if, rather than you serving your business, your business served you? What if you could turn a profit from your very next deposit? And what if you had the power to guarantee that profitability?
I am always looking for the best books to read that can help my businesses and those that I consult. I came across this book a couple of months ago and immediately began to enact the principles Mike talks about. I found much in common with him when he talked about his earlier experiences as an entrepreneur. There is a high percentage of businesses that fail. What can entrepreneurs do to succeed immediately?
Mike’s concept was so simple yet so eye-opening. Mike explains that although we are taught that your profit is what is left over after you subtract expenses from your sales, the problem is that most companies operate with no profit or a loss, and eventually get more debt or have to close up shop. The answer for most entrepreneurs is to try to just increase sales. But the problem here is that your expenses go up with sales, and just becomes a never-ending cycle.
In his book Profit First, Mike explains how this age-old accounting formula turns great businesses into cash-eating monsters, trapping you in a day-to-day, check-to-check struggle to survive. His premise to solve this problem is simple. Flip that “Frankenstein Formula” and take profit first without compromising your business. This simple equation: Profit First Formula of Sales – Profit = Expenses actually forces innovation, supports sustained growth and skyrockets profits.
After reading this I immediately started the profit-first system. After for years being caught up in the “Frankenstein Formula” (learn more about it in the podcast!) my expenses were just as high as my sales, so I can only start with a nominal amount, with the goal of trying to grow it to his targeted allocation percentage. I even started to do this with my personal financial accounts. For many businesses, it may take time to get the profit you want, but the goal is to change your mindset.
Mike has also written the cult classic The Toilet Paper Entrepreneur and the game-changing book, The Pumpkin Plan, where Mike Michalowicz details the cash management system that will ensure any business – of any size, in any industry, no matter how much debt it carries or how many years it has been operating—will become permanently profitable.
Click here to get his free resources to start the profit-first system, and order the books below today!