Profit First – Book Review / Summary

Profit First Book Review and Summary - Mike Machailowitz

Profit First by Mike Michalowicz is a small business classic. Mike preaches that you should take profit first – that you as a business owner, and IF you ever had share-holders, should expect profit – and the business will run better because of this process. It will be healthier, because it will be formed on the premise that profit is important.

Profit First Summary:

  • You should identify where you’re at with your profit, owner’s draw, operating expenses, and taxes.
  • Create separate accounts with clear names like OP EX 65% (TAP 51%) – the first percentage being where you’re current allocating money, and the TAP being the ‘Target Allocated Percentage’
  • Each quarter – move 4% out of Op Ex and add 1% to each of the other accounts.
  • This will create a squeeze – since you’re use to operating at 65% and operating on 61% of revenue will feel tight. This is a good squeeze according to Mike – it’s like when you can make a tiny travel sized version of toothpaste last for a month if you have to, and you become lest wasteful and conserve more as appropriate.

 

Profit First Review:

This is one of those books that I wanted to get out and try right away – even though I generally pride myself on taking things with a grain of salt and moving slowly. The reason it’s so tempting to just go for it now, is that he leaves these ‘call-to-actions’ throughout the book that push you to want to go for it now.

So my review is partly this way because I took action on the Profit First system, and am now implementing it in my small business:

  • The system is difficult. It’s easier sometimes to just spend as much as you want on your business while your building it. The problem is that I was likely building out areas of the business that wouldn’t serve me long-term because they were low-profit, or no-profit – so they need to be trimmed or cut for the long-term health of the business.
  • The book has a lot of urgency in it, and I really appreciate the little call to actions and and emphasis placed on action.
  • The book is well-written and Mike does a really good job of entertaining along the way.

*The Audible version is awesome – as Mike reads it and I really appreciate his playful and interesting approach in the reading:

  • I might suggest re-reading this a couple times, and I have started my second reading.
  • Spend some time with this one, and get ready to write along the way.

 

If you’re also interested in cranking your Small Business marketing up to 11 – Check out my audio-book for a clear-cut, no-nonsense way to get more leads, and become famous in your niche.

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Personal Financial Missions

My Key Missions

  • Get to basic financial freedom
  • Get 300k in bank

Outlining Upcoming Articles:

How I got to financial freedom:

  1. Going to college or training while working 30-40 hours a week
  2. Getting a job in a design, marketing or coding job with no previous experience
  3. Working an average 15 hours on the side while being paid a salary
  4. Working on your personal brand and then transitioning on your own with a financial buffer
  5. Learning to delegate and focusing on the business

How  I’m getting to 300k in the bank

  1. The ultimate Guide to learn how to sell
  2. Finding VA’s and people to help with the work + Getting a team working in the same direction
  3. Understanding the important KPI’s for a small business / getting to profit
  4. Selling for more / not getting squeezed too hard by vendors
  5. Going from 20 to 50 clients in a service business
  6. Scaling from an average of 2k retainers to 3k
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