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 shareholders, 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.
Basically “Profit First” is the ‘grandma envelope system’ but instead of for your personal finances, it’s for your business. Put aside your profit first, in a separate account, and prioritize its creation… increase the profit, and decrease the operating expenses by a couple of percents every quarter.
Here’s a Profit First Overview in 3-minute cartoon form:
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 currently allocating money, and the TAP being the …