Summary of Profit First

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Profit First book summary

Editorial Rating

8

Qualities

  • Applicable
  • Concrete Examples

Recommendation

This practical workbook can help small-business owners improve their companies. The core of entrepreneur Mike Michalowicz’s advice is self-evident: If you pay yourself and the government first – in profit, salary and taxes – you have to run your business with what’s left. In his analysis, focusing on expenses before anything else and martyring your profits and salary to reinvest in growth creates a never-satisfied beast you eventually have to kill. Michalowicz hones his simple but uncommon message relentlessly: Put “profit first” and thrive.

About the Author

Mike Michalowicz is head of Profit First Professionals. You can find an “Instant Assessment Form” for your business at mikemichalowicz.com. 

Summary

Change your thinking from “Sales - Expenses = Profits” to “Sales - Profit = Expenses.”

Entrepreneurs know the refrain: work long, hard hours and plow everything back into the business. Conventional wisdom says grow, grow, grow, and don’t think about profits until you do. But most new ventures that follow this advice don’t endure. Overall, “eight out of ten businesses fail, and the number one reason they fail is lack of profitability.”

To be successful, you need to change your thinking. From the day you start your business to the day you sell or dissolve it, pay yourself first. This simple shift – from dreaming about taking a profit one day to taking a profit from day one – will improve your mental and financial health and save your business. Determine what you should spend to run your business by first deducting a profit, paying yourself a competitive salary and putting aside enough money to pay your taxes. Unless your business income exceeds $5 million or so, what you do is not at the level of the work of a Fortune 500 CEO, so pay yourself accordingly and reasonably. What’s left over...


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