[Review] Profit First by Mike Michalowicz

Profit First By Mike Michalowicz - Book Review And Summary By Charelle Griffith

Thinking about reading Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine by Mike Michalowicz?

Have you heard people business owners talking about Profit First and want to know a bit more about the book before buying a copy for yourself. If so, you are in the right place! Keep on reading to find out more about what you can expect to find inside Profit First, as well as hearing my thoughts on the book.

Profit First by Mike Michalowicz - Book Review and Summary by Charelle Griffith - Pin

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Introduction
Chapter 1: Your business is an out-of-control cash-eating monster
Chapter 2: The core principles of profit first
Chapter 3: Setting up profit first in your business
Chapter 4: Assessing the health of your business
Chapter 5: Allocation percentages
Chapter 6: Putting profit first into motion
Chapter 7: Destroy your debt
Chapter 8: Find money within your business
Chapter 9: Profit first – advanced techniques
Chapter 10: The profit first life
Chapter 11: how to keep it from falling apart
Epilogue

ABOUT ‘PROFIT FIRST’

Profit First was written by Mike Michalowicz and published by Portfolio Penguin. The book was first published in 2014 by Mike Michalowicz. Profit First is Mike’s third book having already published The Toilet Entrepreneur and The Pumpkin Plan. The book offers a different approach to cash management with the aim being it will help small businesses to become, or increase their, profitability.

INSIDE ‘PROFIT FIRST’

In the beginning Mike talks about the origins and impact of profit first. Mike originally created profit first to help himself, before trying it with a few other business owners and then included a small paragraph about the method in his book The Toilet Entrepreneur. He talks about he began to get emails of other business owners using the method with great success and after a while decided that he needed to write a whole book dedicated to the method.

Next Mike talks about the dangers of growth and how in business bigger isn’t always better. Many believe that in order to be more profitable they need to grow and in fact it couldn’t be farther from the truth. He also talks about how traditional accounting (General Accepted Accounting Principles) are killing your business.

Mike believes that rather than following the tradition of Sales – Expenses = Profit if you want to be profitable you need to put profit first and instead the formula should be Sales – Profit = Expenses. He then goes on to outline the four core principles of profit first.

Now that you understand the general idea of profit first the book concentrate on how to set profit first up in your business. Mike tells you exactly what accounts you need to set up and the role of each account. There is then an assessment for you to complete so you can understand the current health of your business and be fully aware of your starting point.

Once you’ve got your accounts set up it is time to start working out how much money should be going into each account. Mike walks you through how to work out your allocation percentages. By this point you have everything in the book to start operating the system and so there is advance to help you start using the system on a day-to-day basis.

The next few chapters won’t be relevant to everyone. There is one around getting out of debt and another is about finding more money within your business.

Then towards the end Mike adds in some advanced techniques for those who want to take their profit first implementation to the next level. First the techniques are focused on the using the method in your business, but then there are also some tips for embracing the method for your personal life too.

To end Mike gives the reader a warning ‘The worst enemy of Profit First is you’. He then outlines some of the common mistakes other people have made when following Profit First to help you to avoid making those mistakes.

FINAL THOUGHTS FROM CHARELLE

Overall, I loved Profit First. Whilst I love numbers and am happy to regularly look at my accounts, I appreciate that I’m in the minority. I can appreciate how profit first works with human nature and will enable more business owners to pay themselves properly and to generate a bigger profit. What I love about the book is that Mike is very prescriptive. He tells you exactly what you need to, which makes it a very practical book. The book alone is enough to successfully start implement profit first.

WHO SHOULD READ PROFIT FIRST BY MIKE MICHALOWICZ

Firstly, every business owner who isn’t making enough profit in their business or isn’t paying themselves enough should read this book. However, even if you are a business owner that is paying yourself well and / or consistently making profit you can still find this book useful. Even if you don’t decide to implement profit first. Mike’s way of thinking is refreshing and even if you decide to carry on with the traditional way of accounting at least you’ll be doing it as an active decision rather than not knowing an alternative approach.