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Profit First: A Simple System To Transform Any Business From A Cash-Eating Monster To A Money-Making Machine

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You are about to discover the profoundly simple yet shockingly effective accounting plug-in that will transform your business from a cash eating monster into a money making machine. In Profit First, Mike Michalowicz, author of The Pumpkin Plan & The Toilet Paper Entrepreneur, explains why the GAAP accounting method is contrary to human nature, trapping entrepreneurs in the You are about to discover the profoundly simple yet shockingly effective accounting plug-in that will transform your business from a cash eating monster into a money making machine. In Profit First, Mike Michalowicz, author of The Pumpkin Plan & The Toilet Paper Entrepreneur, explains why the GAAP accounting method is contrary to human nature, trapping entrepreneurs in the panic-driven cycle of operating check-to-check and reveals why this new method is the easiest and smartest way to ensure your business becomes wildly (and permanently) profitable from your very next deposit forward.


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You are about to discover the profoundly simple yet shockingly effective accounting plug-in that will transform your business from a cash eating monster into a money making machine. In Profit First, Mike Michalowicz, author of The Pumpkin Plan & The Toilet Paper Entrepreneur, explains why the GAAP accounting method is contrary to human nature, trapping entrepreneurs in the You are about to discover the profoundly simple yet shockingly effective accounting plug-in that will transform your business from a cash eating monster into a money making machine. In Profit First, Mike Michalowicz, author of The Pumpkin Plan & The Toilet Paper Entrepreneur, explains why the GAAP accounting method is contrary to human nature, trapping entrepreneurs in the panic-driven cycle of operating check-to-check and reveals why this new method is the easiest and smartest way to ensure your business becomes wildly (and permanently) profitable from your very next deposit forward.

30 review for Profit First: A Simple System To Transform Any Business From A Cash-Eating Monster To A Money-Making Machine

  1. 5 out of 5

    Shorel

    The title to this book will turn off many people. Gnostic Christians won't like it because "profit" is a bad word. Entrepreneurs won't because it sounds too good to be true. The general populace because they aren't business owners. However, the formula behind this book is critically applicable in any aspect of life and not only business. Here's the formula: Sales-Profit=Expenses Whoa! Seems rather backwards doesn't it? In business, here is how it works: Figure out your Real Revenue: The income gener The title to this book will turn off many people. Gnostic Christians won't like it because "profit" is a bad word. Entrepreneurs won't because it sounds too good to be true. The general populace because they aren't business owners. However, the formula behind this book is critically applicable in any aspect of life and not only business. Here's the formula: Sales-Profit=Expenses Whoa! Seems rather backwards doesn't it? In business, here is how it works: Figure out your Real Revenue: The income generated by your company after subtracting the cost of materials and subcontractors. Dump your income into a bank account twice a month, then immediately disperse into other bank accounts in the following order: Profit - 1% (monthly/quarterly working up to 5%) ("Profit First") Owner's Pay - 1% (working up to 50%) Tax - 1% (working up to 15%) Operating Expenses - the remainder % (working down to 30%) Every month or quarter, move the percentage up 1% (down for OpEx), knowing that you aren't allowed to go back. What does this do? It forces you to bootstrap. To think agile. To be lean and mean. You don't pour the profit back into the business. You think how you can leverage the decreasing OpEx percentage in your favor. You no longer think "yeah, I'll just spend the money on that necessary gadget." Now, you think "how can I not buy the gadget, and still figure out a way to do it better?" How does this apply to life? Do you prioritize your priorities? Talking with God? Meditating on God's Word? Exercise? Training your children? Romancing your wife? Or do you give them what is left over? How do you set up ways that prioritize the priorities? In business, you set up a separate bank account for your Profit and Taxes at the MOST inconvenient bank that has NO online access, no bank cards and requires you to physically visit the bank to get money out. For morning time with God, I place my alarm on the other side of the bedroom, so I have to physically get out of bed. You don't get back in bed. And in business you don't touch the Profit or Taxes accounts and you definitely don't pour the profits back into the business. You want to be agile...up and moving. For exercise, I might hide all my shoes but my running shoes. Or leave my running clothes on top of my alarm. Or tell myself that I must do 1 pushup (which always results in doing them all). For a personal retreat, I might book a non-refundable hotel. You get the drift. Prioritize the priorities. Sales-Profit=Expenses. Profit First.

  2. 4 out of 5

    Jure Brkinjač

    Good concept. General accounting principles dictate that: revenue - expenses = profit. This book suggests turning this formula around so that: revenue - profit = expenses. It basically plays to the common human trait of using whatever resources we have to make things happen. If we have one month to complete a project, it'll take us one month. If we have a week, it'll take us one week. Urgency and scarcity work as incentives. This same principle is used here for treating expenses when it comes to Good concept. General accounting principles dictate that: revenue - expenses = profit. This book suggests turning this formula around so that: revenue - profit = expenses. It basically plays to the common human trait of using whatever resources we have to make things happen. If we have one month to complete a project, it'll take us one month. If we have a week, it'll take us one week. Urgency and scarcity work as incentives. This same principle is used here for treating expenses when it comes to running a business. The writing style, however, is horrible. I can't stand the idiotic way the author is trying to be funny and/or relatable. This seems to be a general trend in certain contemporary business books. Please stop.

  3. 4 out of 5

    David Huff

    One of the simplest, clearest, and most practical approaches to handling the finances of a business that I've ever read. "Profit First", just as the name implies, is a straightforward, understandable discipline that -- if applied - can completely transform a business, and put it on the path toward managing cash flow to greater -- dare I say guaranteed? --profitability. No rocket science here, just basic common sense, and a system that's wonderfully easy to apply and manage. Not only does it give One of the simplest, clearest, and most practical approaches to handling the finances of a business that I've ever read. "Profit First", just as the name implies, is a straightforward, understandable discipline that -- if applied - can completely transform a business, and put it on the path toward managing cash flow to greater -- dare I say guaranteed? --profitability. No rocket science here, just basic common sense, and a system that's wonderfully easy to apply and manage. Not only does it give me a whole new paradigm for advising clients in my CPA practice, but I'll be adopting this model for my own business.

  4. 4 out of 5

    Arthur Beredjick

    I was pretty skeptical when in the first chapter of Profit First the author guaranteed every business that uses his system will be immediately profitable, and by the end of the book I was proven correct. “Transforming Your Business” to become more “profitable” happens by changing the definition of profit and implementing an over-complicated accounting system using several different bank accounts. The whole gist is that entrepreneurs should be paying themselves a salary and dividends and accruing I was pretty skeptical when in the first chapter of Profit First the author guaranteed every business that uses his system will be immediately profitable, and by the end of the book I was proven correct. “Transforming Your Business” to become more “profitable” happens by changing the definition of profit and implementing an over-complicated accounting system using several different bank accounts. The whole gist is that entrepreneurs should be paying themselves a salary and dividends and accruing for taxes regularly. Rather than rev - exp = profit, rev - profit = expenses. Decide what you want your profit to be and adjust expenses accordingly. This book is an irresponsible take down of GAAP. You can take the general idea of paying yourself a salary, dividends, and having a “lean” business without ditching your accounting systems (which, GAAP is being reviewed and modified annually, Mr Author who claims it is an old system. You just don’t really know how to use it. And you kind of admit that early in the book lol.)

  5. 4 out of 5

    Brandon Wissel

    A 180 page book of common sense that could be wrapped up in five pages. The only person profiting from reading this book is the author who managed to sell a self help book to poor souls who either don't understand money, or got shilled into buying it. It's bizarre to assume there are people who don't understand these basic concepts that actually own businesses. Half the book is an advertisement for his own consulting business. The only use for this book is reading it in public to make it look like A 180 page book of common sense that could be wrapped up in five pages. The only person profiting from reading this book is the author who managed to sell a self help book to poor souls who either don't understand money, or got shilled into buying it. It's bizarre to assume there are people who don't understand these basic concepts that actually own businesses. Half the book is an advertisement for his own consulting business. The only use for this book is reading it in public to make it look like you own a business or something.

  6. 5 out of 5

    Curtismchale

    Money is hard. Running a profitable business is hard. In theory all the accounting principles work, but only if you're an accountant, and then not even always. Profit First introduces you to a new way to manage your business finances, take your profit first. Forget about fancy stuff, this keeps it simple and if you follow it's plan you will build a business that is wildly profitable.

  7. 5 out of 5

    Kate McKenna

    Not 100% applicable to personal finances as it says. Could have just read the one 'personal' chapter. Felt as though it's a lot of repetition of the same anecdotes, corny jokes, and "breaking the third wall" writing. Was happy when it was completed.

  8. 5 out of 5

    Corey

    Summary: This book is great. Well structured, informative and the writing is entertaining. Some great examples and supporting resources are available through the author's website and you are directed to them throughout the book. The system described in the book turns generally accepted accounting principles on their head by changing the way you operate your business from revenue - expenses = profit to revenue - profit = expenses. This minor change has a massive impact on your psychology and flows Summary: This book is great. Well structured, informative and the writing is entertaining. Some great examples and supporting resources are available through the author's website and you are directed to them throughout the book. The system described in the book turns generally accepted accounting principles on their head by changing the way you operate your business from revenue - expenses = profit to revenue - profit = expenses. This minor change has a massive impact on your psychology and flows through into business and financial efficiency. The author offers an accounting system that is simple to implement, but able to yield massive financial gains over time. I like these seemingly obvious and basic approaches that for some reason aren't the norm. They are often easy to implement, easily automated and have large rewards. While my business ventures only create infrequent revenue at the moment, as things pick up I'll be starting with this system in place which will hopefully give me the edge and help build good habits. I would recommend this book to anyone operating a business or thinking of operating one. The main message I took from this book is that our psychology leads us to make poor decisions and we can prevent this from happening by creating effective systems that neutralise our tendencies. Profit first is one such system. Some notable points: - Profit is the important foundation of a business. We must master profit in order to have a business that lives up to its purpose. - A lack of profitability leads to a lot of business failure. A business can earn immense revenue, but still be unprofitable. - Rather than trying to leverage our habits, it is more productive to change the structure around us and our habits to leverage them instead. - Four tips to dieting that also work for finance: Use small plates (redistribute money to other accounts), serve sequentially (allocate based on percentages to accounts in order), remove temptation (move your profit and other tempting accounts out of arm's reach and make it hard to access them) and enforce a rhythm (do your allocations twice a month, on the 10th and the 25th of the month works well). - Parkinson's Law applies to your money in the sense that when you have lots available, you'll use it, when it you don't, you won't. By restricting access and visibility of your money, you'll blow less cash and run a leaner operation. - We place additional significance on whatever we encounter first. This is called the primacy effect. - When you take your profit first, your business will tell you whether you are streamlined enough and can pay your bills or not. If you can't, you need to address these points and make fixes. - Sales - profit = expenses. - The model: Set up five accounts. Income, owner's pay, operating expenses, profit and taxes. Determine target allocation percentages based on an instant assessment, but start slow (1% at implementation). From here all receipts from sales go into the income account and on the 10th and 25th of each month you'll spread the money into the other accounts as per your allocation percentages. Then disburse salaries from the owner's pay account and pay bills from the operating expenses account. At the start/end of each quarter take 50% of the money from the profit account as profit distribution. To optimise this system, set up the profit and taxes accounts with a separate bank. - No matter what the number is, if you work toward it and believe it is a possibility, you will achieve it and even blow past it. - marketwatch.com can provide important information about similar businesses. - Don't cut your salary to make the numbers work. The goal of every business is health and that is achieved through efficiency. - Your company should reserve your personal income tax liability and then pay it. Your business should pay your taxes. - You can determine what owner's salary your business can afford by looking at your lowest three months and drawing a reasonable percentage from that. - The ultimate in innovation is to extract more benefit from less expensive resources. - It's smarter to dig a well than to try and make it rain. - Every business should have a three month cash reserve. - There is a simple rule to determine staffing capacity: for each full time employee, your company should generate real revenue of $150,000. - Don't expand your lifestyle in response to more cash on hand. You need to accumulate cash. Lock in your lifestyle so you can achieve financial freedom in the long run. - 5 steps to help lock in your lifestyle: 1. Always look for a free option 2. Never buy new if you get the same benefit as used. 3. Never pay full price. 4. Negotiate and seek alternatives first. 5. Delay major purchases until you've written down 10 alternatives.

  9. 5 out of 5

    Suzannah

    RE-READ: I intended to revisit this book a year after starting to implement the things it teaches, to reassess what I had done and pick up on any tips and hints I missed the first time. I found myself looking back on the business decisions I made over the last twelve months partly as a result of reading this book. Not only did my income grow significantly, but I was able to start enjoying the fruits of my labours and spending the hard-earned with peace of mind. There's a big difference between wo RE-READ: I intended to revisit this book a year after starting to implement the things it teaches, to reassess what I had done and pick up on any tips and hints I missed the first time. I found myself looking back on the business decisions I made over the last twelve months partly as a result of reading this book. Not only did my income grow significantly, but I was able to start enjoying the fruits of my labours and spending the hard-earned with peace of mind. There's a big difference between working for a business and letting your business work for you. No matter how much of a dunce you are at business and no matter how little you're making, this book is well worth the read. -- Before I picked up this book, I had so many questions about how to handle money and run a business. Now I have answers to those questions, and for the first time in my life I feel like I have the first inklings of how to handle money. Highly recommended to anyone who needs to figure out what to do with even very small amounts of money.

  10. 5 out of 5

    Natali

    A lot of great advice in this book. I also appreciate that the author makes a real effort to be conversational while also being strict about serious topics. Some of his jokes were a little lame but I suspect that they made him chuckle while he was writing them so I don't begrudge. Nevertheless, I highly suggest this for any business owner or home finance manager!

  11. 5 out of 5

    Eddy

    Easily the most poorly written, repetitive, vacuous book I've ever read. The entire book could be summarized in two pages.

  12. 5 out of 5

    Scott Wozniak

    Too many business owners are really busy, but struggling to be profitable--and they feel stuck. This book turns the standard approach to planning your finances upside down. This system provides clarity--targets that you need to hit to be profitable--and a multiple bank account method that keeps you from "borrowing" from one category to cover bad performance in another. It's designed to work with human psychology to keep you disciplined and on track--and making profit right away. If you're a busin Too many business owners are really busy, but struggling to be profitable--and they feel stuck. This book turns the standard approach to planning your finances upside down. This system provides clarity--targets that you need to hit to be profitable--and a multiple bank account method that keeps you from "borrowing" from one category to cover bad performance in another. It's designed to work with human psychology to keep you disciplined and on track--and making profit right away. If you're a business owner struggling with profit, this is a good read.

  13. 4 out of 5

    Rene Nauheimer

    Never thought it would be so so good, it's super valuable to every business owner and delivers profitable actionables instantly.

  14. 4 out of 5

    Allyson

    I LOVED this book! Not only does the author outline a very simple and effective way to manage your business' finances, he does so in a way that's easy to follow and fun to read. His personality really shines through with corny jokes and personal anecdotes, which I enjoyed. I've always been good with money and gave myself many little pats on the back reading this book, because so often it was obvious the target reader is expected to be in such worse financial shape! And still I sometimes feel not I LOVED this book! Not only does the author outline a very simple and effective way to manage your business' finances, he does so in a way that's easy to follow and fun to read. His personality really shines through with corny jokes and personal anecdotes, which I enjoyed. I've always been good with money and gave myself many little pats on the back reading this book, because so often it was obvious the target reader is expected to be in such worse financial shape! And still I sometimes feel not as in control of my business finances as I should be, mainly because I didn't have a good system that would let me impose a measure of "health" that was immediately obvious, nor did I have a clear breakdown of what percentage of sales income should go into various critical categories of spending. Now, thanks to this book, I have all of that and then some. Fantastic must-read for anyone who is running a business of any size or kind.

  15. 4 out of 5

    Jeff Walker

    His advice sounds common sense, but it's just not practical at all.

  16. 5 out of 5

    Chris Earley

    Loved the audio book in particular read by the author. Goes into detail recommending you predetermine your margin up front that you will stick to and build the business from there.

  17. 4 out of 5

    John Elliott

    To be honest, my initial reaction toward books like "Profit First" is marked by suspicion. When I see big promises and lots of hype, the first question that comes to my cynical mind is "What's the catch?" However, I had this book recommended to me by a number of trusted sources, so I decided to give it a shot. And I'm glad I did. What I discovered is that underneath this book's shell is a rock-solid, common sense principle that can help any business become more profitable. And that principle is To be honest, my initial reaction toward books like "Profit First" is marked by suspicion. When I see big promises and lots of hype, the first question that comes to my cynical mind is "What's the catch?" However, I had this book recommended to me by a number of trusted sources, so I decided to give it a shot. And I'm glad I did. What I discovered is that underneath this book's shell is a rock-solid, common sense principle that can help any business become more profitable. And that principle is best illustrated in a metaphor he uses about toothpaste. What happens when you get a brand new tube? You push out generous helpings onto your toothbrush without thinking twice about it. What happens when you get to the very end of a tube? Two things. You get a lot more frugal in what you squeeze out. And you get creative in how to force more of it out. Well, folks, that is "Profit First" in a nutshell. It's about intentionally setting aside your profits first, which naturally forces you to approach your operating expenses with more creativity and frugality. It's derived from Parkinson's Law, which states that the demand upon a resource tends to expand to match the supply of the resource. A simple idea that—if intentionally applied over time to your business—can have a transformative impact.

  18. 5 out of 5

    Jordan Brown

    It’s far too easy to reinvest your earnings into growing your business. This is a helpful read on how to take a profit while growing. A friend recommended this to me as a guide for managing risk while growing an FBA business. Favorite Quotes: “When you have less, you do two things. The first is obvious: you become frugal. When there is less toothpaste in the tube, you use less to brush your teeth. That is the obvious part. But something else, far more impactful happens: you become extremely innov It’s far too easy to reinvest your earnings into growing your business. This is a helpful read on how to take a profit while growing. A friend recommended this to me as a guide for managing risk while growing an FBA business. Favorite Quotes: “When you have less, you do two things. The first is obvious: you become frugal. When there is less toothpaste in the tube, you use less to brush your teeth. That is the obvious part. But something else, far more impactful happens: you become extremely innovative and find all sorts of ways to extract that last drop of toothpaste from the tube.” “After setting up this new checking account at your bank, nickname the account PROFIT, and from this moment forward from any deposit you put into your normal checking account, transfer 1 percent of that deposit into your PROFIT account.”

  19. 4 out of 5

    Hannah

    There were some great principles to think about in this book, but a lack of a simple definition for "profit" made me a little confused the whole book. Profit to the company? Or to the individual? Both? That could have been spelled out clearly at the beginning to avoid a lot of confusion for me! I do like the principle of taking profit first and then essentially forcing yourself to work with whatever you have left over. It goes super specific and step by step, which is helpful. I definitely would There were some great principles to think about in this book, but a lack of a simple definition for "profit" made me a little confused the whole book. Profit to the company? Or to the individual? Both? That could have been spelled out clearly at the beginning to avoid a lot of confusion for me! I do like the principle of taking profit first and then essentially forcing yourself to work with whatever you have left over. It goes super specific and step by step, which is helpful. I definitely would modify some things and not fully implement the system as is, but the general principles were helpful.

  20. 5 out of 5

    Renee Lord

    The book can change your life! The business approach Mike Michalowicz outlines in this novel is almost verbatim the system I have used to turn around a hopeless business situation. I wish I had read this book rather than reinventing the wheel. If your business is struggling and negatively affecting all areas of your life and you are ready to do what is necessary, this is the book for you. The system works. You can and should do less and will make more. The information in this book will remind yo The book can change your life! The business approach Mike Michalowicz outlines in this novel is almost verbatim the system I have used to turn around a hopeless business situation. I wish I had read this book rather than reinventing the wheel. If your business is struggling and negatively affecting all areas of your life and you are ready to do what is necessary, this is the book for you. The system works. You can and should do less and will make more. The information in this book will remind you that working smarter rather than harder is the answer. You will be reminded to remain bottom line focused rather than ego gratifying top line focused.

  21. 4 out of 5

    Tiago Soares

    The concepts in the book might be good, but I didn't enjoy the way it was written, neither all the little stories to try to bring up the point. I understand it might make it easier to understand, and for sure it makes it more relatable to people, but I was expecting something more from a businessman like him. Nowadays, I like more practical insights, that is why I read such books.

  22. 5 out of 5

    Adam Clark

    Not a business owner yet but have dreams of being one and this simple system breaks it down do anyone can understand. Really enjoyed this book and can’t wait to implement Mike’s system into my business and personal life.

  23. 4 out of 5

    Shanda Macomber

    Had me thinking outside the box. Profit first is an important book for all business owners. I will keep it and read again. I think I had to read it all the way through once before implementing so I can understand what I will be doing.

  24. 5 out of 5

    Melissa Music

    Every small business owner should read this book. I’m excited about applying the principles to mine.

  25. 5 out of 5

    Ali

    Did not understand the book much, but maybe one day I will come back to this book, I guess the first chapter is the most important as in the very end he mentioned it again.

  26. 4 out of 5

    Chelsea Simdorn

    A must read for entrepreneurs/business owners!

  27. 5 out of 5

    Ryan Shumway

    Seems like a really good book. (I’m not at a place in my business where I can apply the principles discussed.)

  28. 5 out of 5

    Genert

    5 stars material, 4/5 rating for repeating content.

  29. 4 out of 5

    Tarvo Metspalu

    Disclaimer: I consumed this as an audiobook. --- The core concept of profit first budgeting was really straightforward to understand. And it is great, of course! I do understand why the underlying stories needed to be added - for those who could recognize how they are ruining their businesses - although I would have settled for less. As a matter of fact, You actually get all the basic information free online. The book itself "just" contains numerous examples of different companies that either faile Disclaimer: I consumed this as an audiobook. --- The core concept of profit first budgeting was really straightforward to understand. And it is great, of course! I do understand why the underlying stories needed to be added - for those who could recognize how they are ruining their businesses - although I would have settled for less. As a matter of fact, You actually get all the basic information free online. The book itself "just" contains numerous examples of different companies that either failed to operate without the "profit first system" or thrived thanks to using "profit first" system.

  30. 4 out of 5

    Rus

    Really good way of reviewing your business and personal finances, by looking at your profit first then working backwards to ascertain how much you’ve available left for expenses, growth then how to best use it.

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