*Disclaimer* This is NOT a paid advertisement. We actually really believe in this book.
Have you ever wondered why your firm has little to no profit at the end of the month or year? According to your financial statements, you’re making money, so where’s the profit? Your reaction is to get worried about the upcoming year and start focusing on how your firm can make even more money.
Profit First by Mike Michalowicz challenges the notion that when you make more money, you’ll finally have a business that generates profits. The book rightly claims that more money won’t solve the financial woes plaguing your business. Instead, you need to change the way you think about money.
As a business owner, you’ve likely been conditioned to analyze your financials often. If your bank balance starts dipping low, it can cause anxiety, especially if the end of the month is here and you’ve got a lot of expenses to pay.
Profit First proposes a system that gives you the cash flow information you need to make important business decisions while giving you peace of mind knowing that all expenses, such as salaries and operating costs, are covered.
The Envelope System Explained
Mike Michalowicz has modified the traditional envelope system to create a cash management system for businesses. The premise is surprisingly simple: you take your profit first. (Hence the name of the book, get it?)
The book states that if you can operate your business at 100%, you can also operate it at 99%, with that 1% now making it profitable.
While growth is important, it’s not the entire solution. Many business owners try to grow out of their problems by relying on the next big sale or client, but that usually results in an even bigger problem. Growth and financial stability happens naturally when you take your profit first.
Efficiency Is Key To Sustained Profitability
If you have less money to run your business, you will find ways to achieve the same or better results with less. You will be forced to think smarter and innovate more if you put your profit first. This means identifying the services that make a profit and discarding the ones that don’t.
Your business should be run based on what you can afford to do today, not what you hope to be able to do someday. Just make sure to take your profit first before you pay your expenses. Whenever profit comes first, it always dominates, and it is never forgotten.
Profiting is Easier Than You Think
Starting today, try transferring 1% of every payment you receive into a profit-only account (we started at 4%). If your deposits in one month total $100,000, set aside $1,000 as profit. If you can run your business on $100,000, you can definitely run it on $99,000. You likely won’t miss that $1,000, and over time, you’ll get more confident and more profitable.In business, money is the foundation. If we don’t have enough money, we can’t spread our message and sell our products or services. The system presented in Profit First can give your firm the financial resources it needs to grow, and keep growing.
Pick up a copy of this transformative book today.
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