Profit First

In Profit First, Mike Michalowicz suggests a revolutionary approach to managing business finances. Instead of the traditional formula of Sales - Expenses = Profit, he suggests flipping it to Sales - Profit = Expenses. This means you take your profit first, and then manage your expenses with what's left.

Michalowicz uses the 'small plates' strategy to manage finances. He suggests setting up multiple bank accounts for different purposes - one for profit, one for owner's pay, one for taxes, and one for operating expenses. This way, you can see exactly where your money is going and manage it more effectively.

The author emphasizes the importance of routine in managing finances. He suggests setting specific dates for transferring money to your different accounts. This way, you can make profit a habit, not an afterthought.

Profit First encourages you to take a hard look at your expenses. If you're taking your profit first, you'll need to make sure your business can run on what's left. This might mean cutting costs, but it will also force you to be more innovative and efficient.

The main takeaway from Profit First is the importance of profit itself. Many business owners see profit as a bonus, something to be enjoyed if there's any left over at the end of the year. But Michalowicz argues that profit should be the main goal of any business. By prioritizing profit, you can ensure the long-term sustainability of your business.