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

Ready to make sure you create a profit on each transaction? Allow me to present to you, the solution in this book!

"All revenue is not the same. Suppose you remove your worst, unprofitable clients and the now-unnecessary costs associated with them. In that case, you will see a jump in profitability and a stress reduction, often within a few weeks. Equally important, you will have more time to pursue and clone your best clients." This is the mindset Mike Michalowicz presents and guides you through implementation.

Through this book, you will develop an understanding of how you can grow a business that will be profitable from day one. You must not get caught in the belief that your business will start giving you good results only if you are working both smarter and harder. In 'Profit First,' the author, Mike Michalowicz, explains the process of how you can assess the financial health of your business and start the management of it in a better way. Others may be just getting started and can begin by applying the same concepts to your personal finances as well.

If you want your business to start making profits, then you shouldn't only walk but run to grab your copy of Profit First. This book will give a strategy to turn any business from a cash-eating business to a money-producing machine. Through this book, the author has detailed how you can start making profits and reducing debts. He has used a bank account system with a certain formula to hold money for taxes, profit, compensation, and even more. Using this process, you will increase funds allocated to these accounts through time while reducing the expenses. Michalowicz shows that by taking your profit first and apportioning only what stays for expenses, entrepreneurs will change the businesses from cash eating monsters to profitable cash cows. 

My favorite part of the book is the perspective of viewing your income statements. Mike pointed out the formula that shows Income – Expenses = Profits doesn't always work. He has proposed the formula that Income – Profits = Expenses. But will this formula give any different results? Technically no. But psychologically, this reframing strategy can have benefits. Traditional accounting has the potential to fail businessmen and humans just alike. He detailed that we should be taking the profits before expenses. In many cases, he has recognized that having a huge profit was not in the best interest for the company. Instead, he recommended taking a small profit in the first place and symmetrically increasing it as the expenses were reduced. 

The Profit First system take-a-ways include:

- The 4 simple rules given by the author can simplify the accounting and make it very easy to manage a profitable business by looking at the bank account balances.

- A small and profitable business can be worth a lot more than a huge business that is barely surviving.

- Businesses that get early and sustainable profitability, have a lot better chance of showing long-term growth.

He has the system to maintain all of your accounts and allocate the funds to those two times a month. The great thing about this system is that it can also be applied to your personal and business accounts. The author walks us through a system that has an easy setup process, daily, monthly, quarterly, and annual duties to maintain the system. This system also provided guidance for reducing debts and expenses. 

This book offers step-by-step advice and the author's signature style has made this book a great read and easy to follow. This book shows that the profit system will not replace the need to have accounting in the firm. But it will help those who are struggling to understand the basic cash flow, accounting, and lack the discipline in their spending habits. 

You can read the book for more insights into the Profit First System and other other books through our Avid Listener's Bookclub. The Avid Listener's Bookclub is created to read 1 book per month that can add value to your life, business, and relationships. Our goal is for members to generate a return on investment of your time, energy, and resources with each title read! We cater to the audio listener; however, traditional readers who enjoy turning physical pages within a book are always welcome.