In Profit First, Mike throws out antiquated general accepted accounting principles (GAAP) to make room for a concept that has delivered literally tens of thousands of business owners from entrepreneurial poverty. Since 1933, when GAAP was established by the United States government via the Securities Exchange Act of 1934 business owners have only realized profit after accounting for expenses. With the Profit First framework, Michalowicz unleashes the profitability of any business by accounting for profit first.
What I appreciate most is that Mike explains every aspect of the Profit First framework very clearly. In the early chapters, he explains why GAAP is suffocating your business and helps the self-conscious entrepreneur understand their responsibility to be profitable. Mike references a saying, “Revenue is vanity, profit is sanity, and cash is king”. He explains, “As you focus on profit, you’ll discover new ways to both streamline and grow your business.” He’s animated that the old way is the path for lemmings and false hope.
After Michalowicz establishes the why, he spends the rest of the book explaining, in detail, the how of Profit First principles. He begins with a great process for calculating and assessing your current cash flow situation, or what he refers to as your “Instant Assessment”. You learn the difference between top-line revenue and real revenue along with what TAP and Delta mean to your profitability.
Once you’ve established your numbers, Mike runs through a step-by-step process on how to set up your bank accounts and properly allocate your income. He takes into account different types of businesses and gives easy-to-understand explanations of how you or your bookkeeper will easily keep track of everything. Profit First is truly a how-to book that includes both basic and advanced concepts of this straightforward concept.
By the end of this book, you will have a skillful understanding of why your business is not serving your financial needs adequately and how to remedy the situation in a matter of one billing cycle. From the initial assessment to advanced resource allocations, Mike steps you through the process masterfully and methodically. He shows you every aspect of his concept so you can accurately implement Profit First in your business immediately.
I became a full-time entrepreneur in 2005, and have been reading self-improvement, business, and marketing books since 1991. Out of the hundreds of business and marketing books I have read, Profit First is the most influential piece of non-fiction literature I have consumed. This book has literally changed my life since reading it in 2018. My only regret is that I didn’t discover it when it was first published in 2014. Since implementing Profit First principles, my business is seven times more profitable, operates on a 100% cash basis, and allows me the financial freedom to spend more quality time with my wife, family, and friends around the world.
I give this book an emphatic five stars. Profit First is not a fluff piece trying to get you to buy into some expensive coaching program. Michalowicz truly believes in this game-changing concept and gives you every bit of information you need to successfully transform your business from a cash-eating monster to a money-making machine.
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