Episode 44: Putting Profit First With Mike Michalowicz
Is your business profitable? How profitable? Are you actually taking profit out of your business?
Most small business owners struggle with becoming & staying profitable and actually taking the profit out of the business. That’s why I was intrigued when I heard about Profit First by Mike Michalowicz. I read the book and loved it. It’s one of those books that is transformational and can really make a huge impact on your business. Today Mike has joined me on the podcast to teach you about the Profit First Formula and how you can make your business more profitable.
By his 35th birthday Mike Michalowicz (pronounced mi-’kal-ō-wits) had founded and sold two multi-million dollar companies. Confident that he had the formula to success, he became an angel investor… and proceeded to lose his entire fortune.
Then he started all over again, driven to find better ways to grow healthy, strong companies. Among other innovative strategies, Mike created the “Profit First Formula”, a way for businesses to ensure profitability from their very next deposit forward.
In this episode we’ll cover:
- What the recency effect is and how it impacts our finances
- Why you shouldn’t assume we are logical
- Why the traditional GAAP accounting method (Sales – Expenses = Profit) makes profit a leftover and the last priority
- How the Profit First Formula (Sales – Profit = Expenses) works and how the simple shift makes you much more profitable
- Why it’s so important to keep your profit in a separate account
- How to get your bank on board with you using the Profit First Formula
- Why you should focus on what Mike calls your “real revenue”
- Why your money management needs to be based on human behavior instead of economic theory
- How to implement the Profit First Formula in your business
- How to build your profit muscle
- How to find an accountant or bookkeeper who understands Profit First
- Why accountability is so important
Resources & Links mentioned in this episode include:
Profit First – buy the book
Profit First Resources
Simple
TAPS (Target Allocation Percentages) for Profit First & other graphs from the book
Profit First Professionals
The Inner Circle for accountability
Book More Weddings Academy Free Training
More from Mike:
Website: www.mikemichalowicz.com
Twitter: @MikeMichalowicz
Facebook: www.facebook.com/MikeMichalowiczFanPage
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