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

by Mike Michalowicz

Putting your nose to the grindstone is a really easy way to cover up an unhealthy business.

eight out of ten businesses fail, and the number one reason they fail is lack of profitability.

You know the formula I’m talking about: Sales − Expenses = Profit. That crusty, bifocal-wearing, old-person-smelling formula at first blush makes total sense. Sell as much as you can, then pay the bills, and what is left over is profit. Here’s the problem: there are never any leftovers. Flap. Flap. Flap. Splat.

The old profit formula creates monsters of businesses. Cash-eating monsters. But we stay loyal to the formula, and things get worse.

Profit First will challenge you because you will have to totally change the way you think about business. And change is scary. Most people suck at trying new stuff, let alone sticking with new systems.

commit to study this and then do it. Don’t skip the doing. Pleeease do not skip the doing. You can’t read

this book, think “awesome concept,” and go back to business as usual. You need to get off your butt.

And it feels like one, too, until the day you realize your business has become a giant, scary, soul-sucking, cash-eating monster. That’s the day you discover that you, too, are an esteemed member of the Frankenstein family.

difference between making money (income) and taking money (profit). These are two very, very different things.

That day I also learned that no amount of talent, ingenuity, passion, or skill would change the fact that cash is still king.

save your money and block access to it so it doesn’t get stolen—by you.

And I learned that I could tell myself that my natural aptitude for business, my relentless drive, and my solid work ethic could overcome ...

But colossal growth without financial health will still kill your company.

Without enough money, we are slaves to the businesses we launched.

Sales slow down. The problem here is obvious when you operate check-to-check

Sales speed up. This problem here is not obvious, but it is insidious. As your

Growth is only half the equation. It is an important half, but still only half.

The perfect size for your business? It will happen naturally, when you take your profit first. You will reverse engineer all the elements of your business, and as Fried says, “the right size will find you.”

Here’s the deal, my friend: Profit is not an event. Profit is not something that happens at year-end or at the end of your five-year plan or someday. Profit isn’t even something that waits until tomorrow. Profit must happen now and always. Profit must be baked into your business. Every day, every transaction, every moment. Profit is not an event. Profit is a habit.