Mike Michalowicz explains Profit First: instead of profit being what's left after expenses, you take a set percentage of every sale first and make expenses fit what remains. It's not about greed, it's about changing how you think about money.
Give me a question. Yeah, yeah. Can you explain what is Profit First?
So, uh, it's funny, I get this question relatively often that people don't understand what Profit First is, and their first impression when they see the book cover is like, oh, this guy's all about greed and it's profit over people. And that's not at all what it's about. It's about the perception of how profit's managed. In traditional thought, profit is the bottom line, it's the year end. But it's our behavior when something comes last. You would call it the bottom line. When something comes last, it means it's insignificant. Like you would never say, I'm gonna put my health last or my family. Well, your family maybe, but I don't put my family last. You would never say that unless they are insignificant. So what we do with Profit First is we put profit at the top of the formula. So the new formula is sales minus profit equals expenses. And how it works in practice is every time you have a deposit for sales, you immediately take a predetermined percentage, allocate it to a profit to ensure the profitability of your business. That's what Profit First is. It's a behavioral flip on how we manage profitability.
Perfect. Easy peasy.
We nailed it. Welcome to under— or goodbye from under the covers.
