Erika Jones, CFO, CCTAProfit First Professionals · Certified Fractional CFO and Profit First Professional

Profit First Myths Debunked| Profit First Is A Set and Forget System

4 May 2021 · 1 min

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1:01

In this video, Mike Michalowicz, author of Profit First, addresses a common misconception that the Profit First methodology is a "set it and forget it" approach. He clarifies that Profit First is a dynamic cash‑management system that requires regular attention. Michalowicz emphasizes the importance of revisiting the Current Allocation Percentages (CAPS) each quarter, adjusting the allocations for profit, tax, owner’s compensation, and operating expenses. He also highlights the role of advanced accounts—such as CAPEX, future employee, retainers, and drips—and advises that these should be periodically re‑evaluated to optimize organizational health and shareholder value. Finally, he strongly recommends partnering with a Profit First professional for quarterly review meetings to continuously refine and improve the system.

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Hi there, I'm Mike Michalowicz, the author of Profit First. I'm doing a series of videos to bust Profit first myths. One that circulates around is that Profit first is a set it and forget it system. It's not. Profit first is a dynamic system. We have over 500,000 businesses that have implemented Profit first and it's very clear that you should revisit your Profit First CAPS settings on a quarterly basis. CAPS stands for current allocation percentages and you want to adjust your profit, your tax owner's comp and opex. But also there's advanced accounts. Perhaps you have a CAPEX account, future employee account, retainers and drips. All these accounts should be readdressed to maximize the health of the organization and to serve the shareholder of the business. I strongly suggest you work with a Profit first professional. Once a quarter have that sit down meeting, figure out how the business can be further enhanced and tweaked and make sure that Profit first is perpetually improving into perpetuity.