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

Take Your Profit First Distributions Early

20 Apr 2021 · 1 min

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1:14

In this short video, Profit First author Mike Michalowicz debunks a common misconception that business owners can or should withdraw profit distributions whenever they wish. He explains that while it is technically possible, doing so undermines the behavioral cash‑management system at the heart of Profit First. The method relies on a disciplined 90‑day (quarterly) profit‑distribution rhythm: profit accumulates in a dedicated account, creating anticipation and reinforcing the habit of operating only with cash that is truly available for the business. At the end of each quarter the accumulated profit is distributed to the owner, providing a dopamine‑boosting “profit muscle” that encourages repeat discipline. Michalowicz notes that this quarterly cadence mirrors the practice of large public corporations, reinforcing that the approach is suitable for businesses of any size.

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Hi, I'm Mike Michalowicz, the author of Profit First. I'm doing a series of videos to bust Profit first myths that are circulating around Happy report. Over half a million businesses are doing profit first and that is growing exponentially and it's growing daily. Well, one of the common myths is I can take out my profit distribution anytime I need it. I can take it out early, I can take it out frequently. And the truth is you can't. Well, you can technically, but you shouldn't because it hurts the behavioral aspect. Profit first is a behavioral management system, manages cash flow, but it works with our own behaviors. And a 90 day rhythm is very important because what happens as money accumulates in your profit account, it builds that anticipation and that fortitude to wait, that strength of preserving profit while you work within what's truly available to operate your business. Then the 90 day cycle, the money is released and you receive as a shareholder, the owner of the business. So there's a dopamine release. It builds excitement and momentum. So we repeat the process again, by having a 90 day rhythm, it builds that profit muscle. And it's not only small businesses that do this. The big corporations do it too. If you own public stock, you may notice your distributions come out quarterly. Do the same for your business.