Profit First Myths | You Can Take Your Profit First Distribution Early

28 Apr 2021 · 1 min

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1:14

In this video, Mike Michalowicz, author of the Profit First system, debunks the common myth that business owners can take profit distributions whenever they wish. He explains that while it is technically possible, doing so undermines the behavioral cash‑management purpose of Profit First. Michalowicz emphasizes the importance of a 90‑day (quarterly) distribution rhythm, which creates anticipation, reinforces discipline, and provides a dopamine‑boosting “profit muscle” when the profit account is finally tapped. He likens this practice to the quarterly dividends paid by public corporations, arguing that both small businesses and large companies benefit from waiting for a set cycle before distributing profit.

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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.