Summary of Profit First: by Mike Michalowicz- Transform Your Business from a Cash-Eating Monster to a Money-Making Machine - A Comprehensive Summary
5/5
()
About this ebook
The GAAP (Generally Accepted Accounting Principles) formula for determining a business's profit since time immemorial has always been:
Sales - Expenses = Profits
While that formula is logically accurate, it doesn't really take human nature into account. Specifically, most small business owners do what can be termed "bank balance accounting" – they look at their bank balance and make decisions based on the balance they see. That relegates profit to an afterthought – something which will be left over at the end of the year with a bit of luck.
The Profit First Accounting (PFA) approach is to flip the standard GAAP formula this way:
Sales - Profit = Expenses
You take a predetermined percentage of profit from every sale first and then use only the remainder to pay for your expenses. Or put another way, with PFA, you secure your profit first and then run your business on the remaining cash.
PFA Take your profit first and then scale your expenses to match that goal
“It comes down to this – do you want to treat your profitability like leftovers, knowing you may only find scraps or an empty plate? Or do you want to get your full, healthy share right up front? I don't know about you, but I want to get my due portion first. I have taught the Profit First system to small companies and big companies, to private companies and even public companies. It works for all of them. And it will work for you. My commitment to you is that, if you follow the Profit First system, your business will become permanently profitable from the moment of your next deposit."
- Michael Michalowicz
About the Author
MICHAEL MICHALOWICZ is a serial entrepreneur and former small business columnist for The Wall Street Journal. By his 35th birthday, he had founded and sold two multi-million-dollar enterprises before losing everything by becoming an unsuccessful angel investor. He, therefore, started his third enterprise and worked to build it into a million-dollar venture. He formerly was a business make-over expert on MSNBC and is now a popular keynote speaker on entrepreneurship. He is the author of three books including The Pumpkin Plan and The Toilet Paper Entrepreneur. He is a graduate of Virginia Tech.
Important Note About This Ebook
This is a summary and not a critique or a review of the book. It does not offer judgment or opinion on the content of the book. This summary may not be organized chapter-wise but is an overview of the main ideas, viewpoints, and arguments from the book as a whole. This means that the organization of this summary is not a representation of the book.
Profit First offers readers another method of thinking about bookkeeping. Rather than calculating your profit based on the distinction between your Sales and expenses, Mike Michalowicz recommends calculating your costs from the difference between your sales and profit. Take your Profit First, at that point work out how to cut your costs.
Mike built up this thought from the most effective weight loss methodology – limiting bits by using more modest plates. Mike Michalowicz's framework expects to turn businesses from feeling like money-eating beasts into feeling like profitable cash cows.
Here is a Preview of What You Will Get:
⁃ A Full Book Summary
⁃ An Analysis
⁃ Fun quizzes
⁃ Quiz Answers
⁃ Etc.
Get a copy of this summary and learn about the book.
Read more from Alexander Cooper
Summary of Sell Like Crazy: by Sabri Suby - How to Get As Many Clients, Customers and Sales As You Can Possibly Handle - A Comprehensive Summary Rating: 3 out of 5 stars3/5Summary of The Culture Code: by Daniel Coyle - The Secret of Highly Successful Groups - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of The Girl with the Louding Voice: by Abi Dare - A Comprehensive Summary Rating: 3 out of 5 stars3/5Summary of A Court of Thorns and Roses: by Sarah J. Maas - A Comprehensive Summary Rating: 5 out of 5 stars5/5
Related to Summary of Profit First
Titles in the series (100)
Summary of The Last Thing He Told Me: by Laura Dave - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of The Good Sister: by Sally Hepworth - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of The Alice Network: by Kate Quinn - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of You Can Heal Your Life: by Louise Hay - A Comprehensive Summary Rating: 5 out of 5 stars5/5Summary of Covid 19: by Klaus Schwab - The Great Reset - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of The Infinite Game: by Simon Sinek - A Comprehensive Summary Rating: 5 out of 5 stars5/5Summary of American Marxism: by Mark R. Levin - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of The Midnight Library: by Matt Haig - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of Klara and the Sun: by Kazuo Ishiguro - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of The Dutch House: by Ann Patchett - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of What’s Mine is Yours: by Rachel Botsman The Rise of Collaborative Consumption - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsDropshipping For Beginners: by Alexander Vinci - Start, Grow and Scale Your Dropshipping Business Using Shopify Rating: 0 out of 5 stars0 ratingsSummary of Skin in the Game: by Nassim Nicholas Taleb - Hidden Asymmetries in Daily Life (Incerto) - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of Maps of Meaning: by Jordan Peterson - The Architecture of Belief - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of Landslide: by Michael Wolff - The Final Days of the Trump Presidency - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of How I Saved the World: by Jesse Watters - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of The Premonition: by Michael Lewis - A Pandemic Story - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of Live Free or Die: by Sean Hannity - America (and The World) on The Brink - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of A Higher Loyalty: by James Comey - Truth, Lies, and Leadership - A Comprehensive Summary Rating: 0 out of 5 stars0 ratingsSummary of We Were Never Here: by Andrea Bartz - A Comprehensive Summary Rating: 0 out of 5 stars0 ratings
Related ebooks
Profit First Summary Rating: 4 out of 5 stars4/5Profit First (Review and Analysis of Michalowicz's Book) Rating: 5 out of 5 stars5/5Summary of Mike Michalowicz's Profit First Rating: 0 out of 5 stars0 ratingsBuilt to Sell (Review and Analysis of Warrilow's Book) Rating: 4 out of 5 stars4/5E-Myth Mastery (Review and Analysis of Gerber's Book) Rating: 0 out of 5 stars0 ratingsStart at the End: How Companies Can Grow Bigger and Faster by Reversing Their Business Plan Rating: 5 out of 5 stars5/5The CashFlow Quadrant (Review and Analysis of Kiyosaki and Lechter's Book) Rating: 0 out of 5 stars0 ratingsPredictable Success (Review and Analysis of Mckeown's Book) Rating: 0 out of 5 stars0 ratingsSecrets to a Successful Startup: A Recession-Proof Guide to Starting, Surviving & Thriving in Your Own Venture Rating: 0 out of 5 stars0 ratingsSummary of Mike Michalowicz's The Pumpkin Plan Rating: 1 out of 5 stars1/5Summary of Gino Wickman's Traction Rating: 4 out of 5 stars4/5Summary of Greg Crabtree's Simple Numbers, Straight Talk, Big Profits! Rating: 0 out of 5 stars0 ratingsThe Lean Startup | Summary Rating: 3 out of 5 stars3/5The E-Myth Revisited (Review and Analysis of Gerber's Book) Rating: 0 out of 5 stars0 ratingsThe $100 Startup by Chris Guillebeau: Summary and Analysis Rating: 4 out of 5 stars4/5Summary of Keith J. Cunningham's The Road Less Stupid Rating: 4 out of 5 stars4/5Company Of One Summary: Business Book Summaries Rating: 5 out of 5 stars5/5The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It Rating: 4 out of 5 stars4/5Rocket Fuel (Review and Analysis of Wickman and Winter's Book) Rating: 5 out of 5 stars5/5Summary of MJ DeMarco's The Millionaire Fastlane Rating: 5 out of 5 stars5/5Summary of Mike Michalowicz's Clockwork Rating: 0 out of 5 stars0 ratingsSummary of Gino Wickman & Mark C. Winters's Rocket Fuel Rating: 0 out of 5 stars0 ratingsTraction: Quadruple Your Business Immediately With These Marketing Techniques Rating: 2 out of 5 stars2/5Summary of Sabri Suby's Sell Like Crazy Rating: 5 out of 5 stars5/5Summary of Ryan Daniel Moran's 12 Months to $1 Million Rating: 5 out of 5 stars5/5Summary of Sahil Lavingia's The Minimalist Entrepreneur Rating: 5 out of 5 stars5/5Profit First for Tradies: Transform your business from a cash eating monster to a money making machine Rating: 0 out of 5 stars0 ratingsSummary of Gino Wickman & Tom Bouwer's What the Heck Is EOS? Rating: 0 out of 5 stars0 ratingsRocket Fuel Rating: 0 out of 5 stars0 ratings
Accounting & Bookkeeping For You
Accounting For Dummies Rating: 5 out of 5 stars5/5The Intelligent Investor, Rev. Ed: The Definitive Book on Value Investing Rating: 4 out of 5 stars4/5The ZERO Percent: Secrets of the United States, the Power of Trust, Nationality, Banking and ZERO TAXES! Rating: 5 out of 5 stars5/5Excel Formulas and Functions 2020: Excel Academy, #1 Rating: 4 out of 5 stars4/5Bookkeeping For Dummies Rating: 5 out of 5 stars5/5The Payroll Book: A Guide for Small Businesses and Startups Rating: 5 out of 5 stars5/5Financial Statement Basics: From Confusion to Comfort in Under 100 Pages Rating: 4 out of 5 stars4/5Accounting Rating: 5 out of 5 stars5/5Bookkeeping: An Essential Guide to Bookkeeping for Beginners along with Basic Accounting Principles Rating: 4 out of 5 stars4/5Accounting 1 Rating: 0 out of 5 stars0 ratingsOvercoming Underearning(TM): A Simple Guide to a Richer Life Rating: 4 out of 5 stars4/5Taxpayer's Comprehensive Guide to Llcs and S Corps: 2016 Edition Rating: 5 out of 5 stars5/5Start, Study and Pass The CPA Exam FAST - Proven 8 Step CPA Exam Study Playbook Rating: 5 out of 5 stars5/5QuickBooks 2023 All-in-One For Dummies Rating: 0 out of 5 stars0 ratingsBookkeeping: Step by Step Guide to Bookkeeping Principles & Basic Bookkeeping for Small Business Rating: 5 out of 5 stars5/5Bookkeeping: A Beginner’s Guide to Accounting and Bookkeeping for Small Businesses Rating: 5 out of 5 stars5/5The Book on Advanced Tax Strategies: Cracking the Code for Savvy Real Estate Investors Rating: 4 out of 5 stars4/5Accounting for Non-Accountants: The Fast and Easy Way to Learn the Basics Rating: 4 out of 5 stars4/5Bookkeeping Essentials For Dummies - Australia Rating: 4 out of 5 stars4/5Profit First for Therapists Rating: 0 out of 5 stars0 ratingsQuickBooks: A Beginner’s Guide to Bookkeeping and Accounting for Small Businesses Rating: 0 out of 5 stars0 ratingsThe Tax and Legal Playbook: Game-Changing Solutions To Your Small Business Questions Rating: 3 out of 5 stars3/5Bookkeeping Kit For Dummies Rating: 5 out of 5 stars5/5
Reviews for Summary of Profit First
1 rating0 reviews
Book preview
Summary of Profit First - Alexander Cooper
First
SUMMARY of Profit First
by Mike Michalowicz - Transform Your Business from a Cash-Eating Monster to a Money-Making Machine - A Comprehensive Summary
SUMMARY of Profit First
The GAAP (Generally Accepted Accounting Principles) formula for determining a business's profit since time immemorial has always been:
Sales - Expenses = Profits
While that formula is logically accurate, it doesn't really take human nature into account. Specifically, most small business owners do what can be termed bank balance accounting
– they look at their bank balance and make decisions based on the balance they see. That relegates profit to an afterthought – something which will be left over at the end of the year with a bit of luck.
The Profit First Accounting (PFA) approach is to flip the standard GAAP formula this way:
Sales - Profit = Expenses
You take a predetermined percentage of profit from every sale first and then use only the remainder to pay for your expenses. Or put another way, with PFA, you secure your profit first and then run your business on the remaining cash.
PFA Take your profit first and then scale your expenses to match that goal
It comes down to this – do you want to treat your profitability like leftovers, knowing you may only find scraps or an empty plate? Or do you want to get your full, healthy share right up front? I don't know about you, but I want to get my due portion first. I have taught the Profit First system to small companies and big companies, to private companies and even public companies. It works for all of them. And it will work for you. My commitment to you is that, if you follow the Profit First system, your business will become permanently profitable from the moment of your next deposit.
- Michael Michalowicz
About the Author
MICHAEL MICHALOWICZ is a serial entrepreneur and former small business columnist for The Wall Street Journal. By his 35th birthday, he had founded and sold two multi-million-dollar enterprises before losing everything by becoming an unsuccessful angel investor. He, therefore, started his third enterprise and worked to build it into a million-dollar venture. He formerly was a business