Profit First (Review and Analysis of Michalowicz's Book)
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About this ebook
This complete summary of the ideas from Michael Michalowicz's book "Profit First" introduces the Profit First Approach. According to Michalowicz, this approach means prioritising profit, instead of leaving it as an afterthought. By following this approach, you can secure your profits and run your business on the remaining cash.
There are four steps to install the Profit First Approach:
1. Draw a line in the sand
2. Set up your Profit First system
3. Use Profit First to destroy debt and optimise your business
4. Integrate some advanced techniques into your Profit First system
Added-value of this summary:
• Save time
• Prioritise your company’s profits
• Make your company permanently profitable
To learn more, read “Profit First” and get your business profit-ready!
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Reviews for Profit First (Review and Analysis of Michalowicz's Book)
10 ratings1 review
- Rating: 4 out of 5 stars4/5Much quicker read than you think it will be and it covered everything as a quick review of the audio that I had already enjoyed.
Book preview
Profit First (Review and Analysis of Michalowicz's Book) - BusinessNews Publishing
Book Presentation: Profit First by Michael Michalowicz
Summary of Profit First (Michael Michalowicz)
Book Abstract
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 into account human nature. 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