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Good morning, entrepreneurs!
I just got done reading Profit First by Mike Michalowicz and I had to jump on my blog and share about it with you guys. This book has skyrocketed to the top of my Book Recommendations, and if you haven’t read it yet? Boy, are you missing out.
First, a little background on me: I have been in business since 2010. Over the years, I’ve consistently hit six figures with my income but I have never really felt like I was truly turning a profit. I would look at my 17Hats profit and loss statements and I would genuinely ask myself, “where the heck did all my money go?”
It’s super disheartening to totally bust your ass day after day, see on paper that you’re doing well, but not actually see any positive changes in finances. Anyone else feel like that?
Book Review of Profit First by Mike Michalowicz
Sales – Expenses = Profit
I would see my income from sales and bookings, pay all my bills, and at the end of the day I would see pennies on the dollar left over in my business account. It’s really hard to see a profit when you’re never actually giving yourself a profit!
After reading through Profit First, I realized that I have been going about business accounting totally wrong all of these years. I sat down and really went through my profit and loss statement from this past year, and saw some pretty eye-opening things.
I have always looked at my business and have definitely worked harder during leaner months (winter and spring). It’s easy to feel successful during peak photography times here in the midwest (summer and fall), pulling in five-figure months and shooting just about every single day. But during slow season? Oof. I have to continuously be marketing, blogging and working in and on my business. If I know I have to make at least X-amount in order to pay for Y-expense, you better believe I am WORKING.
The amount of hustle has traditionally been related to the natural ebb and flow of business.
Profit First introduces an entirely different way of thinking about running a healthy business. The idea is if you take out a reasonable profit right away from your business’ finances, you should be able to successfully take care of your costs with what is left. Traditional thinking is the exact opposite and if you’re anything like me, sometimes what is leftover isn’t enough to be a profit. Michalowicz says in the book:
“You are no longer asking, “How can I make my business bigger?” You are asking, “How can I make my business healthier?” WHAT!”
Michalowicz challenges readers to take a deep dive into the health of their business instead of the growth. People assume multi-million dollar businesses bring in multi-million dollar profits, but the truth of the matter is that if it costs a business multi-million dollars to run? That’s not truly a multi-million dollar profitable business. What if, instead, business can figure out where they’re hemorrhaging money, how to make their business run more efficiently, and stop robbing Peter to pay Paul when it comes to things like taxes?
A business that makes $1000 and it only costs them $100 to run is much more profitable than a business that makes $10,000 but costs them $9,900 to operate.
Order your copy of Profit First
Just like Michalowicz – I want to challenge you to read Profit First, and apply it to your business. I am really excited to dive deep into making my business not just successful, but HEALTHY in 2023! I hope you enjoyed my book review of Profit First – see you next year, y’all!
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