Somewhere in that title there's a pun about Love in the Time of Cholera - we just haven't found it yet. On a brighter note - we're back! Back wth another book review and, by the sheer amount of good news pumping out of every media channel these days, we figured what better way to really capture our readership than churning out an article about business finance. (Better yet, thoughts on profitability and how to maximise yours as advised by copywriting team during a recession.) If this sounds like something you've been waiting to read then you're in luck - because here. We. Are!
As mentioned in our review of Malcolm Gladwell's Talking to Strangers, our team recently flew through Mike Michalowicz's Profit First as one of our weekly Non-Fiction reads and wanted to share a few thoughts about its practicality for the everyday entrepreneur. Although, admittedly, not a book of high literary merit, Profit First is instead extremely accessible (meaning, written for increased understanding by its target market - the everyday entrepreneur - with limited-to-no technical jargon), a quick read, and so. Damn. Actionable.
Profit First takes the prehistoric GAAP system (Generally Accepted Accounting Principles) and flips it - a full 180 degrees. (Where most modern business owners intuitively pay the bills, pay the employees, and scramble around for some meagre pocketful of change to take home as a salary, the Profit First system is exactly as its name suggests: pay the owner first.) Although we'll leave Michalowicz to best explain his tried, tested, and true advice, we wanted to spread the word and encourage our readers to pick up a copy of what has quickly become our version of the Good Book. Need a little prompting? We've highlighted below the best, and most simple, take away tips that every entrepreneur, business owner, and side-hustler should know.
4 Take Aways from Mike Michalowicz's Profit First
(Or, "Why You Need to Read Profit First During the Pandemic/Recession/Apocalyptic Season That is Upon Us")
Burn this into your brain: Income - Profit - Owner's Pay - Tax = Expenses. We'll write that once more for the people in the back: Gross Income - Profit - Owner's Pay - Taxes = Expenses. Michalowicz's purpose is to eradicate entrepreneurial poverty. While we make no assumptions about your own state of affairs, many small business owners will understand the strain of covering all expenses and being left to take home the scrap heap at the end. Under the Profit First method, you get paid on time, every time, and the bills get paid later.
You don't need to have set aside 47 months of Operating Expenses (or living expenses!) to put the system in place. On the contrary, the current business and personal climates indicate that there is now less residual income than the GFC. Further, and while we admit financial freedom is a marathon not a sprint, saving toward the lofty goal of severals months of Operational Expenses is no small feat and may discourage many business owners from ever changing their ways. (Whether their 'way' works or not.) The Profit First system can be put in place today whether you're looking to increase existing profitability, in the red, or temporarily closed due to Covid-19.
Profit First was designed to match existing business and financial management habits - not create new ones. There is a lot going on right now. A-lot. And although we love seeing how many businesses and professionals are innovating and adapting to the current environment, we recognise that extreme productivity, a mini life makeover, and training for a marathon may not best the best coping strategies for everyone. Fortunately, of the few changes Profit First asks of its readers, personal habit change isn't one of them. (Which is good, because we've all been asked to change a lot as of late.) Instead, the system is designed to work with common human financial behaviours and merely adds-in a system to support better money management. Looking for an extremely effective practice to support your business goals with (genuinely) very minimal effort? This will be the practical money plan of your dreams. (Spoiler alert: you'll need 5 bank accounts and two hours a month to pay bills. That's it.)
The Profit First system is shockingly simple and quick to implement, however, Michalowicz offers advance practices for those in later business stages, or, gluttons for punishment. We recognise that everyone is affected by this economic downturn from side-hustlers, to just up-and-comings, to seasoned businesses, and Tier-2 corporations. Fortunately, Profit First offers ample tips to get the system set up for absolute beginners (recommended first for all) as well as more advanced practices for organisations with extensive responsibilities. Michalowicz's website offers further (and free!) worksheets, exercises, and resources to help you along the way. When it comes down to it? There is genuinely no reason not to get started. (None.)
We get it - we're a copywriting and communications agency summarising a commercial Non-Fiction business development book about money. And to that, we say, one; we are business owners too; two, no time like the present to rid outdated habits and adopt some new ones (seriously, there has never been more time for reflection in our generation's history than Covid-19); and, three, any and all business development books are just another example of Non-Fiction information sharing/storytelling that we can learn from to help better our craft.
If you pick up a copy of Profit First (and we hope that you do!) do your mental, financial, and entrepreneurial wellbeing a favour and read it during this downtime. (Slash pandemic, slash recession, slash could-things-be-any-worse?) We appreciate the season we are all in - a time of reflection, a slowing down, and a time when many old systems are dying away and making room for new ones. Although much of this shift and change is coming at an extremely high cost, we're all for making lemons out of lemonade and know that when business and life return to a new-normal, our time for adopting new habits and change will be less again. With that in mind, and for what is ultimately very minimal at-home reading effort, pick up a copy of Profit First because, really, what do you have to lose? In readership, reflection, and recession, The CCC Team