A summary of things you should know about Profit First according to Mike Michalowicz: Introduction In this episode Mike Michalowicz joins us for a third time to share his latestRead More
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]]>In this episode Mike Michalowicz joins us for a third time to share his latest book, Profit First. Michalowicz challenged the formula for business when it comes to profitability.
In his book, Michalowicz shows you the correct formula for success as opposed to the original from Generally Accepted Accounting Principles of GAAP. He proposes a new formula about selling as much as you can, extract your profit from your business first and then pay your expenses with the remainder. His approach changes the entire paradigm.
This book is perfect for all entrepreneurs who have based their businesses profitability on the formula of sales minus expenses equals profit. By taking the advice from this book, there will be less money for expenses, your behavior will change and you will find ways to get the same things done with less money.
Every book I have read to this point has talked about Generally Accepted Accounting Principles (GAAP) which is the formula that businesses base their profitability on. I challenge this formula and say it is totally flawed because profit is the leftover or after thought and it’s the worst formula for the way our minds work. I propose a new formula about selling as much as you can, extract your profit from your business first and then pay your expenses with the remainder. This changes the entire paradigm.
This is a beginning to end book. You start at the beginning and there are action steps at the end of each chapter.
Hands down it is flipping the formula of sales minus expenses equals profit or sales – expenses = profit. This formula does not work and hurts your business. I want people to take home the new formula of sales minus profit equals expenses or sales – profit = expenses. By taking your profit first there will be less money for expenses, your behavior will change and you will find ways to get the same things done with less money.
In the book I go over the four principles of Profit First. I found that in the fitness, health or diet industry there are four core principles and these four principles translate into a healthy business as well.
The first principle is about the intake of fewer calories. The diets and extreme workouts don’t work because they aren’t sustainable. The one way dietitians found very successful is simply by changing the size of the plates at your house. By getting smaller plates you now get to leverage your habits and that little change has a huge impact. In our business we have to realize that we have one massive plate called the checking account. All of our money goes in there and all our bills get paid out of this one account. The strategic step we need to make is to have multiple small plates which will reduce the size of that account for expenses, spread the money out into small plates and by doing this you see that less is available and you consume less for expenses.
The second step I leaned was to eat your vegetables first. In the health industry they found that most people eat their food simultaneously and most of the time that means the vegetables get pushed aside and never eaten. If we simple eat your vegetables first you’ll get the nutrients and vitamins from it and take in fewer calories. In business we do the same thing. When money comes in our account the very first thing we should do is spread it out to different plates and then the leftover should be used to pay expenses. By doing this you’ll have less money for expenses and you will be more likely to spend less on expenses.
The third step is to remove temptation. In the health industry they say that if you like soda, the best thing to do is not have any in your house. In business when we have our profit reserved the first step is to take that profit, transfer it to a second bank and now with the profit removed you are less likely to borrow or steal from yourself. By doing this you will feel more pressure to cut your expenses and make sure they fit in with the amount of money that is left over.
The final step that is taught in the health industry is our eating frequency. Most people eat too infrequently and the optimal amount is five small meals a day instead of three big ones. In business we need to establish a rhythm of going through the process of paying bills about twice a month. If you do this you see money come in piling up as income and then you allocate and pay your bills.
“Take your profit first always.” – Mike Michalowcz
I am an author targeted toward small business books and how to grow them to be successful and competitive in market. I challenge all the beliefs that are out there about growing a business and study other businesses to find the current formula for success.
After selling my second company I thought I knew the formula to success and became full of myself. I decided to become an angel investor, took my own money and started 10 companies and threw money at these businesses believing that the only thing that mattered was my involvement. This ended up being a train wreck and caused me to lose basically every penny I put in it. The day I lost my last penny became a defining moment for me and the realization that what I thought was the formula to success was in fact wrong. I thought that profit was an event and I became to realize that profit is not an event, it’s a habit.
The Starfish and The Spider by Ori Brafman and Rod Beckstrom
Buy Profit First by Mike Michalowicz on Amazon today
Visit MikeMichalowicz.com to learn more about Mike and his books
Follow Mike Michalowicz on Twitter and Facebook
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Listen on iTunes, Stitcher , and SoundCloud
Related books: Show Me The Money by Alan Barrell | High Profit Selling by Mark Hunter | Hyper Sales Growth by Jack Daly
Relevant advice and tips: Top Financial Mistakes Entrepreneurs Make When Creating A New Business
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]]>A summary of things you should know about The Responsible Entreprenur according to Carol Sanford Introduction In this episode Carol Sanford shares her insights on a special breed of entrepreneurs.Read More
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]]>In this episode Carol Sanford shares her insights on a special breed of entrepreneurs. In her book, The Responsible Entrepreneur, Sanford gives you the framework to make a difference in the way your business affects the world and maps the journey through 4 archetypes: Realizing Entrepreneurs, Reconnection Entrepreneurs, Reciprocity Entrepreneurs, and Regenerative Entrepreneurs. The Responsible Entrepreneur is the perfect book for entrepreneurs looking to pursue world-changing results or significantly impact investors.
This book is really about stepping up to how you put a dent in the universe and do it in a way that you have phenomenal business. How you take the traditional entrepreneur energy, the social mission and you make it possible to make these quantum changes in industries, social systems, belief systems and even how we govern.
I do something called making promises beyond ableness. That is what you might say the summary of this book is about. Making promises beyond ableness means you have to grow and learn but you promise to do something that might not happen if you don’t do it. All of the ten stories I tell in this book show you how that is possible in every person alive.
It’s broken up primarily in three sections, the first one I talk about 3 icons and tell you short stories about their successes. The second part is two chapters for each of the four archetypes. One is the four pillars that I use as the themes in my research and my practice, these are all stories I have been involved with for years. It shows first the pillars and then goes through the details of two entrepreneur’s lives of how they lived it out and exactly what they did. The third section I took one business and showed how it played out all four archetypes because the archetypes aren’t you, you don’t become an archetype, you use it. The second archetype that I renamed is the realization archetype. This archetype is about reality and how it is that you become much more grounded in reality and you figure out how to fight what’s worth fighting for. The third archetype I call the reciprocity entrepreneur. In this section of the book I share stories about Oprah. Oprah has taught us so much about our racism and how we exclude people. It makes us look at the wholeness or lack of wholeness of our beliefs and how those need to be rethought. The final archetype I call the regenerative entrepreneur. The summary of this book is how to use these four archetypes to regenerate a tribe, a nation, a business. The last chapter is putting that all together and showing it how it all works as one.
“Entrepreneurism isn’t for a rare few who are born with it; it is a fire waiting to be lite in all of us.” – Carol Sanford
“If you want to operate from a place of creative freedom you have to take on defining the game itself and changing the rules for everyone.” – Carol Sanford
I have written several book, the most recent is The Responsible Business and the new one we are talking about today is The Responsible Entrepreneur. I used to be a professional improvisational performer and standup comic.
There are two intersections in my own personal life experience. One is the clients, colleagues and students in universities where I teach that I have seen doing things that I knew at the level of entrepreneurship was possible for everyone to do but it always showed up in magazines in a very funny way. The other thing that was an intersection was I was raised closely by my maternal grandfather who is a descendant of the tribe of Mohawk survivors and he passed along the stories to me of how they rebuilt the nation based on four archetypes that he was exposed to. I saw how I could really explain what was going on with my clients and these amazing leaders in a way that entrepreneurs could take on much bigger change and pull more together than they knew was possible.
The Starfish and the Spider by Ori Brafman and Rod Beckstrom
Buy The Responsible Business by Carol Sanford on Amazon today
Buy The Responsible Entrepreneur by Carol Sanford on Amazon today
Visit CarolSanford.com for the free workbook deal and more info on the book
Follow Carol Sanford on Twitter and Facebook
Download the full transcript here
Listen on iTunes, Stitcher , and SoundCloud
Related books: Overfished Ocean Strategy: Powering Up Innovation for a Resource-Deprived World by Nadya Zhexembayeva | Lifestyle Entrepreneur by Jesse Krieger | Everyday Entrepreneurs by Ken Torn
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