Profit First Book Summary

Book Summary

15 min

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Brief Summary

If you’re like many small business owners, financial freedom is probably one of the reasons you went into business for yourself. Mike Michalowicz, the writer of Profit First, has a solution to dealing with financial burdens: putting profit first. Read on to discover how putting profit first can be game-changing for your small business, how it can help you to get out of the survival trap, and why adhering to the standard formula for determining profit might be holding you back.

About the Author

Mike Michalowicz is an American author, entrepreneur, and lecturer. He hosted the reality television program called Bailout!. He is the “Business Rescue” segment host for MSNBC Your Business. He previously worked for Wall Street Journal’s small business section, where he wrote the Small Business Shortcuts series. He is a contributor to Entrepreneur Magazine and is a columnist for American Express’ Open Forum series. He has appeared on television shows such as CNBC’s The Big Idea with Donny Deutsch. He has spoken about entrepreneurship, sales, and behavioral marketing techniques at universities, corporations, and organizations.

Topics

Entrepreneurship

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Key Insights

If you’re like many small business owners, financial freedom is probably one of the reasons you went into business for yourself. Not having to rely on someone else to cut you a paycheck, no limit on what you can earn... that’s the dream! Ironically, though financial freedom is what many of us are searching for, it's incredible how quickly you can get bogged down and stressed out by managing expenses when you start a small business. Mike Michalowicz, the writer of Profit First, has a solution to dealing with financial burdens: putting profit first. Read on to discover how putting profit first can be game-changing for your small business, how it can help you to get out of the survival trap, and why adhering to the standard formula for determining profit might be holding you back.

Get out of the Survival Trap

Many people who start businesses find themselves caught up in what the author calls “The Survival Trap”. The trap often starts with not having enough money to cover expenses, which leads to trying to generate income at all costs: often at the expense of the business’s integrity or future goals. Even if it means taking on shady clients, or creating/advertising products they don’t want to sell. Eventually, they get stuck with the consequences of these practices. They start making poor decisions due to stress, develop a roster of bad clients, and lose touch with the vision they once had for their business. Business owners caught in this trap can become enslaved to their business, often while not prioritizing their own pay… which means they’re stressed and broke. Efficiency can never become a priority when a business is in a constant state of crisis, which means sadly, the crisis will often repeat itself. Not to mention they don’t have money in their account for the projects they would really like to do, and they can feel as though they’re inching towards a nervous breakdown. A total nightmare! There is a better way! But first….

Profit Needs to come before your ego

Though author Mike Michalowicz was a very successful business owner, he lost everything due to one fatal mistake: letting his ego get the best of him. The day he received a $388,000 check for one of his super successful companies that were being sold to a Fortune 500 firm was the day he, according to his book, lost his mind. His ego got massive and he began funding start-up after start-up, with each one failing until he had only $10,000 to his name. Moments after this realization, his accountant told him he owed $28,000 to the IRS and a $2,000 fee for doing his taxes. Financially, he hit rock bottom. He had nothing. While he was down there, he realized that he had been structuring his businesses ineffectively, for a variety of reasons, but with his unchecked ego in the driver’s seat, he just couldn’t see it. From his financial failure, he realized that profit needed to be the top priority,...