There's an energy that starts to happen when you're telling money what to do instead of money deciding what it's going to do for you.
It’s all about mindset.
And Profit First will practically usher you into this new mindset of having control over your money and not the other way around.
Profit First – The Book and the Process
Profit First is a powerful book authored by Mike Michalowicz. But it’s more than just a book – it’s a process.
You aren't going to just read a book and then implement it the next day and then get all the fruit of that effort the next day. It is a process that happens every day, every week, every month, every quarter, every year.
Profit First is a cash method of management in terms of how to direct the financial resources in your business. It's not accounting – but a way to organize the financial flow of your money inside your business.
The New School Way Of Handling Money In Business
The Profit First new school way is:
Sales – Profit = Expenses
This turns the old counting adage on its head of Sales – Expenses = Profit. Just that terminology in the way they switched around speaks volumes to the intent.
Setting Up Five Bank Accounts and Two Separate Banks
The five bank accounts you need to set up include the income account, the tax account, the profit account, the op x account, and then the owner’s pay account. Set up at a completely separate bank that you have relatively limited access to. It should be a bank account that grows and that you're only going into it once a quarter. This separate bank just puts another layer so that you're not tempted to go borrow from it.
Getting Paid as the Business Owner
It’s a mindset issue and a consistency issue. Whether you’re paying yourself 1% or even $10, doesn’t matter. It’s the behavior of the action – not the amount.
If you want to learn more about Profit First and how it can help you and your business, check out 004: How Profit First Can Leverage Your Behavior With Money
