Profit First

This is the first of Michalowicz‘s books that I’ve read, and it was all about turning around your business finances. Being a bit of a money nerd, I was intrigued. In all actuality, it’s a digital edition of the envelop system where you allocate a specific percentage of revenue to different buckets like OPEX (Operating Expenses), TAX (tax liability), and profit (yes, there’s a profit category). More broadly though, he promotes a different way of thinking about your business and entrepreneurship. Businesses should be profitable Day #1.

This was fantastic and applied outside of business:

The solution to debt is this simple: If you want to get out of debt, you must get more enjoyment out of saving your money than you do spending your money (Suze Orman)

I found this distinction between profit and salary really helpful:

The profit distribution is an award to the equity owners (you and anyone who invested in the business with money or sweat) for having the courage and risk tolerance to start the business. Don’t confuse the profit distribution with Owner’s Comp, which is pay for working in the business.