Start paying yourself first.
“Profit First,” the new book by one of my favorite mentors Mike Michalowicz, makes a stunning suggestion. The longer you have been an entrepreneur, the more stunned you will be. Also, the more it will change your life.
Sales – Expenses = Profit creates a Frankenstein monster that will kill your business, livelihood, social life, sex life, and maybe your dog. It’s that insidious of a monster. It’s caused by getting into a cycle of robbing Peter to pay Paul, racking up debt, borrowing from income tax to keep the business a float, taking on unsuitable clients or projects just to fill the money hole, and other fun and damaging habits.
Here’s the new formula.
Sales – Profit = Expenses which creates a wave effect of happiness. You work with the money you have. Eating from a smaller plate, you make business work on less and you tame the ego beast that wants to spend profits on things that cost the business money. You also are able to put aside money that will assure a tidy quarterly bonus for you.
Sound nice? It is.
It’s so nice, in fact that we are making “Profit First” our book of choice for our Twitter book club. Just search #LiveBookClub and you’ll be plugged right into it. I spend all day reading the first five chapters and pulling nuggets out for you. I even snagged some page graphics.
When you join my community (the sign up is in the side bar) you will get the first five chapters of “Profit First” for free. I’m sure you will want to join me in the book club after you read it. It’s already changing the way I look at profitability, how I run What Works Coaching, and what my bank accounts could look like… scratch that… WILL look like.
— What Works Coaching (@WhatWorksCoach) July 8, 2014