Profit First
Mike Michalowicz argues that the conventional accounting formula of sales minus expenses equals profit is a trap, because most entrepreneurs spend whatever is left in the operating account and end the year with nothing to show for the work. Profit First inverts the equation. On the day revenue lands, a small percentage is siphoned into a separate profit account before any bill gets paid, forcing the business to run on what remains. Using a system of named bank accounts for profit, owner pay, taxes, and operating expenses, and a quarterly rhythm of distributions, Michalowicz walks owners through sizing their allocations, cutting expenses without starving the business, and treating profit as a habit rather than a year-end hope. The result is a behavioral finance playbook aimed squarely at small business owners who are tired of being the last person their own company pays.
Themes & atmosphere
What you might want to know about Profit First
The questions readers send us most often, answered without spoilers.
Mike Michalowicz argues that small businesses should not bank on what is left after expenses but flip the formula, taking profit, owner pay, and taxes off the top into separate accounts before bills.
Profit First was written by Mike Michalowicz and published in 2014, with a revised edition in 2017. Michalowicz is a serial entrepreneur and author of several other small-business books.
Profit First flips the standard accounting equation by allocating profit before expenses. Mike Michalowicz argues that small businesses can improve discipline by paying themselves first into separate bank accounts before paying bills.
Profit First is a standalone novel by Alan Folden, not part of a series.
Profit First is available in hardcover, paperback, ebook, and audiobook formats from Amazon, Bookshop.org, ThriftBooks, and most major bookstores.