All business books at some fundamental level hope provide new ideas and insights, inspire change and ultimately make a positive difference in the life and business of the reader. Although most books do achieve this to some level, Profit First by Mike Michalowicz impacted my business far more than business books generally do.
Long before I joined the craft industry, I worked for Ernst and Young, LLP, one of the largest accounting firms in the world. Although not an accountant, I worked with them closely as I installed accounting systems for their small business clients. This, along with my natural love of numbers, gave me a rather deep, appreciative understanding of all things associated with traditional accounting.
As such, I have always done a fine job of managing my own bookkeeping, review my financial reports on a regular basis and always have know where my business stood in terms of profitability. I have shared this unique strength for the past ten years by teaching other craft industry business owners how to better understand what their financial numbers are saying.
However, after reading Profit First, I have had to rethink everything I once took for granted. Whereas the standard formula for calculating profitability has always been Income – Expense = Profit, Mike Michalowicz redefines the formula to be Income – Profit = Expense! By changing how we look profit and expenses, we can ensure that we not only make money, but also run our businesses as leanly and efficiently as possible.
Obviously, there is more to the process than just moving a few variable around in a mathematically expression. But this small thought adjustment produces a significant change in how you think about (and generate!) profit. And that is the key to the success of the Profit First methodology, it leverages tendencies we naturally have to ultimately improve our business and bottom line. After less than a quarter of implementing the system, I am already seeing the results in my own business.
If you aren’t sure how the Profit First methodology could work in your business, need an accountability partner or would just like to discuss the possibilities of implementing the Profit First system in your business, use this link to schedule 20 minutes on my calendar for us to discuss it! It’s possible for anyone in the craft industry to become truly profitable. You just have to willing to try something new!