Here are 7 lessons on Profit First by Mike Michalowicz:
1. Sell first, then buy.
Traditional accounting teaches you to buy inventory, then sell it, then make a profit. Profit First flips this on its head, teaching you to sell first, then buy. This means that you only buy what you can afford to pay for, which helps to ensure that you're always profitable.
2. Allocate your income into four accounts.
Profit First recommends that you allocate your income into four accounts: Profit, Owner's Pay, Taxes, and Operating Expenses. This helps you to prioritize profit and make sure that you're always saving for the future.
3. Set a target profit percentage.
A target profit percentage is the percentage of your revenue that you want to keep as profit. This percentage will vary depending on your industry and business model.
4. Set a percentage for each account.
Once you have a target profit of percentage, you can set a percentage for each of your four accounts. The Profit account should get the highest percentage, followed by the Owner's Pay account, the Taxes account, and the Operating Expenses account.
5. Deposit your income into your accounts.
Every time you make a sale, deposit the money into your four accounts. This will help you to stay on track with your budget and make sure that you're always saving for the future.
6. Pay yourself first.
Once you have deposited your income into your four accounts, pay yourself first from the Owner's Pay account. This will help you to ensure that you're always making money and that you're not just working for free.
7. Review your accounts regularly.
Regularly review your Profit First accounts to make sure that you're on track. This will help you to identify any potential problems and make adjustments as needed.