The profit formula is simple: Sales – Expense = Profit. The only problem is, it’s a lie. In
his wildly popular presentation, Mike shows why the formula entrepreneurs use to
calculate profit actually inhibits it.
Mike then shares a new approach to profit – taking it first – that instantly changes
everything. With this simple yet profound change, any business, will become instantly
and permanently profitable.
THE PROFIT FIRST FORMULA: The GAAP (Generally Accepted Accounting
Principles) formula for determining a business’s profit is Sales – Expenses = Profit. It is
simple, logical and clear. Unfortunately, it’s a lie. The formula, while logically accurate,
does not account for human behavior. In the GAAP formula profit is a left over, a final
consideration, something that is hopefully a nice surprise at the end of the year. Alas,
the profit is rarely there and the business continues on its check to check survival.
Sales – Expenses = Profit
Sales – Profit = Expenses
With Profit First you to flip the formula to Sales – Profit = Expenses. Logically the math
is the same, but from the stand point of the entrepreneur’s behavior it is radically
different. With Profit First, you take a predetermined percentage of profit from every sale
first, and only the remainder is available for expenses.
How to implement Profit First
How Profit First impacts Parkinson’s Law
How bank balance accounting works – and why it is logical
How Profit First works with your existing habits, no big changes needed