Moe and Mike catch up to discuss a simple system to transform any business into a money-making machine.
The Profit First Imperative
Growing up in the insurance & financial services business, one of the pillars of our selling tenets was the significance of ‘paying yourself first’ – this time-honed philosophy is anchored in the belief that by taking small, measurable steps today, you improve the odds of living a life free of financial worry. Being only 20 years old at the time, I had little foresight of what life might be like at 60, still I quickly bought in and decided to ‘eat my own cooking.‘ It was a period in my life when I had many more questions than I did answers; yet I wanted to reassure my clients that I was in this business to stay. I, therefore committed to contribute $250 per month divided between a whole life insurance policy and a mutual fund – little did I know that I had just made one of the more telling decision of my life.
Fast forward almost 30 years, and as I look back, I celebrate that naiveté – for it not only enabled me to prioritize financial discipline; more importantly it set the stage for my kids to follow my example. I reminisce on this topic today knowing that Mike Michalowicz has made it his highest priority to implement the same reasoning for his businesses. “Profit first speaks to human behavior” he writes, “it accounts for the regular Joes of the world, like me, who have a tendency to spend all of whatever is available to us.” The simple formula is (Sales – Profit = Expenses) and here’s how it works.