A Great Resource for Getting a Handle on Your Business Finances
Hi there! Welcome back to the Bodywork Business Book Series, where I scour through business books so you don't have to!
This is where you'll get my reviews and suggestions for must-read books to help you up-level your business, no matter what that next level is for you.
You know by now that I get jazzed not only about reading, but also about hooking you up with the perfect book. What can I say, it's my Inner English Teacher ;)
So much of what's been written about business and entrepreneurship is wicked-boring and tough to slog through. Fear not. I'll guide you to some true gems, so that whether you check them out from the library or decide to add them to your professional collection, you'll know you've got something that will work for YOU.
Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine
I love this book so much.
Finally, a book about finances that's written for entrepreneurs like us -- good people who want to do good things for the world.
Mike Michalowicz is an entrepreneur himself who has created and sold several successful companies. What makes him stand out, though, is his honesty and humility. (And his hilarious writing style -- when's the last time you laughed out loud while reading a business book? How about Never, right? You will when you read Profit First.)
He begins the book by telling you about how he sold a business for multiple six figures, and a few months later had no money left to his name. None. He made the mistakes that so many entrepreneurs make, and he is brutally honest about them.
Then he explains how you can avoid the same mistakes, and he calls the system Profit First.
Basically, he says that you need to start making a profit in your business from Day 1, even if that profit is just 1% of your earnings. So, if you earn $1000 in a month, you need to set aside $10 for profit. Easy peasy, right?
Sounds easy enough, but as a business owner, we tend to put everything we earn back into the business, and then we can't figure out why we don't have any money and why the business isn't working financially.
What we need to do instead, Michalowicz writes, is divide up our revenue into Profit, Salary, Operating Expenses, and Taxes -- that way, there will always be enough in each of those accounts and our business can begin to grow.
Wait, though... don't most entrepreneurs just do what I used to do: earn money, pay my bills, and anything (if there even WAS anything) left over was my salary (sound familiar, anyone?)
Yes, most entrepreneurs do that, and that's one of the reasons 80% of businesses fail within the first 2 years.
“You are no longer asking, “How can I make my business bigger?”
You are asking, “How can I make my business healthier?”
from Profit First
You MUST learn to look at your business numbers and have a simple system for figuring it all out. Profit First gives you that system. The system is straightforward and easy to understand.
And it's a book with practical ideas. I'm pretty much over all the books that say things like, "Just adjust your mindset, and you'll be swimming in riches!" That never worked for me -- I mean, how are you supposed to "feel" like you're rich when you've never been rich and you don't know what that feels like?
The Profit First approach is much more accessible and down-to-earth.
If you're struggling to get a handle on your finances, and you don't want to get a degree in accounting to do it, then Profit First is a fantastic first step.
Check it out and let me know what you think below. I can't wait to hear how it goes for you.