Book Review: Profit First by Mike Michalowicz

How This Counterintuitive System Can Fix Your Business Finances.

Running a small business can feel like you're constantly chasing cash flow—and too often, profit is the thing that never quite shows up. That’s exactly what Mike Michalowicz tackles head-on in his bestselling book, Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine.

As a bookkeeper who works with small businesses every day, I can say this system is simple, powerful, and refreshingly realistic.

What’s the Premise of Profit First?

Michalowicz flips the traditional accounting formula:

Traditional formula:Sales – Expenses = Profit

Profit First formula:Sales – Profit = Expenses

In other words, you take your profit first, then run your business with what’s left. The idea is that if you learn to operate with less, you’ll spend more intentionally—and actually keep more of what you earn.

How the System Works

It’s not complicated. The Profit First system recommends that you set up multiple bank accounts and allocate income into them based on fixed percentages. The main accounts include:

• Profit

• Owner’s Pay

• Tax

• Operating Expenses

Each time money comes in, you divide it up—automatically giving yourself a profit before you pay expenses.

What I Love About This Book

• It’s mindset-changing. Even if you don’t follow it to the letter, Profit First shifts how you view money in your business.

• It’s doable. You don’t need an accounting degree to implement this. Many of my clients start with just two bank accounts and gradually build from there.

• It builds financial discipline. You’re less likely to overspend when your operating budget is clear and limited.

What Might Be Challenging

• Multiple bank accounts. This is key to the method, but some people find the setup tedious or intimidating.

• It doesn’t replace bookkeeping. This is a cash management strategy, not an accounting system—you’ll still need clean, accurate books.

• Industry-specific challenges. Businesses with very tight margins or variable income may need to adapt the system’s percentages.

Final Thoughts

Profit First is one of the most useful books I’ve read for small business owners who feel like they’re working hard but never quite getting ahead. It’s a must-read for anyone who wants more control, more clarity, and yes—more actual profit.

Want to Read It?

👉 Buy Profit First on Amazon

Want Help Applying Profit First in Your Business?

At R. Schaublin & Associates, we help business owners implement financial systems that actually work—including Profit First strategies adapted to real-world cash flow challenges.Book a free consultation today »

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