EFP 148: Profit First – A Different Way To Look At Business Financials

Justin Cooke

November 19, 2015

A few weeks ago, Joe and I sat down to review financials and he showed me this “Profit First Assessment” he did and then started using all this terminology that was unfamiliar to me. I knew he had some framework he was working from, but I had no reference point.

Finally I got him to backtrack a bit and he told me about this book he’d read, Profit First: A Simple System to Transform Any Business from a Cash-Eating Monster to a Money-Making Machine

I was a little thrown off by the title (Sounded sketch) but quickly realized I’d better get on the same page if this book changed my business partner’s thinking.

The Profit First Book and Why It Can Help You

I downloaded the book on Audible and dug in to catch up. What I found was a simple concept that’d had amazing impacts on businesses for thousands of entrepreneurs.

I was still skeptical, though – I had to talk to this guy. Why not get him on the podcast to flesh out some of my questions!

In this episode, I sit down with Mike Michalowicz to dig into the philosophy, strategy, and tactics behind the Profit First methodology. Whether you’re new to the book or a fan, you’re going to want to check this episode out.

Also – want to win a free copy of the book? Leave us your best comment and you’ll have a chance to win one of three copies we’ll be giving away to listeners.

Check Out This Week’s Episode:

Direct Download – Right Click, Save As

Topics Discussed This Week:

  • How does the Profit First formula work in real businesses?
  • Profit First – Should you wait until your earnings are “significant”?
  • Does Profit First allow for building war chests? How?
  • Profit First on a portfolio of sites or each individual site/business?
  • How do you go about implementing Profit First strategies on Day 1?

Mentions:

Spread the Love:

“As the business evolves and progresses you’ll evolve and progress financially” – Mike – Tweet This!

“When you less money it forces you to be more innovative than the rest of the industry” – Mike – Tweet This!

“Every second we allow this bad client to stay is taking us away from our best clients” – Mike – Tweet This!

Are you familiar with the Profit First methodology? Have you implemented this or something similar in your business? Let us know in the comments!


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Discussion
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  1. Vic says:

    I would be curious about a lifestyle update on you guys… seems like that was a frequent topic a couple years ago. Why did you leave the P.I.? Still in Vietnam? I love Vietnam so I would like to hear about expat life there. Perhaps you can record a podcast focusing on these topics, I’m sure everyone would interested.

  2. Great episode guys, I love how you’re always mixing it up with interesting guests and issues I’ve never even considered.

    As someone in the early stages of building a business I thought this was another interesting interview, but not something immediately applicable. Near the end of the discussion Mike mentions his simple 1% in a checking account tactic and it occurred to me the best time to do this is now so I can build it in from the starting shot. I can go to my bank and take that first step TODAY. Considering picking up his book and I’m thankful to you for bringing these new thought technologies to my earholes.

    BTW, In my personal experience Parkinson’s law is a law in the same way gravity is a theory : )

  3. John Calloway says:

    Hey Justin & Joe,

    By far your best episode (for me at least) :-)

    Keep up the good work!

  4. Alex Dealy says:

    Really interesting interview today gents, interesting model and interesting to hear it applied to the marketplace. Would love to check out the book/PDF/podcast.

    Fun fact: thought of you guys this week, as I was also featured on the Ahrefs blog this week. Was trying to get my gravatar to work and couldn’t, ended up seeing your pic (Justin) in the media files, hahaha.

    Cheers!

  5. DUG this episode and will check out the book.

    At first I thought the idea was “simplistic” but as we know most good ideas are simple to grasp and difficult to implement in our lives.

    As I am working on our 2016 Plan as we speak I will see if there are some principles I can add due to this.

    Nice stuff guys.

  6. Jamie says:

    Nice one,

    I read The Pumpkin Plan a few years ago and added it to my Audible wishlist recently, so cool you have the guy on podcast.

    Will definitely add this book to my list too.

  7. Marvin says:

    Hey Justin & Joe,

    really loved this episode and the concept discussed!
    I have been struggling myself with taking out profits out of my business for a while now (even though I probably could).

    This has made me realize however that if I take out profits first I will be able to have some peace of mind knowing that I have the comfort of some savings in the back. I have also realized that having this security enables me to be actually more effective within my business and look even closer at what I am spending money on and even cutting expenses.

    For some reasons this tends to happen when to much money is available you do not care that much for smaller expenses. But when those available funds become less, the percentage of those expenses grows and soon you start to question them. It really helps focus on what’s essential and what not (also a great book is “Esentialism” by the way). Same concept applies to time, I have experienced. The more time you have, the more you will waste. The less time there is, the more focused you become.

    So all in all, great show as usual.
    I’d love to get a chance to read the book as well! So if you’re giving a copy away I’m all up for that :)

    • Justin Cooke says:

      Hey Marvin,

      Awesome – glad you liked the episode!

      It’s a really interesting strategy. Making the business work for YOU is a great mindset shift, I think.

      Really hope you enjoy the book! Shooting you an email to let me know if you want eBook or audible and to give me your info to get you a free copy. :-)

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