What is Profit First?
Profit First is a book on business-money-management by Mike Michalowicz.
Mike gives many new and controversial methods for managing your money. He recommends having multiple bank accounts, like a 21st century envelope system, in order to budget and manage your money. He values paying yourself and building up cash in your business for emergencies, personal bonuses, and to increase the value of your business for when you want to sell.
I decided to read this book because several of my clients said that they enjoyed it and wanted to implement it in their finances. I absolutely LOVED it and decided to use it in my own business! (I am not a Profit First Professional, I’m just supportive of however my clients wants to manage their finances.)
I’m a part of many bookkeeping groups, and I was surprised to find that a lot of bookkeepers HATE the Profit First system! They believe it’s a terrible bookkeeping system and shouldn’t be promoted…
BUT…
Profit First is NOT a bookkeeping system! Profit First is a method for managing your cash. Its phenomenal for people who aren’t number-savvy, and it can truly help you have a profitable business.
Bookkeeping is about so much more than that. Managing cash is an important piece of the puzzle, but it is not the only piece. Business owners also need to keep up with which expenses are deductible, keep up with inventory, money owed to them, money they owe others, and so much more.
Mike Michalowicz does a fantastic job of teaching you about managing cash coming in and out of your business, but Profit First does not need to be mistaken as a bookkeeping substitute.
I will continue to promote comprehensive bookkeeping, but I also want to promote any and all books/products/software that help my clients succeed in business! I believe that Profit First can help you succeed, and I will continue to promote it regardless of any bookkeeper-hate thrown it’s way. 🙂
