"Profit is not an event. Profit is a habit. " Mike Michalowicz
I have to admit -- I have this book, but I haven’t yet read it in its entirety. I have read, listened to, and researched pieces of it, and it remains on my top-ten list of books to read and reference in the future. I am sure I won’t agree with some pieces, and I know some nuggets are so brilliantly logical that they’re confronting. As we are over halfway through 2021 (can you believe it?!) I wanted to revisit where I am at with this important topic, specifically some succinct takeaways, for instance:
Stop spending so much money so soon. Every day we use our money to buy what's obvious. Instead, we need to be innovative with the money we have and, as money comes in, allocate it. As they should, living expenses top the list. We all have bills to pay. However, if I can't afford the bills, then I have to prioritize them and find a way to cut expenses. It’s not always about having a more significant revenue stream; rather, it can be about cutting down on the money going out.
Ditch logic. Humans are behavioral and emotional messes. Let’s be clear on that. We operate on a first-come, first-served basis for most things -- what comes first we tackle, what comes last we forget. We all know the equation that sales minus expenses equals profit, but it’s not always that simple. We need to shift our thinking to “how much can my business afford to spend?" Reverse engineering your profitability by being innovative, removing temptation, and reserving your money before it comes in, not after. It’s the same line of thinking when you go to the grocery store -- never go hungry without a list, always have a list (and eat a snack on the way there)!
Create accounts. Have five different accounts or containers for your money, including; income, profit, owners pay, taxes, operations. I have always had two business accounts -- one has always been designated to taxes, and I am diligent about allocating money to that account first. Currently, I have accounts that make sense and work for me. The last one I have on my list to create is an Operations Account where I will pay subcontractors and tie my subscriptions, insurance, and professional development.
Purposeful budget. The dreaded B-word. It’s on my list, too -- something I know I need to get better at so that I am crystal clear every month on what needs to go where and so that I can prepare for future expenses and wishlists.
Being the CEO of The 25th Hour means that I have to show up every day and deliver stellar outcomes to my clients, and it also means that I have to show up for my own business and do the work to ensure its success. Managing this vital piece is one of them.