Allocate funds for profit before expenses from "summary" of Profit First by Mike Michalowicz
To truly prioritize profit in your business, you must change your mindset about how you handle your finances. This means flipping the traditional formula of sales minus expenses equals profit on its head. Instead, it's all about allocating funds for profit before anything else. By taking this approach, you are ensuring that profit is not an afterthought or something you hope will materialize after all your expenses have been paid. It becomes a non-negotiable part of your financial strategy. This is a fundamental shift that will help you build a financially sustainable business in the long run. When you allocate funds for profit first, you are essentially putting a stake in the ground and proclaiming that profit is a priority. This sends a powerful message to yourself and your team that profit is not just a nice-to-have but a must-have. It forces you to think creatively about how to make your business more efficient and profitable. This approach also helps you guard against the all-too-common trap of spending all your revenue on expenses without setting aside anything for profit. By allocating funds for profit first, you are creating a safety net for your business and ensuring that you are always working towards a sustainable and profitable future.- The concept of allocating funds for profit before expenses is about taking control of your finances and putting profit at the forefront of your business strategy. It requires discipline and a willingness to challenge conventional wisdom, but the rewards can be significant. By making profit a priority from the start, you are setting yourself up for long-term financial success.
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