Ou book this month is “Profit First” by Michael Michalowicz. You’ve no doubt heard the advice from financial advisors called “Pay yourself first”.

This book sounds like the same advice, only it’s quite different. It breaks down the human behaviours that result in a money management cycles that ultimately can become a trap.

Most businesses focus on growing revenue to generate cash and stay ahead of expenses. The problem with this approach is that the additional revenue attracts hidden expenses which erode the benefit of the added revenue. Some businesses can grow themselves into the ground. As a minimum, the relentless focus on adding revenue removes the focus on the primary motive which is profit for the owners.

Profitability is a decision that happens first. But most businesses treat profitability as a consequence of all the other decisions. Profit is the left-over. Many business owners end up “reinvesting” their income to grow the business and in so doing, end up working for free, or at least for far less than they’re worth.

What Michael Michalowicz teaches is how to establish new money management governance within your business that becomes a new set of habits. These habits eventually become muscle memory and they become normal.

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