My book review of Profit First by Mike Michalowicz
EPISODE 19
Notes
In this episode I review the book Profit First by Mike Michalowicz. This is because I know how many entreprenuers love this book. But I believe there is information in this book that needs to be considered with a grain of salt.
The author proposes that businesses are cash eating monsters that need to be controlled by taking profit before all their business cash is spent on expenses, leaving no income for the owners of the business. The way this is done is by transferring cash to 12 different bank accounts under what's known as Bank Balance Accounting. Financial reports are to be ignored, because they are too confusing for entrepreneurs to understand anyway.
Whilst I agree with many of the profit-generating business improvements the author proposes throughout the book, I don't agree that financial reports are too complicated for entrepreneurs to grasp. And I think opening 12 different bank accounts is a lot more complicated than getting your bookkeeping and taxes up to date with accounting software like Xero.
I think that entrepreneurs are smarter than the author gives us credit for.
What do you think?
LINKS:
Useful podcast episodes to help you understand your numbers:
Episode 1 Bookkeeping is key to business success
Episode 5 Why every business needs a budget
Episode 6 Let’s talk cash flow
Episode 12 Why is there no cash in your bank account when you’re making a profit
About the
Author
Bec is a chartered accountant who worked at Australia’s big firms and banks for 15-years. Faced at a crossroads in her career, she backed herself, left her corporate job and launched Straight Up Bookkeeping. 3 years and 5 staff later, Straight Up Bookkeeping is one of Australia’s leading virtual bookkeeping businesses for creatives, with a mission to free business owners from financial stress so they can grow their empires.
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