Coral DarbyWeek six and the end of my book, Profit First*, by Mike Michalowicz.
I will use this opportunity to reflect on what I have learned. Before I begin, I would like to say that this book provides an incredible dissertation on basic accounting. I recommend Profit First for any entrepreneur working diligently to understand their numbers. Michalowicz’s system for prioritizing profit from the get-go illustrates the key expenditures in owning and operating a business and how they independently and cumulatively impact the bottom line.
The core message of this book is to prioritize generating profits over business growth. According to Michalowicz, this is the path to financial freedom and truly enjoying the rewards of one’s hard work. His system liberates the entrepreneur from the cycle of constant growth and spending, offering a sense of relief and security. Drawing from my own business experience and my journey with the agency, I can wholeheartedly endorse his approach. Often, we haven’t prepared for business downturns, and they are inevitable. This lack of foresight can push the agency into a crisis, leading to a desperate need to land new business immediately. It’s a stressful situation that I am determined to avoid in the future.
Additionally, Michalowicz talks about how business and personal finances are intertwined, and he reflects on the importance of incorporating his tactics of being frugal, setting aside profit first, and paying down debt as soon as possible, which is critical to a healthier, more enriched life. Again, I am entirely on board with this train of thought. Reflecting on my life, I don’t have the suggested eight months of savings readily available when the dividend checks dry up. And they do, prosperity ebbs and flows.
I appreciated his teachings on approaching the debt monster both in the business and with the home finances. His system, which I outlined in week 5, is great for business but also works on the home front. I plan to review all my recurring expenses to determine if we need five streaming channels. I suspect that money would serve us better in the money market. Michalowicz also talks about how debt dismantlement is an emotional rush. He’s right; it feels good to pay off credit cards and then have extra for savings or maybe even a plane ticket somewhere fun. He says, don’t worry about the highest interest rate; start with a small balance and crush it. Michalowicz promises the rush of eliminating debt will be the encouragement to keep going.
My one criticism of this book is that it emphasizes over and over the necessity of frugality. This can be a tad extreme and undermine an organization’s culture. Not all expenditures have to feed profit directly, and that’s okay. My staff is everything to our success, and I will continue to treat them occasionally with a team lunch and an annual staff retreat. By doing so, they know they are valued and appreciated, and that’s money well spent. Plus, it’s a long-term investment. The profits might not appear immediately, but the payout of tenured staff pays dividends in the long run.
Also, if I want the fancy bottle of wine with my dinner out, I will go for it every chance I get (and you should, too) … We’re not promised tomorrow, so let’s enjoy the little things in life while we can!
Thank you,
Coral
*Michalowicz, M. (2017). Profit First, Transform Your Business from a Cash-Eating Monster to a Money-Making Machine. Penguin Random House
Coral,
I enjoyed reading your reflection this week. Your book teaches you to put profits over growth, and my book teaches you to scale the business, sell it, and repeat if you’re up for it. I think that both books speak of how to be frugal, but yours took a deep dive into that area. I think because the author of my book works a lot with computer systems; it’s easier to create something, sell it, and begin again. There was a chapter on how your people affect your success. Rewarding your team, especially when they are sticking it out with you during the rough times is very prudent and wise. I applaud you for splurging a little on the team. I also applaud you for splurging on yourself from time to time. My book heavily encourages this, because if we can’t, what are we doing for? Thanks for sharing this week and see you next semester!
Dear Coral,
Thank you for sharing your reflections this week on Profit First. I love hearing how the book has helped you prioritize profitability and manage finances effectively at Darby Communications and in your personal life. Your proactive approach to preparing for business downturns is easy to forget and not considered, but it reflects your strong commitment to financial stability and remaining debt-free.
I appreciate your perspective on balancing frugality with investments in your team’s well-being. It reflects directly on you and how well you treat and pay your staff. They know their value and worth, and you show them how much they’re appreciated through a living wage and the occasional lunch treat or outing!
Lastly, remembering to enjoy life’s pleasures is vital to overall mental and physical health. Balancing financial prudence while enjoying life’s moments creates happiness. As much as we work, we must relax and enjoy ourselves to avoid exhaustion and burnout.
Thanks again for sharing your reflection, and I hope to see you in our next course!
Kindly,
Shawn
Coral,
Your reflections this week have been insightful and thoughtful, showcasing a deep understanding of the book’s core principles and how they apply to real-world business and personal finances. You highlight Michalowicz’s emphasis on prioritizing profit over business growth, which is a crucial takeaway. This approach, as you noted, can offer financial security and relief from the constant pressure to expand.
Michalowicz’s advice on frugality, setting aside profit first, and paying down debt is a sure recipe for a healthier financial life. Your candid reflection on not having the suggested savings buffer emphasizes the importance of his tactics, and your intention to review recurring expenses is a practical step forward. I think we could all benefit from utilizing this method at some point in our journey.
Your critique regarding the book’s emphasis on frugality is valid and well-balanced. While frugality is important, you rightly point out that not all expenditures need to directly feed profit. I would agree that investing in your staff through occasional treats and retreats is crucial for fostering a positive organizational culture and long-term success. This demonstrates a nuanced understanding that while profit is important, so is maintaining a happy and motivated team.
Lastly, your personal touch at the end about enjoying life’s little pleasures, like a fancy bottle of wine, adds a warm and relatable element to your reflection. It’s a reminder that while financial prudence is essential, so is enjoying life and appreciating moments of joy.
Best,
Macie