Alliedify

By Mike Michalowicz

Introduction – Flip the Formula: Profit Isn’t What’s Left Over

Most entrepreneurs follow this outdated formula: Sales – Expenses = Profit. The problem? Profit becomes an afterthought. In Profit First, Mike Michalowicz flips the script to: Sales – Profit = Expenses.

This book introduces a behaviorally-driven cash flow system that forces business owners to prioritize profit by design. It’s simple, powerful, and immediately transformative for freelancers, solopreneurs, and small business owners.

Top 10 Key Lessons from Profit First

1. Pay Yourself First—Literally

Set aside profit before spending a dime on expenses. You’ll force your business to live within its means.

2. Create Multiple Bank Accounts

Use separate accounts for profit, taxes, owner’s pay, and operating expenses to create clarity and discipline.

3. Parkinson’s Law Rules Your Spending

We spend what we see. By allocating profit first, we limit available operating funds and reduce waste.

4. Small, Frequent Allocations Work Best

Don’t wait until the end of the quarter or year. Transfer profits and reallocate funds twice a month to stay consistent.

5. Profit Isn’t Greed—It’s Responsibility

Profitability ensures sustainability, growth, and resilience. Without it, your business is just expensive self-employment.

6. Simplicity Beats Complexity

You don’t need complex accounting software to be profitable. A few strategic accounts and habits are enough.

7. Owner’s Pay Must Be Protected

You are your business’s most important asset. Pay yourself fairly or burnout will become inevitable.

8. Use a “Drip Account” for Large Expenses

Don’t get caught off guard. Drip funds gradually for large recurring expenses like annual software or tax bills.

9. Quarterly Profit Distributions Build Motivation

Treat your profit account like a reward system. Quarterly bonuses reinforce the value of being profitable.

10. Profit First Creates a Healthier Business Culture

A profitable company isn’t just about numbers—it’s about stability, confidence, and a leadership mindset.