Running your own business sounds great—until the finances get messy. You're making money… but where is it all going?
Enter: Profit First by Mike Michalowicz. This money management method flips the traditional business model on its head and helps you get paid—first.
Why "Profit First"?
Most businesses follow the old-school formula:
Sales – Expenses = Profit
But what happens? You pay your bills, and there's little (if anything) left for you.
The Profit First model rewrites the equation:
Sales – Profit = Expenses
Meaning: You take your profit first—intentionally and consistently. It's about paying yourself and building a sustainable business that actually supports your life.
How It Works
Set up five business bank accounts:
- 💰 Income – All business deposits land here.
- 📈 Profit – A % of income that's yours to keep.
- 🧍 Owner Pay – Your paycheck as the business owner.
- 🧾 Taxes – For quarterly and end-of-year taxes.
- 🛠️ Operating Expenses – What's left to run your business.
Every two weeks (or month), you transfer money from the income account into the others based on target percentages. For example:
- 5% Profit
- 50% Owner Pay
- 15% Taxes
- 30% Operating Expenses
Start with what works for you, and adjust over time.
Why It Works
✅ It forces you to live within your means—no more spending everything your business earns.
✅ You'll know right away if your prices are too low or expenses too high.
✅ It separates your personal and business finances (a must).
✅ You'll actually see your profit—and celebrate it!
And here's a reality check from the book:
If you're not making at least as much per hour from your business as you'd earn working at McDonald's… it's time to rethink things.
Bonus: It's Childfree-Friendly
With no dependents to support, you can build a business that prioritizes your lifestyle and goals. Profit First helps you keep it lean, intentional, and rewarding—without needing a massive team or funding.
Want help getting started? Your CFP® or a Profit First-certified accountant can walk you through setup.