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Four Non-Business Books That Help My Business

Writing a business plan is the easy part. You add up how much it costs to run your business, then you set targets of how much more you want to make each month. You separate your many income streams and figure out how many units of each thing you need to sell each month.

The math will always math. But the person who executes this plan? That’s the unpredictable factor. This month I’m sharing my go-to books to keep me motivated and build the business of my dreams - on my terms.

Profit First, by Mike Michalowicz

I have always prided myself on being “good with money”. Then I started working for myself.

Turns out, I’m good at managing a bi-weekly paycheque. Managing money as a business-owner, that takes a whole new skill set.

We like to think money management is a set of rules that work for everyone and apply to every situation. To build a budget you add up all of the money you bring in each month, then you subtract what you spend each month. If you have money left over, put that in savings. If you’re spending more than you make, cut back your spending.

But what if the money you bring in each month changes each month? What if you have clients who pay-in-full and you have to make that last for three months? What if you land a once-in-a-lifetime bonus?

In this case, money management is a set of habits and discipline, not rules that apply to everyone. Profit First shares a set of habits that move money around when it comes in waves, as opposed to a steady stream.

The basic idea of Profit First is to separate all money coming into your business into different buckets. Each business has their own unique buckets, and there may be times when you add or subtract buckets based on your business goals. Instead of diverting the same amount each month into the different buckets, you divert a percentage of the money coming in.

Here are my buckets for example:

20% operating expenses

15% taxes

5% profit

5% owner’s compensation

The rest covers my salary. If there’s anything left after the buckets are filled and I’ve paid myself a salary, it goes either toward debt repayment, building emergency funds, or towards investing in myself or the business.

Not only is this a great way to make sure things like taxes are always accounted for, but it also provides a helpful guide for how you make money decisions as a business owner.

Even a remote, bare-bones business has some operating costs: website domains, subscriptions to efficiency tools (for client onboarding, invoicing etc). I also include networking meals, memberships to business clubs and networking events. When there’s a lot of client work, I also use the money in this account to decide on staffing levels.

If there is consistently not enough money in the OpEx fund to cover contractor fees, there is not enough work to justify having staff. This has helped me take emotions out of hiring and firing people from my team. 

The part I love most about the Profit First concept is its focus on mindset. A portion of every payment goes into a profit pile. No matter what you’re earning that month, you are deciding it’s a profitable month. There will be times when you spend more than you make. Those are investing periods in your business. Every business does it. This does not mean you’re a failure. It does not mean you have to play small in order to survive.

In the habit of setting aside some money, whatever you can justify, it’s a regular reminder that even in lean times you are planting the seeds for larger profit margins in the future.

Now I can safely say I’m good at money in all forms!


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